Am I eligible for a business loan?

Eligibility for business loans is incredibly diverse, as every business is in a different situation and at a different part of its life. There is no hard-fast rule too what sort of businesses will be eligible for a business loan and at what interest rates. While there are no rules, there are however factors that will influence a lender into their decisions and also at what price the business will need to pay for the finance.

These factors usually include:

•       Yearly Turnover – How secure is it?
•       Loan size – Most lender won’t lend above 25% of a company’s turnover.
•       Is your business profitable? A lot of lenders will only lend to profitable businesses.
•       Affordability – If we lend you what you want, can you afford to pay us back with your current turnover? This will be worked out through a companies bank statements.
•       Filed Accounts – These will tell the lenders what your balance sheet looks like as a business and if you have other debts/liabilities you need to pay.
•       Trading History – Most lenders love businesses that have traded over 2 years.
•       Company Credit History – has the company got a good credit score? Have they got any CCJs or any other types of unpaid creditors that they are not paying back what they have promised?
•       Directors Credit history – Are the directors good with money? Do we trust that the directors will pay the money back as leaders of their companies? Also, will their personal guarantees be worth anything? Again, CCJ’s bankruptcies etc… play a huge part in decision-making processes.
•       Is your business based in the UK?
•       Assets – Does the company own any assets to lend the money against? Again, while this is not compulsory, it is a factor that will allow lenders to lend larger amounts.
•       Homeowners – Are the director’s Homeowners? While this isn’t always compulsory, it will allow a lender to lend more money, as there is more security available if the company stops paying back the loan.
•       Risk – At the end of the day it all comes down to risk. The lender thinks, “What are the chances of me getting my money back?” The higher the risk the higher the cost, the lower the risk the cheaper the loan. It is that simple.

The easiest way to see if you are eligible is to get in touch. Start an application and one of our brokers will quickly tell you whether you are eligible and what lenders it is worth speaking to.