If you’re applying for a loan to help your small business through a tough patch or to expand, there are things you can do to maximise your chances of success.
Follow our tips to help make the process smoother.
In simple terms, there are usually four steps to a loan application:
It’s worth pulling together the details you’ll need for your application before you get started, so you’re not rummaging through boxes or scrolling through files to find what you need mid-way through a form.
Details you’re likely to need for most small business loan applications:
If you’re applying for a loan due to the coronavirus outbreak, you can read more about the lending criteria you’ll need to meet in our articles on the Coronavirus Business Interruption Loan Scheme (CBILS) and the Business Bounce Back Loan Scheme (BBLS).
Banks like to see some proof that you’ve borrowed money before and have paid it back on time. That’s why it can be a good thing to have a credit card or to borrow small amounts of money. But bear in mind that if you miss any payments, it can reduce your credit score.
Getting yourself on the electoral register gives lenders a way of checking your name and address history. They need this information to confirm you are who you say you are before they give you any money.
You can use a credit score service like Experian or ClearScore to keep on top of any changes to your credit rating and ways you can improve your score.
The smallest mistake or missing detail on your application could be the difference between getting your loan application approved or declined. So make sure you read everything again to double check the details before you click ‘submit’.
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If you want to see what sort of loan amount and interest rate you could get, use a calculator first. Otherwise it could look to prospective lenders like you’re searching around in a struggle to get approval for your loan.
Before you go down the route of borrowing money for your small business that you’ll have to pay back at some point, it’s worth checking whether any grants are available to you. Funding your business with financing you don’t have to pay back gives you one less financial burden to think about.
Read our article on grants for small businesses to find out how and where to start your search.
The government has set up a wide range of financial support schemes for small business owners, which can be helpful to many. But it’s not always easy to work out which ones you’re eligible for. With this in mind, we’ve been busy working on a tool to help you check.
All you need to do is answer a few questions and you’ll see what coronavirus support you and your business can get from the government to help you weather the storm.
What are your tips for getting a loan approved? Let us know in the comments section.
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