In most cases, you’ll need to have been trading for 6 – 12 months before you’ll be eligible to get a business loan. If you’re planning to approach a bank, that could increase to two or even three years. So if yours is a start-up business, you’ll probably need to look elsewhere for funding. Here’s a comprehensive list
You’ll need to have a good credit rating (although some lenders do specialise in lending to businesses with poor credit scores – at a price, of course).
Above all else, you’ll need to have be generating enough clear profits (after all your business expenses) to service your loan. Even if you have collateral to offer as security, even the most risk-friendly lender won’t deal with you if they don’t think you’ll be able to meet your repayments.
If you’re planning to approach a traditional bank to get a loan, you’ll find the eligibility criteria are a lot more stringent than those of alternative lenders. Only businesses with the highest credit ratings, high minimum turnover and security to offer tend to get approved for bank business loans.
What documents will I need to supply for a business loan?
This will depend on where you go for your loan. If you approach a traditional bank you’ll have to go through a long and onerous application process and provide extensive documents, such as:
- full financial statements for the past two or three years
- sales and cash flow projections
- business or strategic plans
- copies of sales orders or contracts
- your personal and business credit records.
If you’re applying for a small business loan with a fintech lender, you will probably only need to provide:
- 6 to 12 months’ bank statements (Learn Why)
- Identity documents (Drivers Licence)
If you are being asked to provide a personal guarantee, which is not uncommon for unsecured business loans, you may also need to provide details of your personal financial circumstances – i.e. your assets, debts, income and outgoings.