Glossary
Business purpose declaration
A business purpose declaration is a statement signed by a borrower that a loan is for business or investment purposes. Lenders use it as part of determining that the loan is not regulated consumer credit.
An example
A borrower taking a short-term loan to pay a business tax debt signs a declaration that the funds are for business purposes, along with evidence of the debt.
Why it matters
A declaration does not override the real purpose of a loan. Signing one when the funds are actually for personal use can remove protections the borrower would otherwise have.
Points to check
Read the declaration carefully before signing and make sure it is true. Signing it when the loan is really for personal or household purposes can affect the protections available to you, and a lender cannot rely on a declaration it knows or should know is false. If you are unsure whether your purpose counts as business or investment, ask for an explanation in writing and consider getting legal advice. Keep a copy with your loan documents.