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Business Loans
Getting a business loan in the UK means proving your business can afford to repay it, choosing the right type of loan, and having your paperwork ready before you apply. This guide walks through each step, from working out how much to borrow to what happens after you submit your application.
Getting a business loan in the UK generally follows the same sequence, whatever type of lender you eventually choose.
Most limited company loans also require a director's personal guarantee, and speaking to an advisor before you apply can help you avoid a wasted application to the wrong lender.
This guide covers how to get a business loan UK lenders will consider approving, from working out how much to borrow through to what happens after you submit an application. A business loan is a lump sum a bank, online lender or other finance provider lends to a business, repaid with interest over an agreed term - it can be used to cover a cash flow gap, buy equipment, fund growth or bridge a short-term need. Unlike a personal loan, the borrowing is assessed against your business's finances rather than yours alone.
Most business loans to limited companies are commercial lending, which sits outside the consumer credit protections that apply to personal borrowing. That's one reason it's worth understanding the process properly before you apply, rather than assuming it works the same way as a personal loan. You can check any advisor's authorisation on the Financial Conduct Authority register. For a wider look at how business loans work more generally, see our full business loans guide.
The rest of this guide focuses on the practical steps: what to check before you apply, which documents to gather, how to choose between a bank, an online lender and a broker, and what happens once you submit an application.
Lenders read a business loan application very differently to a personal one. They're not just checking whether you can afford the repayments - they want to see a clear purpose for the money and evidence your business can service the debt from its own cash flow.
Not sure where to start?
Speak to an advisor about which type of business loan fits your circumstances. We compare a wide range of lenders so you don't waste an application on the wrong one.
Whether you're a sole trader or a limited company director, applying for a business loan usually follows the same seven-step sequence. Some loan types are unsecured, while others - like certain secured business loans - are secured against your commercial or residential property. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it, so it's worth understanding which category your preferred loan falls into before you apply. Working through the steps below in order helps you avoid a wasted application and gives you a realistic idea of what a lender will ask for.
How it works
Work out how much you need and why
Lenders want to see a clear purpose behind the amount you're asking for, whether that's covering a cash flow gap, buying equipment or funding growth, rather than a round number picked without justification. Borrowing an amount that's tied to a specific need, and that your income can realistically service, also makes your application easier for an underwriter to assess.
Check your eligibility
Most lenders look at your trading history, annual turnover, and both business and personal credit history. Newer businesses aren't automatically ruled out, but eligibility criteria, and the loan types available to you, tend to differ for pre-trading startups compared with businesses that have two or more years of accounts.
Choose the right type of loan
Options include unsecured business loans, secured business loans against property, the government-backed Start Up Loans scheme for newer businesses, and asset finance for equipment or vehicles. Most unsecured loans to a limited company also require a director's personal guarantee, so it's worth understanding what you're personally signing up to before you choose a loan type.
Gather your documents
Have your paperwork ready before you start an application rather than scrambling for it once a lender asks. The document checklist below sets out exactly what most lenders want to see and why, so you can prepare everything in one go.
Compare lenders: bank, broker or online lender
Decide whether you'll approach your own bank, apply directly to an online lender, or use a broker to compare a wide range of lenders in one go. Each route has trade-offs, covered in full further down this page, so it's worth taking time to compare the best business loan lenders before you commit to one.
Submit your application
Most applications start with a soft credit search, which doesn't affect your credit score, so you can get an idea of your options before committing. If you proceed, the lender then runs a full credit check and may ask you to sign supporting declarations, including a personal guarantee where applicable.
Find out what happens after you apply
Some online lenders give an initial decision within a day or two, while bank and secured lending can take several weeks once affordability checks, underwriting and any security are worked through. If a lender asks for more information, respond promptly - a slow reply is one of the most common reasons a straightforward application stalls.
Exactly what you need varies by lender and loan type, but most business loan applications ask for a broadly similar set of documents. Having these ready before you apply speeds up the process and reduces the chance of delays once you've submitted your application.
Requirements vary considerably between lenders and loan types - a bank may want two full years of accounts, while some online lenders will work from bank statements alone. That's exactly why comparing across a panel of lenders can help: rather than gathering paperwork to fit one lender's specific checklist, an advisor can point you toward the lenders most likely to work with the documents you already have.
None of the steps below guarantee a lender will approve your application, but each one removes a common reason applications get delayed, declined, or offered on worse terms than a business might otherwise get.
Boost your chances
There isn't a single route that suits every business - the right choice depends on your circumstances, how established your business is, and how quickly you need funding. Here's how the three main routes compare.
None of these routes is automatically better than the others - a well-established business with a strong relationship at its bank may do just as well applying directly. Where a broker adds the most value is when you're not sure which loan type suits you, or when you want to avoid multiple separate applications to work that out for yourself.
Being declined for a business loan is more common than most applicants expect, and it isn't the end of the road. The most useful first step is understanding exactly why a lender said no, since that decides what to try next.
Ask the lender for the specific reason behind the decision - common causes include affordability concerns, gaps or issues in your credit history, or missing documentation, rather than an outright refusal on principle. Addressing that specific issue, or applying to a different type of lender better suited to your circumstances, is usually more productive than reapplying to the same lender with an identical application.
If you're considering a secured business loan after an unsecured decline, it's worth weighing the risk carefully. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Comparing that risk against unsecured alternatives, such as bad credit business loans, is often worth doing before you commit.
Speaking to an advisor gives you access to a wider range of lenders in one conversation, with no pressure to proceed, which can help you avoid repeating the same declined application with a different lender's name on it. If you're feeling overwhelmed by the process, worried about a personal guarantee, or concerned about wider business debt, MoneyHelper offers free, independent guidance at moneyhelper.org.uk or on 0800 138 7777, and Citizens Advice can help too.
A business loan is only one type of finance, and it isn't always the right fit - if you'd like to see how it stacks up against other borrowing, you can compare all our loan types in one place.
Common questions
It depends on your business's trading history, turnover and credit profile rather than being uniformly hard or easy. Established businesses with clean accounts and a clear purpose for borrowing tend to have more options, while newer or lower-turnover businesses may need to consider specialist lenders, asset finance or the government-backed Start Up Loans scheme instead.
There's no single turnover figure that applies across all lenders. Many mainstream unsecured lenders look for at least six months to two years of trading history and turnover in the tens of thousands of pounds, but some online lenders and the government-backed Start Up Loans scheme will consider pre-trading or very early-stage businesses too.
No business loan can be approved without checks, whatever a lender's marketing might suggest. Asset finance and the government-backed Start Up Loans scheme are often more accessible for newer or asset-light businesses, since they're assessed against the asset's value or a wider set of criteria rather than trading history and turnover alone.
No single bank offers universally easy approval - each lender applies its own eligibility criteria based on your trading history, turnover, credit history and existing banking relationship. Rather than approaching one bank speculatively, comparing a wide range of lenders, including banks, online lenders and specialist providers, gives a more realistic view of where you're likely to be accepted.
Timescales vary by loan type and lender. Some online lenders give an initial decision within a day or two of a completed application, while bank loans, secured business loans and asset finance can take several weeks once affordability checks, underwriting and any security arrangements are worked through.
Yes, though your options are narrower than for an established business. The government-backed Start Up Loans scheme is designed specifically for pre-trading and early-stage businesses, and some asset finance and specialist lenders will also consider a strong business plan and personal credit history in place of trading accounts.
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Business Loans
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