The next steps
If you’re not sure what interest rate or term to input, why not head over to our business loan comparison page and compare current deals.
Once you’re comfortable with your chosen product and loan amount, why not apply online to get the process moving straight away.
Our job is to ensure you secure the lowest possible rate and we’re here to help. If you have any questions or want help in selecting your product, enquire online or call us on 01922 620008 now.
We’ll talk you through all your options and let you know exactly what your costs will be.
Alternatively, read on below for information on what should be input into the business loan calculator above for the most accurate results.
How to calculate business loan eligibility
As with any type of finance, each lender has their own way of assessing whether you’re eligible for a given loan.
The maximum loan available to your business depends on a number of factors and will vary greatly depending on which lender is the most suitable for your business. The main factors that will influence your maximum loan are:
- Accounting information (turnover and net profit)
- The ability to manage the monthly repayments comfortably
- Credit history
- How the loan will change the trading position of the business
- Bank account conduct
Unsecured business loans generally have a maximum loan size of £500,000. Although, for the right application, lenders will consider more.
Where a loan is taken out and secured against property, this is known as a secured business loan. The maximum amount for secured business loans is generally £1,000,000 but much larger loans would be granted to established and profitable businesses.
An experienced commercial finance broker will be able to quickly tell you how much your business would be eligible to borrow based on your trading position.
What documents will be required?
Before issuing your loan, the lender will usually want to see some important documents to assist with the underwriting process. Although this differs between lenders, you will generally be asked to provide the following:
- Business bank statements – these will be used by the lender to check your account conduct and general cash flow management.
- Financial accounts – These allow the lender to ensure that the new loan would be affordable, by checking turnover, net profit and any trends visible in the accounts.
- VAT returns – Where the borrowing business is VAT registered, VAT returns will usually be requested. These returns are usually issued quarterly, with 2-3 quarters generally being required.
- Details of the Directors and major shareholders – This will allow the lender to understand the people behind the business.
- Proof of ID and address – These are required for each Director and major shareholder for AML (Anti Money Laundering) purposes.
Interest rates start at 4.3% for the lowest risk applications. When calculating your loan repayments, an interest rate of 8-12% is usually realistic.
For a company whose credit history is poorer, or have a history of previously bounced payments, a rate of 12-18% can be expected.
The interest rate charged can vary a great deal depending on your risk profile. Each lender will have their own method of calculating this. If your credit history is poor, or you are perceived as a high risk, the interest rate charged will usually higher.
It’s important that the total cost of credit is considered, rather than just the headline rate. Arrangement fees and other costs can dramatically increase the total cost of credit.
When calculating the monthly repayments on an unsecured business loan, a term of 1-5 years is usually realistic. This term length is common and therefore any agreement between these two figures is realistic, as long as the monthly cost is affordable.
For secured loans, terms of up to 10 years are possible, so calculate the cost based on affordable monthly repayments up to this figure.
Speed of completion
Unsecured business loans are usually able to complete in 1-2 weeks. Secured business loans usually take a little longer and the funds can generally be released in around 2-3 weeks.
Our team of advisors and processing staff work closely together to ensure your application is always completed quickly. As a result, we can ensure no time is lost between application and completion to allow your funds to be drawn down as quickly as possible.
At ABC Finance, we have access to other business borrowing products that allow funds to be drawn down on within a few days. If you require funds urgently, speak to an adviser and we will start work immediately on your application.
We offer business loans on the following basis:-
- Loans from £10,000-£500,000
- Rates from 4.3%
- Loans for UK Ltd Companies and LLPs
- Loans for sole traders £25,001-£500,000
Compare Business Loan Lenders & Apply Online
To find out more, or to get a free personalised quote, enquire online now or call us to talk to an adviser. Our team of experts will be able to assess your application quickly and provide you with full written terms.