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Do you qualify for a Small Business Loan?

Published on 16th August 2018 - Last update on 12th September 2018

If you’re a small business owner operating in the UK, raising the funds you need to support investment can be intimidating. Although you may be clear on your short and long-term business goals, deciding how to obtain the necessary funds to bring them to fruition isn’t easy. Like many small business owners, you might not be aware of what funding opportunities are appropriate for your current financial situation, which can become an obstacle in itself. However, by exploring what the Alternative Finance Industry has to offer, you may begin to find that the array of funding opportunities available isn’t as limited as you first thought. So if you’re looking to raise capital for your business, here’s what you need to consider in order to qualify for a Small Business Loan.

What finance solutions are available to small businesses?

Naturally, as a small business owner, you may possess a limited trading history. Although it’s true that qualifying for some products can prove challenging as a result, there are still plenty of finance solutions available which could be of assistance. So if you’re looking to begin work on a key growth project, smooth out uneven cash flow or support an unexpected payment demand, for example, some of the products available are Secured Business Loans, Merchant Cash Advance, Overdraft Replacement and Invoice Discounting.

Looking to invest in the future of your small business? Aren’t sure which finance solutions your business may be eligible for? Apply for a Small Business Loan or learn more about how your business could benefit.

Will I need to give lenders access to my credit profile?

When applying for any finance solution, lenders will usually ask to review your credit score, allowing them to form a better understanding of your current financial situation. As such, they may incorporate into their checks whether you have recent or past CCJs, Accelerated Payment Notices, any outstanding debt (e.g. credit card debt) and a reliable history of resolving debt on time. However, the amount of attention that’s given to your profile when deciding whether or not to offer your business an agreement tends to vary from product to product. For instance, if applying for a Secured Business Loan, your credit rating will be a deciding factor but, on the other hand, a Merchant Cash Advance application relies primarily on the reliability of your credit and debit card transactions.

It’s worth noting that, although possessing an adverse credit rating may not always lead to a rejection, it will affect how much interest your business is charged throughout the agreement. Therefore, if you’re worried about how your credit profile may affect your application or looking to save your business money in the long run, you may wish to generate a credit report with one of the UK’s leading credit agencies: Experian, Equifax, Clearscore or Callcredit. If the report shows up any issues, assess whether there’s anything you can do to improve the situation before placing your application.

Will I need to provide collateral?

This really depends on the on your choice of product. If you’re considering a Secured finance solution, you’ll need to present unencumbered assets (equipment, machinery, vehicles, property or capital which is not subject to an existing finance agreement) as collateral. Although security raises lender confidence and could help you earn a more favourable interest rate, this does, in fact, mean putting assets at risk of repossession should your business default. Meanwhile, products that are Unsecured do not require the use of collateral but can be more challenging to qualify for and lenders may charge more interest on account of the increased risk to them. An exception to this, however, is the Merchant Cash Advance, since lenders tend to focus mainly on your card-based sales.

What documents will I need to provide?

As well as granting access to your credit profile and deciding whether or not to use a product that’s secured, you’ll also need to provide lenders with a variety of documents when placing your application. Although this can vary according to which product you choose to apply for, the most commonly asked-for documents include proof of identity, past and recent bank statements, profit and loss statements, sales reports, collateral documentation and tax returns. These documents are vital for allowing lenders to gain a deeper understanding of how your business trades and where you stand financially. So to improve your chances of success, you should review all of the documents provided to you by the lender before submitting your application. This is because, as well as outlining what documents need to be presented, it will also let you know what format they should be submitted in as well, helping you avoid any unnecessary hold-ups as a result.

Thinking of applying for a Small Business Loan?

Having access to a sufficient amount of capital is crucial to any business, regardless of size or sector. But as a small business owner, acquiring the funds you need to drive your vision forward can be a frustrating endeavour. With so many different finance solutions to choose from, it is easy to feel lost and confused by what the UK lending landscape has to offer. But rather than using your own funds or waste precious time trying to apply for a product that may not be suitable, there is another way to acquire the funds your business requires.

At Rangewell, we’re an Access to Finance specialist who’s mapped over 400 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you through the application process. So if you’re looking to raise funding for your business but aren’t sure which way to turn, apply for a Small Business Loan today or find out more with Rangewell.


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David Harrison

David Harrison

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