What is required to get a small business loan?


What is required for a small business loan depends on a number of different factors, and the application requirements can vary depending on the lender you choose. There is no universal standard for the application process. However many lenders will require similar sorts of information from you and use similar data to inform their decisions. It’s best that you understand the types of things lenders often look for when assessing small business loan applications before you make one. This ensures you’re able to put your business in the best possible position to be successful in your application before you even apply. Ultimately, knowing what you need to get a small business loan means a faster application process and quicker access to funding for your business.



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  1. A practical purpose
  2. Financial statements
  3. Online presence
  4. Your Businesses Credit score
  5. Outstanding debt
  6. Your experience
  7. Collateral
  8. Credibility
  9. Understanding the requirements


A practical purpose


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One common element of what is required to get a business loan is a practical and demonstrable use for the money that you’re applying for. This can take a number of different forms – for example, it can be presented as a business plan, or as a financial projection. Demonstrating how you intend to use the money, and how you anticipate the money will help your business, can help you towards a successful application. If your business is successful, after all, you will be able to make your loan repayments. So the lender will be more inclined to approve your loan if they can see a tangible route to your business being improved thanks to the cash injection.



Financial statements


Working on laptop


You’ll need to provide relevant financial documentation to provide proof to your proposed lender about the current financial health of your business. This may include a number of things such as invoices, receipts, accounts, bank statements – anything that gives a picture of your cash flow. It’s important you’re as honest as possible – if your business is struggling, don’t try and hide it from \ your lender. They merely want as honest an appraisal of your current financial situation as possible. Ensure all data you provide is as accurate as possible, to prevent any delays in your application.



Online presence


Business Owner Working on Laptop


Many employers now check the online presence of potential employees to assess their suitability. The same thing is true for business loan and finance providers. They will check your online presence as a part of their goal to get a comprehensive view of your business and the way you operate. For example, a series of consistently bad reviews can damage your chances of getting a loan – if you’re not running your business well, how will a simple loan solve your problems? They may also check any social media platforms you operate, to see how you interact with customers and respond to queries and feedback.



Credit score


Business Owner


Another element of what is needed to get a small business loan is an appropriate credit score. Your credit score can be affected by a number of things, such as previous arrears on old debts. If you do have a bad credit score, that doesn’t mean you shouldn’t apply for the loan. Many lenders understand that all businesses have periods of ups and downs – it doesn’t automatically mean your application will be refused. If you do have a poor credit rating, it’s best to be as honest as possible with your lender. Explain how you got it, what you’ve learned, and the steps you intend to take to ensure you make your loan repayments.



Outstanding debt


Laptop Coffee


Lenders are often understandably reluctant to make small business loans to a business that already has one or several loans outstanding. If you’re struggling to make repayments on your current loans, it’s unrealistic to expect you to comfortably afford another repayment on top of that. You may consider taking out a small business loan to consolidate your other loans; however, it’s essential that you inform your lender if this is the case. If you don't, they may view your other loans as excess liability and refuse your application. Depending on the amount of debt that you have, what it’s for, what the repayments are, and how long is left to pay will all have an impact on your application. So provide as much information as possible to your lender, to allow them to make an informed decision about your ability to manage the repayments of a new small business loan.



Your experience


Business Owner


Virtually all lenders will require you to have proof of being in business for a certain amount of time. A small business loan is not intended to be used as start-up capital – many lenders have specific financing options for that. How long you need to have been in business will vary from lender to lender. When you apply for a quick business loan with Capify for example, you will have to be able to provide trading history for at least the last six months. The reasons for this are obvious – many new businesses fail within their first year, so the shorter the amount of time your business has been established, the more liability is assumed by your lender.





Business Owner


Small business loans are often available both secured and unsecured. Unsecured loans will be quicker to apply for, however, you won’t be able to apply for as much money as you can with a secured loan. Similarly, security will mean less liability is assumed on the debt, which ultimately can lead to lower monthly repayments. So a secured loan is a wise option for many businesses. If you do intend to offer collateral for your loan, you will need to provide comprehensive information about it – depending on what it might be. Example collateral might be a work vehicle, in which case its age, mileage, and general condition will all impact its value. Also be aware that if you default on the debt, you will almost certainly lose your collateral. So think very carefully as to what you intend to offer as security if you qualify for a business loan.





Working on laptop


Your general business standing will also contribute to the success of your application for a small business loan. A lender is more likely to approve an application from a small business with happy local customers and a good reputation than one which has multiple bad reviews. All loans are subject to the perceived character of the applicant, and small business loans are no different. This shouldn’t be a concern to you if you operate your business in a friendly, conscientious manner and regularly go the extra mile for your customers. But be aware that lenders may do some background digging, to learn more about how your business is viewed by the community.



Understanding the requirements


Business Meeting


A small business loan can be the perfect option for any small business looking for a quick cash injection. Whether it’s to see you through a customer shortage or to invest in seasonal stock, and anything in between, a small business loan is always useful.

Now you understand what many lenders look for in a successful loan applicant, you’re able to make sure your business is best suited to receive a positive response from your application. With all the right information, your loan can be approved and paid in as little as a few day when you apply online with Capify.



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