HOW TO GET A BUSINESS LOAN

If you’re looking to take your business to the next level, a business loan is a secure financial way to reach that milestone. From small enterprises to corporate companies, any industry can apply for financial support. But how? This article outlines everything you need to know about getting a business loan.

What is a Business Loan?

A business loan is a way for commercial companies to borrow money that’ll help their company. This differs from an individual loan as business loans are often for larger amounts. They are issued by a bank or lender with set loan terms to determine how much your company can borrow. As well as your monthly repayment amounts, time period and business loan interest rates.

Are There Different Types of Business Loans?

Yes, there are two types of business loans:

Secured – these loans are attached to existing assets such as premises, vehicles or machinery. If your repayments aren’t met, the assigned asset will be taken as payment. With this added security for the lender, they will often offer higher amounts with lower interest rates.

Unsecured – this is a popular option for enterprises that require smaller amounts as there’s no asset needed as a guarantee. This is a good option for small businesses that don’t have valuable assets.

Once you know which option is best for you, there are steps you need to consider before applying for your loan.

Check Your Credit Score

The best business loans tend to be offered to businesses with good credit. However, there are still deals for those with ‘bad’ credit, and there’s always time to improve yours. Checking your business credit score is worth doing before applying for a financial loan. It’ll give you a clear understanding of where your finances are so you can confidently answer any questions during your loan application.

Review Your Accounts

A healthy business has a thorough understanding of what money is coming in and out of their accounts. As well as an awareness of any outstanding debts including the repayment costs, deadlines, interest rates etc. If these debts can be paid off before applying for a loan, we’d recommend trying to do this too.

Know the Reasons for Your Loan

A big part of your loan application is to explain why you’re looking for financial support and how the money will be invested. It’s important you know why you’re applying for a loan: how much money you’re requesting, how the money will be spent and the return you expect from this investment. As well as your expectations on the repayment amounts and terms of the loan.

Which Documents do I need for a Business Loan Application?

These can vary depending on your industry and the type of loan you’re applying for. Here at Busby Finance, we can advise you which documents you’ll need but most commonly, you’ll be asked to present the following:

• Up-to-date business accounts
• Bank statements
• Profit and loss statements
• Tax returns
• Business plan
• ID

Business Loan Comparisons

Before you settle on one type of loan, research different lenders and banks, as well as business loan rates and terms. This’ll help you find the best business loan for your circumstances. This can be a time-consuming process but a worthwhile one. Alternatively, contact the team at Busby Finance who can source the right options from across the market.