Business loan requirements explained

Line up what you need for easier approval on your next small business loan.

Business loan requirements What you'll need to provide
How to get a business loan Compare loans now

How do business loan requirements work?

Unlike most personal loans, business loans generally involve more risk for the lender, resulting in stricter eligibility criteria and longer applications. You’ll typically need to provide some key financial details to complete your loan application, and the application process can often take weeks.

What eligibility criteria will I need to meet for a business loan?

The good news is that business owners today have many more options when it comes to finding funding than they did years ago.

Here is a list of what lenders are likely to look at when considering your business loan application:

  • Credit score. Lenders will look at your business credit report when you apply for a business loan. If your business is relatively new, it might not have much of a credit history, in which case, the lender might look at your personal credit score too.
  • Age of your business. To qualify for most small business loans, you’ll need to be in business for at least 6 months. However, some banks might require you to be in business for at least 2 years. You could consider a startup loan if your business is less than a year old.
  • Annual revenue. Lenders often have minimum annual turnover requirements to be considered for a loan.
  • Personal debt-to-credit ratio. It sounds counterintuitive, but some lenders will consider too much personal credit a risk — you could turn to that credit if your business runs out of money.
  • Net operating income. To be sure that you can meet repayment requirements, some lenders look for a total income that’s at least 1.25 times greater than your total expenses.
  • Potential collateral. If you’re applying for a secured business loan, you may need to use an asset — equipment, inventory or property — to back the loan against default. If you’d prefer not to provide collateral, you’ll need to compare unsecured business loans.

Personal requirements

There will also be a range of basic requirements that both you and your business will need to meet to be eligible for a loan:

  • Be at least 18 years old
  • Be a UK resident
  • Be a UK-based business
  • Have a UK bank account

What information do I need to provide with my application?

Larger financial institutions, such as high street banks, might require you to make an appointment to complete an application in person. However, if you apply with an online lender, you’ll be able to complete the application online.

You’ll typically need to provide the following information as part of your application:

  • Your full name and contact details.
  • Your full business name, address, phone number and email address.
  • Your industry and date you started your business.
  • The annual revenue of your business.
  • Your personal bank account information and income earned.
  • How much you’re looking for in funding.
  • How you intend to use your loan.

What documents will I need to provide after I apply?

After applying, you might be contacted by the lender to go through your application. As part of this, you might be asked to provide or upload certain documents, such as:

  • Proof of ID and address. You’ll need to provide proof of ID (passport, driving licence etc) and proof of address (utility bill, bank statement etc.).
  • Bank statements. Lenders typically ask to see two years of your business’s bank statements to verify your financial status.
  • Revenue statements. Also called profit-and-loss statements, lenders often require a recent year-to-date revenue statement accompanied by statements from the past two years.
  • Balance sheets. A good indication of your business’s financial standing, these statements list your assets, capital and any liabilities.
  • Business and personal tax returns. The younger your business, the more likely a lender will require your personal tax returns as part of your application.
  • Your personal financial details. Lenders may want to see your full personal assets and liabilities, including your home, credit cards, loans, cars and other investments.
  • Business registration documents. You might also be asked to provide evidence that your business is a legal entity. This could be through a certificate of incorporation from Companies House or evidence of being registered with HMRC.
  • Business plan. Not all loans require one, but a solid plan can showcase your company and team, increasing your overall credibility.

To avoid delays to the application process, it’s sensible to gather together the above documents before you apply for a business loan so you’re ahead of the game.”

Rachel Wait, financial journalist

Which of these eligibility criteria is most important?

It’s hard to say which factor is the most important when it comes to your business loan, with each lender weighing criteria differently.

Typically, the very best rates on unsecured loans will be reserved for businesses and directors with excellent credit, while specialist lenders serving other sectors of the market are likely to look more at how profitable your business is.

Regardless of what type of business finance you apply for and which lender you apply to, your loan must be affordable when looking at your business’s income and outgoings.

Common business loan application mistakes

  • Making major changes to your business. Now may not be the best time to take big risks. Lenders prefer stability.
  • Forgetting to submit a comprehensive business plan. This is not only a requirement for many business loans, it’s also where you get to make a case for yourself.
  • Not paying attention to your credit score. Your credit score is often the first metric lenders check. If it’s not up to scratch, your application could be rejected.
  • Not checking the eligibility criteria. There’s no point applying for a loan that you won’t qualify for.
  • Missing deadlines. It doesn’t look good if you can’t get your potential lender the documents they ask for on time.

Bottom line

Depending on the size of your business and desired loan, you may qualify for more than one type of financing from a variety of lenders. Keep in mind that traditional banks often have stricter requirements and application processes. Online lenders, on the other hand, can be more flexible and will often offer competitive rates and fees.

Compare business loans

Table: sorted by loan terms, promoted deals first

Name Product Finder Score Loan type Loan amounts Loan terms Turnover/trading criteria Key benefit
iwoca Flexi-Loan
3.8
★★★★★
Variable rate Unsecured loan
£1,000 to £500,000
1 to 24 months
£25,000 annual turnover,
6 months trading
Your business loan rate varies based on your circumstances. Interest applies only to your outstanding balance on days you use the loan – there are no early repayment fees. Limited companies only.
Representative example: Borrow £10,000 over 12 months at a rate of 40% p.a. (variable). Representative APR 49% and total payable £12,294.
Nest Unsecured Business Loan
4.0
★★★★★
Fixed rate Unsecured loan
£10,000 to £5,000,000
No specified loan terms
£200,000 annual turnover,
12 months trading
Portman Finance Business Loan
3.9
★★★★★
Fixed or variable rate Asset finance loan
£10,000 to £2,000,000
3 to 72 months
£100,000 annual turnover,
1 year trading
Representative example: Borrow £30,000 over 3 years at a rate of 7.26% p.a. (fixed). Total payable £36,537.84 in 36 monthly repayments of £1014.94.
Tide Business Loan
4.2
★★★★★
Fixed or variable rate Asset finance loan
£1,000 to £20,000,000
1 month to 72 months
N/A annual turnover,
N/A trading
Connect your business bank account and gain access to business loans (Terms & Conditions apply).
Funding Options Unsecured Loan
4.5
★★★★★
Unsecured loan
£1,000 to £20,000,000
12 to 72 months
£5,000 per month annual turnover,
6 months trading
Representative example: Borrow £50,000 over 24 months at a rate of 7.63% APR. Monthly repayment of £2,252.94 and the total amount payable is £54,070.56.
mcl finance Small Business Loans (formerly mycashline)
4.0
★★★★★
Fixed rate Unsecured loan
£5,000 to £100,000
1 month to 24 months
£15,000 monthly annual turnover,
12 months trading
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We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
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To make sure you get accurate and helpful information, this guide has been reviewed by Rachel Wait, a member of Finder's Editorial Review Board.
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Chris Lilly is Head of publishing at finder.com. He's a specialist in personal finance, from day-to-day banking to investing to borrowing, and is passionate about helping UK consumers make informed decisions about their money. In his spare time Chris likes forcing his kids to exercise more. See full bio

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Chris has written 612 Finder guides across topics including:
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