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How to qualify for a small business loan

By July 10, 2019 No Comments

"Am I good enough?"Qualifying for business financing isn’t always easy and different providers have different criteria that you’ll need to meet.

To put you in as strong a position as possible, follow these steps:

Summary

#1 Build your credit scores

Almost all lenders will check your credit scores – not just your personal credit score but your business’s credit score too – before they’ll approve your application. Your credit report gives the lender an indication of how creditworthy you are. In other words, are you in a position to keep up with the repayments and can you be trusted to do so?

To increase the chances your application will be approved, you should try to build your credit scores and ensure your reports kept up-to-date. We’ve published some advice on how you should do this, but here are the top tips:

  • Pay your bills on time
  • Don’t use too much of your credit
  • Check your report for errors
  • Don’t apply for too much credit

Follow these steps – as well as the others in our guide – and you should have a healthy credit history. Not all lenders demand perfect credit but having as good as score as possible will stand you in good stead.

#2 Check the lender’s minimum eligibility

Most lenders will have a minimum criteria which you’ll need to meet in order to apply. It’s likely that the lender’s criteria will be detailed clearly on their website, and some will make it part of the application process too.

Every lender’s criteria are different, so make sure you check to see what it is before you apply to save you wasting your time.

The criteria can include things like:

  • Time in business
  • Minimum credit score
  • Monthly or annual turnover
  • Legal structure (e.g. sole trader, partnership or limited company)

#3 Provide collateral

For a secured loan, you’ll need to offer collateral to get approved for funding. More often than not, the collateral you offer will be your home, but it can also be your business premises or an expensive piece of equipment or machinery your business owns.

When you apply for a loan, the lender will ask for details of any assets you own so be prepared to offer this information.

If you don’t have any assets to offer as security, or you don’t want to use them as collateral, you’ll need to look for an unsecured business loan instead.

#4 Prepare a detailed business plan

Some lenders will want to see a detailed business plan before they’ll even entertain your application. A good business plan will let them understand what your business does and how, and also what you financial projections are for the years ahead.

For tips on how to write a great business plan, have a look at these articles:

#5 Review your business’s online presence

Sometimes, lenders will check your business’s website or social media before they decide to give you the funding you’ve applied for. They may also check for any reviews you may have got from customers.

They do this to get a better feel for how viable your business is. A business with an out-dated website and lots of negative reviews from customers probably isn’t doing too well, any may not be able to keep up with its payments.

So before you apply, have a quick check of your online presence and make sure it portrays an accurate, positive impression of your business.

How do I qualify for a loan from Boost Capital?

Our criteria are simple:

  • You must have been trading for three years or more
  • You must have an annual turnover of £70,000 or more

To apply, just fill in the form on this page.

Dom Stapleton

Dom joined our marketing team last year. He has over 10 years of experience in SEO and social media, and also runs a (very) small business in his free time.

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Dom Stapleton

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More businesses than ever before are looking to Boost Capital for their business financing needs. To learn more about how our UK small business loans work or to explore the business financing options that are available to you, contact us today!
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