Why the Correct SIC Code Matters When Applying for a Business Loan

Applying for a small business loan in the UK? Discover why having the correct SIC code is crucial for lenders, risk assessment, and loan approval success.

September 16th, 2025

When small businesses in the UK apply for borrowing, every detail matters—including something as seemingly minor as the Standard Industrial Classification (SIC) code.

This five-digit code categorises businesses by industry and helps lenders assess risk. Getting it wrong can significantly impact your ability to secure a small business loan.

At Lime Finance Solutions, we’ve seen how many SMEs overlook this important detail. Here’s why the correct SIC code could be the difference between loan approval and rejection.

What is an SIC Code?

The SIC code system was introduced to classify business activities into standardised categories. In the UK, companies must select an SIC code when registering with Companies House and when filing their annual returns.

For lenders, SIC codes provide a quick snapshot of the sector your business operates in—whether it’s construction, retail, hospitality, or financial services.

Why Lenders Care About SIC Codes

Risk Assessment:
Lenders analyse SIC codes to gauge the risk associated with your industry. For example, sectors such as hospitality or construction are often seen as higher-risk compared to professional services.
Sector Policy: Lenders have different policies for different business sectors. Being in the correct sector can make all the difference. For pubs there are 37 different SIC codes, it means getting the right code for your business is essential to being understood.
Eligibility for Loan Products:
Some financial products are restricted by industry. The wrong SIC code may disqualify you from loans you’re actually eligible for.
Fraud Prevention & Compliance:
A mismatch between your declared business activity and your SIC code can raise red flags during credit assessments.

The correct SIC code enables lenders to lend to businesses in the sectors they prefer, meaning the wrong code can unfairly hold back financing your expansion.

The Impact of the Wrong SIC Code

Using the wrong SIC code can result in:

Loan rejections due to perceived higher risk.
Incorrect interest rates if your business is misclassified.
Delays in funding, as lenders may request additional documentation.

In some cases, it can even affect your business’s ability to qualify for government-backed lending schemes.

Stats That Highlight the Importance

According to the British Business Bank, around 46% of small businesses applying for finance in 2023 faced additional scrutiny due to industry classification.
Data from the Federation of Small Businesses (FSB) shows that 30% of SMEs in the UK believe their sector is unfairly labelled as “high-risk” by lenders, impacting access to loans.
A UK Finance report noted that accurate industry classification reduces approval times by up to 20%, as lenders can process applications more efficiently.

How Small Businesses Can Get It Right

Check Companies House records: Ensure your SIC code matches your actual business activity.
Review annually: Update your SIC code when filing annual returns if your business has expanded or shifted focus.
Seek professional advice: Finance specialists like Lime Finance Solutions can help you align your SIC code with your borrowing needs.

For the vast majority of small businesses their SIC code was set when they started the company and probably never changed or reviewed since.

Conclusion

A small detail like your SIC code can make a big difference in the borrowing process. The ONS shows that by ensuring accuracy, you not only improve your chances of loan approval but also secure fairer rates and faster funding.

At Lime Finance Solutions, we guide UK small businesses through every step of the borrowing process—including getting your SIC code right.

Explore our Small Business Loan solutions to see how we can help.

David Farmer

Over 30 years finance experience. Former credit underwriter, founder of Lime Finance Solutions in 2012. Multi Award winning business, featured in Sunday Telegraph, Parliamentary Review, Sky TV and others. Regular contributor to press and business associations. FCA Authorised, ALIBF Qualified. Specialist in Commercial Mortgages, Business Lending, Property and Development Finance.