Which sectors are considered high-risk?
Lender risk classifications vary, but common high-risk or restricted sectors include: licensed premises and hospitality (especially standalone pubs and nightclubs), gambling and betting, adult entertainment, cannabis and CBD products, firearms dealers, payday lending and consumer credit, and businesses in primary agriculture.
The reasons differ by sector. Hospitality is flagged for its high failure rate and seasonal volatility. Regulated sectors such as financial services and gambling attract extra scrutiny due to licence dependencies. Adult entertainment and cannabis create reputational risk for lenders even where the business operates entirely legally.
- Hospitality: pubs, nightclubs, restaurants facing volatile trading and high failure rates
- Gambling: licence dependency and regulatory complexity
- Adult entertainment: reputational risk regardless of legal status
- Cannabis and CBD: regulatory uncertainty, banking restrictions
- Payday lending and consumer credit: regulatory and reputational sensitivity
- Firearms dealers: specialist compliance requirements
- High-volume cash businesses: AML concerns in certain sectors
Accessing finance in a high-risk sector
Despite mainstream restrictions, sector-specialist lenders exist for most industries. Hospitality finance specialists, agricultural finance providers, and licensed trade lenders all understand sector dynamics that general commercial lenders do not. They often offer more competitive terms for the right business within their niche than a mainstream lender offering a generic product.
Asset-backed products are often more accessible in high-risk sectors because the lender's exposure is secured against tangible assets rather than depending on operational continuity. A pub operator may struggle to get an unsecured working capital loan but can access a commercial mortgage against the property or equipment finance for new kitchen equipment.
Can you change your SIC code?
SIC codes are self-reported at incorporation and can be updated at any time via Companies House. If your business's activities have genuinely changed and a different SIC code more accurately reflects your operations, updating the code is a legitimate step. However, misrepresenting your business activities to obtain finance using a more favourable SIC code is fraud and carries serious legal consequences.
Frequently Asked Questions
Can an SIC code alone prevent me from accessing finance?
Yes, from certain lenders. Some lenders maintain hard exclusion lists where specific SIC codes result in an automatic decline regardless of the business's financial performance. Working with a broker allows you to identify lenders who do not exclude your sector before making an application.
What if my SIC code is wrong or outdated?
SIC codes can be updated at Companies House via your next confirmation statement or by filing an amendment. If your code is genuinely inaccurate and a more appropriate code would better reflect your activities and not be on a lender's restricted list, correcting it before applying is reasonable and legitimate.