Is a decision in principle binding?

No. A UK SMB decision in principle is not a binding offer. It is an indication that, based on the information you have provided and a soft credit check, the lender expects to make a formal offer at the quoted terms once full application, KYC, hard credit search and (where applicable) valuation and legal work are complete. The lender can withdraw or revise the DIP at full application without breach.

The legally binding offer is the formal facility letter or credit agreement, signed after full underwriting. Until that is issued and accepted, you have no contractual right to the facility. In practice, well over 90% of DIPs from established UK lenders convert to a formal offer at the quoted terms, but the conversion rate drops sharply where: bank statements at full application show worse trading than the borrower indicated; identity verification fails ECCTA checks; a CCJ or charge registered between DIP issue and full application; the lender's policy changes (rate moves, sector restrictions tightened); or full underwriting reveals affordability gaps the soft check missed.

For practical purposes, treat a DIP as a quotation rather than an offer. Use it to compare across lenders, plan your timeline, and decide which one to progress to full application. Do not commit suppliers, contracts or completion dates against a DIP alone. Conditional contracts subject to lender finance are common in UK property and asset acquisition, and most lenders are familiar with the convention.

See how long is a decision in principle valid for expiry timelines, and what total cost information will I receive for the binding-cost disclosures that come with the formal offer.