7 Steps
04 Apr

7 Steps to Applying for a Business Loan in the UK


In the UK, you can apply for a business loan through your bank, through an online lender, or directly from the government. If you’re looking to grow your business into something bigger, getting a business loan can be one of the best ways to do it! 


However, there are many different kinds of loans and many steps to take in order to get one — especially if you’re looking to get one from the government. 

Here are 7 steps to applying for a business loan UK that will help you successfully get approved with as little fuss as possible.


Step 1: Research


Before applying for a business loan UK, do your research. The more you know about business loans in general and about any requirements that apply specifically to your business, bank or credit union, the more likely you are to be successful. 


This is also an excellent time to work with advisors such as accountants or lawyers who can help you determine what size loan you might need and make sure everything on your application is accurate. 


You should also spend some time researching local banks or credit unions and deciding which institutions fit your needs best.


Step 2: Find out your credit score


Now that you have your business idea, it’s time to find out if banks and credit unions will be willing to lend you money. They’ll want to know if you are likely to be able to pay them back, so start by doing some research on your own about what type of credit score is needed for small business loans UK. 

The better your credit score, the more lending options you’ll have. You can also get an estimate of your credit score from sites like Credit Karma or Experian. If you don’t already have one, now might be a good time to apply for a business credit card with a high limit (at least $3,000) in case there are any unexpected expenses down the road. 

Also, remember that business-related items—like laptops and cell phones—can affect your personal credit score as well. Once you’ve completed these steps, you should then contact several lenders directly and ask about their specific requirements when applying for business loans in the UK.


Step 3: Decide what you need and how much you can borrow


The government, as well as independent financial institutions, offers loans for businesses of all sizes. Businesses can borrow from £5,000 to more than £1 million. The amount of money you borrow will be based on what you need and how much you can prove that you’ll be able to pay back in monthly instalments. 

A good rule of thumb is 30% or less of your gross profit—if you take out too much cash, it could affect your company’s ability to operate. Business owners should also consider their personal credit history when applying for business loans UK. If they have a poor credit score, they may not qualify for some types of financing.


Step 4: Get quotes from lenders


If you’re looking to start or grow your business, applying for a business loan can be an effective way to secure financing. While every lender has its own lending criteria, as well as its own process, below are some basic steps involved in getting started with most lenders.

The beauty of applying for a business loan in the UK is that you’ll likely have more choices than ever before. To find out what options are available to you, start by visiting your local bank branch or website and looking at its loan offerings. 

Another good place to start is online lenders such as Finance Hub, which specializes in helping small businesses get access to financing quickly in the UK. They are offering multiple business loans in the UK with a fast approval facility.

This can be especially important if your plans are just starting to take shape and you don’t want delays while getting started. Once you have some quotes from different lenders, it’s time to narrow down your list.


Step 5: Compare different loans


It’s hard to know which is best, so it’s important that you understand what each loan has to offer. Compare different loans, and decide which one best fits your business needs. 

Here are some questions you might want to ask yourself: How much will I need? What kind of security is required? Is there a maximum amount available? Is an intermediary required in order to apply for funding? Are any fees involved? Will I be able to pay back my loan early if needed? Will my business be eligible for any special offers or discounts based on my industry or location? When can I expect a response from my lender (and how long does it take)? 

The more research you do upfront, the better prepared you’ll be when applying for a business loan. And remember—don’t hesitate to ask questions!


Step 6: Negotiate with the lender


Be prepared for lengthy negotiations. Lenders are in business to make money, so you should expect them to haggle over interest rates and repayment terms. Before you contact lenders, make a list of your negotiation goals and strategies (such as requesting interest-only payments). 

Determine what makes sense when negotiating with each lender. Some banks may be willing to work with you if your business is only starting out or if it doesn’t have a good credit history, but others might not budge on their initial offer. 

When you negotiate, remember that there are other businesses looking for loans at any given time. Don’t get discouraged if one bank turns you down; keep looking until you find one that works with your business needs.


Step 7. Finalize and apply for your loan


Once you’ve done your research and determined that your loan provider of choice is right for you, it’s time to apply. Make sure you have all of your financial documents in order, check on any special application requirements, and get ready to get approved! 

The final step is easy: Congratulations—you’re officially approved! Now that you know how to start a business from conception to execution, it’s time to finally launch. What are you waiting for? Go out there and make your business dreams come true!