How to get a business loan in the UK: what lenders check and how to prepare

To get a business loan in the UK, match the lender to your trading history, have six months of clean bank statements and recent accounts ready, and know in advance whether you will be asked for security or a personal guarantee. Banks want the longest track record and lend at the lowest rates. Online lenders will look at a business with about six months of trading and can decide within hours, but they usually charge more. Most declines come from a mismatch between lender and business, not from a bad business.

Key Takeaways

Which type of lender fits your business

There are four broad routes. They differ on price, speed and how much track record they want, and that is why the same business can be declined by one and approved by another.

Route	Typical cost	Speed	What they want to see	Good for
High-street banks (NatWest, Lloyds, Barclays, HSBC)	Lowest rates	Decision in days to 2 weeks; funds in 1-6 weeks	Highest bar: 2+ years of accounts and clean credit	Established businesses that can wait for the lowest cost
Challenger banks	Competitive, app-based	Days	Moderate bar	Digital-first small businesses
Online and alternative lenders	Higher rates, or a single fixed fee	Decision from 1 hour; funds in as little as 24 hours	Most flexible: recent trading performance matters more than credit history	Speed, flexibility and growth capital
Government-backed schemes (Start Up Loans, Growth Guarantee Scheme)	Fixed rate for Start Up Loans; commercial rates under the Growth Guarantee Scheme	Around a month if well prepared	Designed for businesses that banks decline	New businesses and marginal bank declines

Beyond the term loan itself, there are products built for specific jobs. Asset finance is a loan or lease where the equipment, vehicle or machinery is the security, and it can cover 80-100% of the purchase price. Invoice finance lends against money your customers owe you, so the security is the quality of your debtors rather than your trading history. Overdrafts suit short, unpredictable cash flow dips and are poor for planned investment.

The product should match the purpose. If you are buying a van, asset finance will usually be easier to get than an unsecured term loan, because the van supports the agreement.

Our own view: most owners apply to their main bank first, because it is familiar. That is reasonable if you have two years of accounts and tidy statements. If you do not, you are spending a credit search on a lender whose criteria you are unlikely to meet.

What lenders check

Every lender has its own scorecard, but the core questions are the same: how long have you traded, how much money moves through the account, can the cash flow carry the repayments, and what happens if it cannot.

Time trading

This is the first filter. As a guide:

• Banks: typically 2+ years of accounts.
• Mainstream unsecured lenders: a minimum of 12 months, with a preference for 24 or more, because two years of statements and at least one set of filed accounts show how the business behaves over time.
• Online, fintech and revenue-based lenders: from about 6 months. The trade-off is higher rates, lower amounts and a likelier personal guarantee.
• Start Up Loans: can lend to pre-trading businesses.

If you are under 12 months, the realistic routes are a Start Up Loan, asset finance (secured against the asset) and invoice finance (secured against your debtors). Our Start Up Loans guide covers the scheme in more detail.

Turnover and cash flow

Minimum annual turnover thresholds range from £50,000 to £250,000, depending on the product. Many alternative lenders also set a minimum monthly revenue floor.

A common rule of thumb for unsecured lending is that a lender will consider advancing up to twice your average monthly deposits. A business averaging £50,000 a month in deposits might access up to £100,000. It is a rule of thumb, not a formula, and lenders adjust for profitability, sector and the rest of the file. It is still a useful sanity check before you ask for a number. Our how much can I borrow tool helps with the same question.

The real test is affordability. Lenders want repayments covered comfortably by monthly cash flow, with headroom. A loan that just about fits in a good month becomes a problem when VAT, supplier bills or a seasonal dip arrive.

Bank statements

Bank statements are the most important document in the initial assessment. A lender reads them for average monthly income, consistency of cash flow, existing loan repayments, the minimum balance (as a measure of resilience) and whether the account stays in credit.

The red flags are specific:

• returned direct debits
• an overdraft that sits at its limit
• very low average balances relative to turnover
• large unexplained transfers
• a deteriorating trend over the review period

None of these automatically disqualifies you, but each one needs an explanation and may change the terms. In the other direction, strong and growing revenue with no bounced payments can secure good offers even where filed accounts show a paper loss.

