Documents to gather
- Last two years of filed accounts
- Up-to-date management accounts
- Six months of business bank statements
- Aged debtor and creditor reports
- ID and address for all directors
- Details of existing borrowing and security
Questions lenders will ask
- What is the money for, and how does it improve the business?
- How will the loan be repaid?
- What happens if trading dips?
- Who are your main customers and suppliers?
Choosing the right product
Match the finance to the need. Use asset finance for equipment that will last years, invoice finance for cash tied up in customer invoices, and a term loan for projects with a clear payback. Using short-term money for long-term investments, or the reverse, causes cash flow strain.
Personal guarantees
Many lenders ask directors to guarantee unsecured business loans. Read the guarantee carefully, take independent legal advice, and ask whether it can be capped.
Common questions
How long does a business loan take?
Unsecured facilities can be agreed within days. Secured loans take longer because of valuation and legal work.
Does my personal credit matter for a business loan?
Yes, especially for small companies and sole traders, and wherever a personal guarantee is involved.
This guide is general information, not personal financial advice. If you are worried about debt, free help is available from MoneyHelper, StepChange and Citizens Advice.