How to Get a Business Loan

Do you want to quickly take your business to the next step or cover cash flow issues? It might be worth considering a business loan.

How to Qualify For a Business Loan?

The exact specification to qualify for a business loan varies from lender to lender as well as product to product, but below is a list of eligibility criteria that all lenders will use to consider approving your application:

  1. Your Business credit – Lenders use reports from companies such as Experian and TransUnion to check your business creditworthiness. The most favourable terms are offered to businesses with good credit scores so it’s good to know ahead what position you are in. It might also make sense to settle outstanding debts before applying.
  2. Personal credit – Some lenders will consider too much personal credit as a risk so it can also be worth running a credit report on yourself before looking to apply. Lenders also don’t like it if there are any outstanding CCJs on an applicant, so always settle those where possible.
  3. Age of the business – The minimum age of the business varies from lender to lender, some lenders will require an age of 6 months or more to allow an application, but it is more common to see 1 or 2 years as a minimum requirement. Note – if you switch from a sole trader to a limited company, some lenders will only count the time as a limited company as they are separate entities.
  4. Revenue and Operating Profit – Lenders like to see the business is performing well and will be making enough money to cover the repayments of the loan.
  5. Potential Security – If you’re applying for a secured business loan, lenders will be looking for an asset (typically a residential or commercial property) that they can back the loan against in the case of a default. If you would prefer to not provide any security, there is the option of an unsecured business loan which in most cases will still require a personal guarantee to be signed.

As stated, the exact requirements will vary between lenders and we have options that fit all kinds of requirements. So even if you think you don’t qualify based on the above, please contact us and we can take a look for you.

What Kinds of Business Loans are Available?

Business loans can be secured and unsecured.
A secured business loan is a great option when you don’t fit the criteria above, but you do have an asset or assets that you would be willing to use as collateral. The lenders will still look at the criteria above, but it is much less important than the security you are offering.

An unsecured business loan works better when you want to solely rely on the criteria above to determine whether your business is suitable for receiving finance. In most cases, an unsecured lender will still require a director of the company to sign a personal guarantee.
What is a personal guarantee?

Providing a personal guarantee means that if the business becomes unable to repay the loan, the individual who signed the guarantee will become personally responsible for the repayment.

How Much Can I Borrow?

For a limited company, the amount you can borrow starts from as low as £1,000 and goes up to £500,000 depending on the strength of your business and the lender. Sole traders can borrow upwards of £25,000.

Secured loans also start at £25,000. However, the amount you can borrow depends less on the strength of the business and more on the strength of the security. 

What Documents and Information Will I Need to Gather?

In order to get started, we just need to know some basic information about you (such as where you live, if you are a homeowner, and your contact details), your business (previous trading history, industry & key information), and the loan you are looking for (ideal loan amount, terms and the purpose of the loan).

If you have this information already and you are ready to start looking at your options you can complete our online form here, otherwise feel free to give us a call on 07860669935 or 07507270291.

Once we understand your situation we will require some documentation to get an application underway. This includes:

  • Business bank statements – typically the last 6 months are required
  • Accounts – Either the last year or 2 years are required. Strong management accounts can be a bonus.
  • VAT statements

If you are looking for a secured loan then we will also need information on the intended security such as what it is and its estimated value.


How long does my business need to be trading to get a business loan?

Typically the minimum time you will need to be trading is 6 months. For the best options to be available to you, you want to have your business running and making a profit for at least 2 years.

How much can you borrow with a business loan?

You can borrow from as little as £1000 up to £500,000. This will depend on the structure of your business, what your requirements are and which lenders your business will be eligible to apply to.

How long is a typical business loan?

Most business loans are between 12 and 72 months in length. It can depend on both your preferences and what the lenders are willing to offer. Shorter terms can benefit as you are paying less interest overall, but there are higher monthly repayments. This is why you might opt for a longer-term, to have a more manageable repayment.

How are business loans paid back?

Most business loans will be paid in equal installments for the duration of the loan. Terms are typically between 12 and 72 months.

Can you pay off a business loan early?

It varies with each lender, but often you can settle your business loan early. This can potentially benefit you as some lenders only charge interest for the duration you keep the loan.

Ready to go?

If you’re ready to start the process, contact us today. We will get back to you as soon as possible.