The short answer
- Decide the amount and what it's for before you approach anyone. A clear purpose makes every other step easier.
- Lenders mainly look at how long you've traded, your turnover, your bank statements and the credit history of the business and its directors.
- Having your documents ready is the single biggest thing you can do to speed things up.
- Compare the total cost, the security asked for and any personal guarantee, not just the headline rate.
Getting a business loan in the UK is mostly about preparation. Lenders make their decision on a handful of things, and the businesses that get funded quickly are usually the ones who knew what those things were before they applied.
This guide walks through the steps in order.
1. Working out how much is needed, and what for
Start with the purpose. Buying stock, covering a quiet season, replacing a van, refitting premises and bridging a delay in customer payments are all different needs, and some suit different kinds of finance better than a standard loan.
Then there's the amount. Many business owners start from what the plan actually needs, because every extra pound borrowed is a pound repaid with interest. How much cushion is useful is a decision for each business, and an accountant can help you think it through.
2. Checking what lenders look at
Every lender sets its own rules, but most look at the same core things:
- Time trading. Many want a year or more of trading history.
- Turnover. Your recent sales show whether the business can support repayments.
- Credit history. This covers the business and, for most small companies, the directors personally.
- Existing borrowing. Lenders want to see that new repayments are affordable alongside what you already pay.
If you're a limited company, your filed accounts and Companies House record are part of the picture.
3. Choosing the type of finance
A traditional loan isn't the only option. The main options for UK businesses are:
- Unsecured loans, where nothing is pledged against the loan. See secured vs unsecured business loans.
- Secured loans, backed by property or other assets, which can mean larger amounts and longer terms.
- Merchant cash advance, repaid from a share of your card takings. See how a merchant cash advance works.
- Invoice finance, which releases cash tied up in unpaid customer invoices.
- Asset finance, which spreads the cost of vehicles and equipment.
4. Getting documents ready
This is where most delays happen. Lenders typically ask for:
- recent business bank statements, often the last six months
- your latest filed accounts, or management accounts if they're more recent
- ID for the directors or owners
- proof of address
- details of any existing finance
We've put the full list, and why lenders ask for each item, in what documents you need for a business loan. For what affects timing, see how long a business loan takes.
5. Comparing offers
The headline rate is only part of it. When you compare, look at:
- The total you'll repay, not just the monthly figure.
- Fees. Arrangement fees, early repayment charges and broker fees all change the real cost, and any fee should be confirmed to you before you proceed.
- Security. Is the loan secured on property or assets? If so, those could be at risk if you can't repay.
- Personal guarantees. Many small-business loans ask a director to guarantee the debt personally.
- Repayment shape. Fixed monthly payments suit steady income. A repayment that moves with your sales can suit a seasonal business.
6. Applying and answering questions
Details that match your documents exactly tend to avoid delays. Mismatches in names, addresses or figures are a common cause of delay. When a lender comes back with a question, answering it the same day keeps the application moving.
7. Reading the agreement before signing
The things to look at are the amount, the term, the total repayable, the security and any guarantee. Anything unclear is worth asking the lender about before signing, and a solicitor or accountant can help with the detail. Once the funds arrive, keep a note of the repayment dates and any early repayment terms.
Where a broker can help
A broker such as Kapitl Partners doesn't lend its own money. We introduce your business to lenders on our panel, so one set of details can be considered by several lenders instead of you applying one by one. It's free to check what's available, and any fee is confirmed before you proceed.
If you'd like to see what's on offer for your business, you can check your options in a few minutes with no obligation.
Common questions
- What is a business loan?
- A business loan is money lent to a business that is repaid over an agreed period, usually with interest or fees. It can be secured on property or other assets, or unsecured.
- How long does it take to get a business loan in the UK?
- It depends on the lender and the product. Some specialist lenders can decide within days once they have your documents, while larger or secured loans take longer because of valuations and legal work. Having your paperwork ready is what saves the most time.
- Can I get a business loan with bad credit?
- Sometimes. Some lenders will look at the strength of the business, its recent turnover and any security you can offer, not only the credit score. The cost is often higher, and some products may not be available.
- Do I need to have been trading for a certain length of time?
- Many lenders ask for a minimum trading history, often a year or more, though requirements vary. Newer businesses may have fewer options.
Check your options
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Check my optionsThis guide is general information for UK businesses. It is not financial advice, and business funding must be repaid. Kapitl Business Finance Limited is a commercial finance broker, not a lender; all funding is subject to eligibility and credit assessment.