Business Loan Application Documents
Applying for a business loan can be a daunting task, but having all the necessary documents organised and ready to go can make the process much smoother.
From financial statements to business plans, there are several key documents that lenders will want to see before approving your loan application.
Business Loans Application Documents List
- Details of Directors
- Business Bank Statements
- Financial and Management Accounts
- Debt Schedule
- VAT returns (if applicable)
- Tax Bills (if applicable)
- Proof of Asset Ownership (if applicable)
- Business Plan (for starts-ups and some acquisitions)
When applying for a business loan, it’s important to have all the necessary documents organised and ready to go. Some of the key documents you will need include financial statements, tax returns, business plans, and legal documents such as articles of incorporation or partnership agreements.
By having the required documents ready you can streamline the application process and increase your chances of getting approved.
Details of Company Directors
When applying for a business loan, it’s important to provide details of all company directors and financiers. This includes their names, addresses, contact information and in most cases personal net worth statements of the directors/significant shareholders.
Lenders want to know who they are lending to and the financial stability of those involved in the business.
For companies with multiple directors, information and consent to search is required for each individual, as all directors must agree to the loan application. Lenders will also need to cover KYC (know your customer) to comply with responsible lender criteria in the UK. This means the lenders will need to do credit search on directors/shareholders on occasions, even if the individuals are not providing personal guarantees.
Business Bank Statements
When applying for a business loan, lenders will usually request your most recent three months’ worth of bank statements.
Using these statements lenders can see your business’s financial history and cash flow.
Although some lenders will accept statements directly from you, others will request open banking access to access the statements directly from your bank.
If you do not have a business bank account, then it is unlikely you will obtain finance in the UK. Some lenders may consider providing a facility if you don’t have a UK business bank statement at proposal stage (if you are a new start business for example) but will need to you have set up a bank account prior to drawing down the funds.
This is needed to collect repayments via direct debit. In some instances, lenders will accept repayments in other formats, but this is rare.
Financial and Management Accounts
- Profit & Loss Statement
- Balance Sheet
- Cash Flow Forecast
In addition to bank statements, lenders will also want to see year end accounts and management accounts, such as profit and loss statements, balance sheets and cash flow forecasts.
It is extremely important to have these documents organised and up to date, as they provide a snapshot of your business’s financial health and stability.
If you’re unsure about how to prepare these documents, consider working with a financial advisor or accountant to ensure they are accurate and complete. Having these documents ready to go can help streamline the loan application process and increase your chances of approval.
Some lenders will request to see a debt schedule If you have outstanding finance and loan repayments showing on your bank statements. A debt schedule will list outstanding loan amounts, the names of any loan providers, how long left on the loan and your monthly repayment amount.
Lenders use this information to assess your company's financial health and affordability to determine whether to approve your loan application.
VAT and Tax Returns
If you are applying for a loan to pay your VAT bill or tax bill, you will also need to provide VAT and tax returns as part of your loan application.
If the sole purpose of the loan is to pay your tax liabilities, lenders will use this figure to assess your application.
In some cases, lenders will insist on paying HMRC directly on your behalf and will therefore need to the necessary information to make the payment.
Proof of Asset Ownership
If you are applying for asset finance or a secured loan, then you will need to provide a range of documents related to proof of ownership, asset cost, market value and condition of asset.
If you are purchasing new assets via asset finance, lenders are likely to request the following;
- Supplier quotations
- Commentary on what the asset will be used for and how it will benefit the business
When applying for asset refinance you will also need to provide;
- Proof of ownership of the equipment
- Original purchase price of the equipment
- Original purchase date of the equipment
- Condition of the equipment including mileage or hours used if applicable
When applying for a business loan, new businesses without a long track record will most likely need to provide a comprehensive business plan which demonstrates your potential for success.
It's important to have a solid business plan in place outlining your company's goals, strategies and purpose, giving lenders a clear understanding of what you plan to do with the funds.
Your business plan must also include details on your target market, financial projections, and any unique selling points that set your business apart from competitors.
If you are applying for a business acquisition loan to purchase a business that operates in a different market than your current business, you may also be asked for a business plan to demonstrate you have a clear understanding of the business and market sector.
Updated: May 10, 2023