5 tips for a successful business loan application

If you are applying for a business loan, there are a few ways to maximise your chances of approval. Given the amount of business loan lenders to choose from, having all the information at hand and knowing where to apply can help speed up the application process and hopefully help you get the funding.

How to apply for a business loan?

The business loan application process can vary between lenders and brokers, however they all follow similar procedures.

  1. Fill out a business loan application form
  2. Your application will be allocated to your dedicated case manager
  3. Your case manager will be in touch to discuss your funding requirements
  4. They will collect all required documents to process your application
  5. Your documents will be checked and in most cases credit checks carried out
  6. If applying for secured finance a valuation will be arranged
  7. You will receive a decision within 48 hours in most circumstances
  8. You will receive your funds within 48 hours of acceptance in most circumstances

Where to apply for a small business loan?

There are a range of options available to you when applying for a loan and knowing which route to take is important.

You need to decide whether you want to use a traditional lender, these are high street banks such as NatWest and HSBC or alternative options such as Peer to Peer (P2P) lenders or employ the services of a finance broker who can do all the leg work for you.

Alternative lenders can be a really worthwhile consideration for those businesses who have been struggling to secure funding from traditional banks.

There are many alternative lenders out there and all specialise in providing funding to small businesses.

To secure the best deal, it is recommended that you shop around for the most suitable loan for your business needs, this may involve looking at traditional banks as well as alternative lenders before deciding on your preferred lender.

What documents do you need to have ready?

To speed up the application process it is a good idea to have all your documents and paperwork ready to support your application.

Depending on which type of funding you are applying for, the amount of paperwork can be quite minimal.

Common documents needed are;

  • Company Accounts
  • Company bank statements
  • Management accounts
  • Contracts you may have in place


For asset finance or secured lending there are some extra documents that you need to supply.

  • Valuation reports – in most cases the lender will arrange for an independent valuation
  • Proof of ownership
  • Any existing credit agreements secured on the asset

For VAT or tax finance you will also need to supply your HMRC bill.

Look at the eligibility criteria

One thing that all loans have in common is that they require you to meet certain financial criteria.

Business loans are no different and will have certain financial criteria that needs to be met for a business to be eligible for funding.

These criteria will include things such as trading time, profit margins and company viability.

Banks will tend to not look at personal finances when they assess a loan application, however some alternative lenders may consider this when deciding on whether or not to approve an application.

The key points that all lenders will look for are;

  • You’re 18 years of age or older
  • You’re a current UK resident
  • You have been trading for more than 12 months unless applying for start up loans
  • You are a UK registered business
  • You pass credit checks
  • You pass affordability checks
  • Your business is financially stable
  • Annual revenue
  • Outstanding credit agreements

Keep an eye on your credit score

How your credit score affects applications differs between lenders, but how much it affects an application can vary.

How high or low your score is will determine if you are eligible for a business loan based on the lenders own criteria.

If you have bad credit, it can be harder to get a business loan than for those with good credit scores.

This is particularly true if you need a larger amount of business funding or need flexible terms and conditions on your loan.

There are lenders that are willing to lend to those with low or “bad” credit scores and those that will only accept applications from borrowers with high credit scores.

It is a good idea to find out what your credit score is and then researching which lenders are likely to approve applications from borrowers with your credit status.

Updated: July 17, 2021