Keep up-to-date finance records
Show the lender you have a plan
Understand your personal and business credit scores
Be open and honest about your history
Thousands of directors, owners, and new entrepreneurs apply for instant business loans monthly here in the UK.
For one reason or another, many don't get the funds they need to take their businesses to the next level.
Whether you're considering applying for a loan now, in the near future, or are just curious as to how you would get approved if the time ever arose, we've written out a guide below on how to get approved for a business loan - instant or not.
Listed below are the key things to bear in mind when it comes to business loans.
When taking out a business loan, you're effectively asking someone to invest in your business for a set period of time, so you need to know your business inside out if you expect someone to agree to invest and put the money into your account.
When you apply for a business loan, the lender will want to know everything about your business. They'll want to see how long you've been in business, revenue streams, expenses, and more. The more you can show the lender about your understanding of your business and its financials, the higher the likelihood that you'll get an approval. So, take some time to brush up on your business knowledge before you apply for a loan.
Of course, any business owner worth their salt will know most aspects of their business like the back of their hand, but as many hire accountants to do the books, the financial side of the business can often be the bit most business owners are most in the dark about.
Before applying for any type of financial injection, be sure you at least know the basics about your business; many instant business loans are applied for online, but you may still receive a phone call to clarify information.
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You should be prepared for the lender to ask you questions about your business when applying for a business loan.
As a small business owner, it's a given that you're busy all the time.
However, that's not a great answer when a lender asks you for your latest financial records.
If there's one thing you need to ensure you stay on top of, it's your finances. This includes tax returns, bank statements, accounts, proof of assets and liabilities, etc. Staying on top of your financial information means the application process will be a breeze.
Set yourself some strict days each month to update your records to ensure there's no rush during the application process to find old information.
If you don't have your financial documentation in order, it makes it harder for you to stay aware of your finances as well as more issues for you when the lender asks to see them. Additionally, if the lender asks for your documentation and you take months getting back to them - they could end up putting your application on hold, and it could be harder to get financing in the future.
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One of the most important things in your business is to stay organised and on top of your finances.
A solid credit score is one of the most significant factors finance brokers (or at least, their automation software) look at when deciding if they should lend you money.
You should always be aware of your personal and business credit scores and take steps to improve them if necessary. If you have bad credit, it could impact your ability to get approved for a business loan.
An excellent credit score will improve not just your chances of receiving the "yes" you desire, but also of getting better rates and terms with many companies.
To improve your credit score:
You can get your personal credit score from a number of sources, including Clearscore or Equifax. For business loans, lenders will often use your business's credit score, which you can get from business credit reporting agencies like Creditsafe and Experian.
Visit our blog for more information on understanding and improving your credit score.
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Ensure you're monitoring both your personal and business credit scores to be in with the best chance of getting finance.
"Honesty is the best policy" might be a bit of a cliché, but it's definitely true when it comes to applications for business loans.
If your potential lender finds considerable inaccuracies in your application - whether you can rectify them or not - they will cast a huge shadow over your application.
Even if you've got a few things on your application you don't think will help, it's better to be honest about them than to cover them up and get found out further down the line; odds are you will.
If you can show the lender that you're working to improve your credit or that you've learned from your mistakes, you'll be more likely to get approved for a loan.
There's also a big chance that something you think won't look good will be standard to most applications and ticked off as fine by your potential lender.
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It's always best to be open about your financial situation rather than lying. Lenders often have alternatives if you can't get what you originally applied for.
If you're struggling to get an approval for a business loan on your own, you may want to consider getting a co-signer. A co-signer takes on the responsibility of your debt if you fail to repay it. Having a co-signer can help improve your chances of getting approved for a loan. That's because lenders will see that someone else is willing to take on the risk of the loan.
When you apply for a business loan, the lender will want proof that you have a well-thought-out plan for how you'll use the loan. They'll want to know that you have a clear purpose for the loan and a plan for how you'll repay it, proving your seriousness to the lender. A well-thought-out plan can improve your chances of getting approved for a business loan.
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A plan will help both you and the lender as you will be more aware of the goings on in your business and they can offer you the appropriate funding option.
Not all lenders are created equal. Some lenders are more willing to approve loans for businesses than others. So, finding a lender willing to work with you is important.
Here's how to find the right lender:
- Talk to your network of business owners and see which lenders they've used in the past.
- Read online reviews of lenders on a service like Trustpilot.
- Contact the Financial Ombudsman Service to check if there have been any complaints against the lender.
Applying for instant business finance can be as simple or stressful as you make it.
Your best chance of being accepted is to know your business back-to-front and be honest in your application.
Deliberating over the finer details and having to go back on cover-ups will significantly reduce your chances of securing the finance your business needs.
Ready to apply for finance today? Click here to apply for an instant business loan today (our applications don't affect your credit score!)
