Apply now

How to apply for a Commercial Loan

Published on 10th May 2018 - Last update on 8th January 2019

Got a business project that you wish to get started on, but lack the necessary financial support? Then why not apply for a Commercial Loan? Commercial Loans are designed specifically for business use, and cover a number of different business finance products and packages, ranging from Small Business Loans, Secured Loans, Unsecured Loans, Revolving Credit Facilities and Working Capital Finance to Asset Finance and Invoice Finance. However, with so many products to choose from, it’s easy to feel lost and overwhelmed. So, if you’re looking for a Commercial Loan but don’t know where to begin, here are a few tips that can help you acquire a suitable finance solution for your business’ needs.

Why does my business require a Commercial Loan?

Before pursuing a Commercial Loan, you must be certain about why you require finance in the first place and whether it’ll add value to your business. Does your business require new equipment, are the funds to help purchase property, more technology or to provide support during low trading periods? By identifying exactly what your business needs, you’ll be in a stronger position to focus your search on specific products which are aligned with your goals.

Want to get started on a long-awaited business project? Or are you in need of more cash? Apply for a Commercial Loan or find out more about how your business could benefit!

How much money does my business need?

Once you’ve decided what aspect of your business requires the funding, you’ll then need to work out how money you need. A common mistake that many business owners make is not borrowing enough. As well as causing your project to stall, it may lead to you needing to acquire further finance or dip into your capital. Plus, being clear on how much money your business needs will help you decide which finance solutions can offer you the necessary support. Whilst some products offer access to a set amount of funding, other Commercial Loan solutions possess no credit limits, but are determined by other product-specific factors. (for example, Invoice Finance uses the equity stored in your unpaid business-to-business invoices.)

What’s my business’ current financial situation?

Another important aspect to consider when sourcing a Commercial Loan is the current financial situation of your business. Although the necessary criteria for applying for a Commercial Loan can vary between different products and lenders, decision-makers will generally want to assess your business’ credit score, debt to income ratio, trading history, cash flow and Industry specific risk assessments (or, Standard industrial classification of economic activities (SIC). This allows you and any potential lenders to determine your business’ financial performance and assess whether you can afford the agreement or if another finance solution would be more appropriate. So, although retaining a strong credit profile is the goal of every business owner, you’ll still be able to qualify for finance with a weak credit score, but the number of solutions available will be restricted as a result.

Will I need to provide collateral for a Commercial Loan?

This depends on the type of Commercial Loan you’re looking to apply for. If the product is Secured, you will need to provide collateral for the agreement in the form of valuable equipment, machinery, vehicles, property to intangible assets. Ultimately, this puts the assets that you put forward at risk of repossession should your business fall behind in the product’s repayment scheme. Meanwhile, Unsecured Commercial Loans don’t require you to present security. However, although there are some exceptions, these types of agreements can be much harder to acquire if your business has a weak credit score.

What documents will Commercial Loan lenders require?

Although this can vary across products and different lenders, you may be required to submit a range of financial documents when applying for a Commercial Loan. This helps lenders to gain a thorough understanding of how your business operates, whether you have any existing debt and how well your business is growing. As such, it generally helps if you find out what documents you’ll need to provide in advance to avoid any delays. Some of the most common documents that lenders may ask for can include proof of identity, proof of address, recent and past bank statements, latest tax returns, Balance Sheet records, profit and loss statements and audited financial records for at least 2 years.

In need of a Commercial Loan?

Making sure that your business has everything it needs to progress and reach new heights can be frustrating. As well as deciding what to prioritise and which direction to take, you need to consider your finances. If you lack the necessary funds or you’d rather not risk your business’ financial well-being, you could explore the benefits of a Commercial Loan. So no matter the project or how much money you need to get the job done, applying for a Commercial Loan could be the solution you’re looking for. If you’ve got a project you want to get going or you need a capital injection after a previous finance agreement, apply for a Commercial Loan today or find out more with Rangewell.

Share this article

Discover your range of finance. Every type of finance for every type of business.

Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.

Find Funding
David Harrison

David Harrison

Content writer
By using our services, you agree to Rangewell's Cookies Policy.