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Published 19 April 2023

How to Get a Business Loan

If you’re ready to apply for a business loan, then it helps to be prepared. You don’t want your application to be turned down because you haven’t got the correct information to hand, or because your business is not in the best possible shape. Learn how to get a business loan with our guide below.

Starting or running your own business requires many things, including commitment, hard work and money. While you can supply the commitment and put in the hard work yourself, you may need outside help in raising funds. A popular way of doing this is by getting a business loan.

When applying for a business loan, there are a number of factors to bear in mind, from what kind of loan you want and how much you need to borrow to what you can do as a business to try to ensure that your application is successful.

It can all sound a bit overwhelming. That’s why we have put together a detailed guide on how to get a business loan in the UK. 

» MORE: What is a business loan?

Applying for a business loan: step-by-step

While the actual process of applying for a business loan will vary between lenders, you will usually need to:

  1. Decide if you want an unsecured or secured business loan, how much you want to borrow, and for how long.
  2. Compare business loan providers to find the best option for your organisation.
  3. Complete an application form either online or in person, which will include handing over the necessary documents required by the lender, including a business plan.
  4. Wait for the lender to assess your application. This may involve both personal and business credit checks. The lender will then decide whether to offer you a loan and will give you information, such as the interest rate and the amount you can borrow.
  5. If you are happy with the terms of the offer, decide whether to accept the loan.

Can I get a business loan?

Although each lender will have their own borrowing criteria, to be eligible for a business loan you will typically need to:

Depending on the type of business, the lender may check both your personal and business credit scores. Your personal credit score will likely be more important if you are a start up with a limited trading history.

Bear in mind that applying for a loan will leave a mark on your credit report. Before submitting a formal application, you may want to make the most of the many online eligibility checker tools available. These will carry out a ‘soft search’, which will let you see your chances of being accepted for a business loan without affecting your credit score.

» MORE: How do business loans work?

What type of business loan do I want? 

Before you can decide on what business loan to apply for you will need to consider your borrowing requirements. This will include:

The answers to these questions should help inform what type of business loan you want. Broadly, traditional business loans – where you borrow a lump sum of money, and repay it over time, with interest – come in two forms:

Under these two umbrellas come a number of business loans used for specific purposes, such as start up funding.

How much can I borrow with a business loan?

How much you can borrow with a business loan depends on a range of factors, including:

While it varies from lender to lender, the smallest amount you can borrow with a business loan is typically £1,000. The maximum amount is more variable: unsecured loans can be capped anywhere between £25,000 and £500,000, while secured loans can be worth millions of pounds.

Should I apply directly or through a broker?

Once you have decided what type of loan you want, how much money you need to borrow and for how long, you will need to apply for a loan directly from a lender such as a high street bank, or through a business finance broker who will be able to show you the options from different lenders – although may need to factor in any fee or commission.

An experienced broker can also help with the application process and make sure that you have all the necessary documents. They will let you know how long applications are taking with different lenders and can alert you to new products coming on to the market or loans that are about to be discontinued.

What documentation will business loan lenders require?

To process your business loan application, your chosen lender will likely ask for a combination of the following documentation:

Before making your application, make sure you have answered every question on the application form, including all the information asked for clearly marked.

How to compare business loans

Taking out a business loan is a big decision and one that should not be made lightly. Before you apply for or accept a business loan offer, you should make sure that you know:

Your broker, or an online comparison site, can help you compare loans from different lenders so you can make sure you have the right one for you and your business.

About the Authors

Sarah Bridge

Sarah Bridge has been writing about business and finance since 2000. She was formerly Deputy Editor, Personal Finance, The Mail on Sunday and was previously the paper's Leisure Correspondent.

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Connor Campbell

Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The…

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