The first step is being really clear on why you need the money, how much you need to borrow and how quickly you need it. You will also need to calculate how much you can afford to repay each month.
By considering this in detail, it will help you to be clear in exactly what your position is and will help you target your search for finance.
Finding The Right Type Of Loan For You
Once you’re clear on the above information, you’re in a position to start your search for the perfect product. Before considering individual products and rates, it’s important that you first decide on the type of funding that’s right for you.
Although a business loan might be ideal, there are other products to consider before going ahead. By taking the time to decide this upfront, it will avoid wasting time and money arranging the loan, only to refinance it shortly after.
There are a number of other products to consider before taking a business loan, including:
- Merchant cash advances
- Business overdrafts
- Asset finance
- Commercial loans
- Invoice finance
- Revolving credit facilities
Each option has its own unique pricing structure and repayment methods and will be right for different circumstances.
Give Your Application The Best Chance Of Success
As business loan lenders tend to judge each application on its own merits, it’s important that the application is well-presented.
Where lenders need information to be free-written onto forms or online portals, ensure that it is easy to understand. Many lenders will base their lending decision on the information input, so ensure it presents your business honestly, but in the best possible way.
The details given are important, it’s not just a form filling exercise, so make sure you present the picture clearly to a person who has never heard of your business before.
The Documents Needed To Apply
When you apply for a business loan, the lender will require certain information in order to underwrite your loan fully. Until the loan is underwritten, the lender won’t release the funds, so it’s important that the information is given to the lender as early as possible in the business loan application process. The standard documents required are:
- Two Years’ Accounts: The lender will need to check two years’ accounts to assess affordability. They will check the net profit to ensure the repayments are affordable for the business.
- Three Months’ Bank Statements: These are used to create a picture of current cash flow and account conduct. Three months’ bank statements are required for almost every application, so it is worth getting them together upfront, to avoid delays further down the line.
- ID & Address Verification: Proof of ID and address verification is a standard requirement and is required for all finance applications. Copies of the documents are acceptable, however, these must be certified as a true copy of the original by a suitable person, such as a solicitor or FCA regulated finance broker.