Lenders also look at everything else you already owe: other loans, asset finance agreements and card balances.

Credit files

Lenders check two files: the business's credit file (for example through Experian Business or Creditsafe) and the personal credit file of each director. The business file shows payment history with suppliers and lenders, CCJs, defaults and public information from Companies House. The personal file shows borrowing history and current commitments.

There is no single credit score cut-off in the UK. Lenders pull files from Experian, Equifax or TransUnion and score you against their own criteria. Adverse history narrows the field, it does not close it. Satisfied CCJs, defaults older than two years and low-value items weigh less than recent, unsatisfied or large ones. Specialist lenders look at current trading first and credit history second.

Checking your own reports first is free and does not affect your score, and it lets you correct errors before a lender sees them. We cover the detail in our guide to the business credit score.

Sector and purpose

Construction, hospitality and early-stage retail are treated as higher risk by some lenders because of cash flow variability and historically higher defaults. That means a narrower choice of lenders and higher rates, not a closed door. Specialist sector lenders are often the answer.

Purpose matters too. Lenders view growth uses (equipment, expansion, hiring) more favourably than a general working capital request, which can look like a cash flow problem. Some lenders will not fund property purchases without a secured facility, refinancing existing debt, or personal spending through the company. Say what the money is for, and how it will be repaid, in a short paragraph.

Secured, unsecured and the personal guarantee

A secured loan is backed by an asset, most commonly commercial or residential property, but sometimes equipment or stock. Because the lender can recover its money from the asset, secured loans usually carry lower rates, larger amounts and longer terms, in some cases up to 25 years. The cost is that the asset is at risk if the business cannot repay. They also take longer: two to six weeks to completion is a fair expectation.

An unsecured loan needs no asset. The lender leans harder on your credit and trading history, so rates are higher and amounts lower. The advantage is speed, and many unsecured lenders can approve and fund within 24-72 hours.

The point most owners underestimate is that unsecured does not mean unguaranteed. Most unsecured business loans require a personal guarantee from the owners or directors. That is a legal commitment to repay personally if the business cannot. In practice it can put your home at risk even though no property was pledged on the loan.

Before you sign a guarantee:

• Read exactly what it covers and whether there is a cap.
• Take independent advice on larger commitments.
• Remember that a guarantor, such as a creditworthy co-owner, co-director or third party, becomes personally liable if you default. Put any such arrangement in writing.

Start Up Loans are different. They are unsecured and need no personal guarantor, but they are personal loans, so you are personally liable for the repayments.

Our is it worth getting a business loan guide helps decide whether borrowing is the right tool at all.

Documents to prepare

Having these ready is the cheapest way to shorten the process.

• Business bank statements, 3-6 months. Six months is the most common ask.
• Most recent filed accounts, or management accounts if your filed accounts are more than 12 months old.
• Profit and loss and a cash flow forecast. Some lenders want the forecast to cover 12-24 months.
• Proof of business registration: your Companies House number for a limited company or LLP, or your UTR for a sole trader or partnership registered with HMRC.
• ID and address for directors, with personal bank statements if asked.
• Details of existing borrowing, including loans, asset finance and card balances.
• A short use-of-funds paragraph explaining what the money buys and how it will be repaid.
• For secured loans: a recent property valuation or mortgage statement.
• For start-ups and Start Up Loan applications: a business plan with financial projections.

Two habits matter more than any single document. Make the figures consistent across everything you submit, because mismatches between the application, the accounts and the statements are what make an underwriter hesitate. Keep business and personal banking separate, so the statements tell one clean story. Online and revenue-based lenders often connect directly to your bank account or accounting software and skip much of the paperwork.

The process, step by step

1. Decide the amount and the purpose. Borrow what the plan justifies, not the maximum on offer.
2. Choose the product that matches the purpose: asset finance for equipment, shorter-term borrowing for stock or marketing, a term loan for planned investment.
3. Check your credit files and fix errors.
4. Gather the documents above.
5. Run soft-search eligibility checks before committing. These leave no footprint on your credit file. Our funding check is one way to do this.
6. Compare at least three offers on total cost, fees, speed and whether security or a guarantee is required.
7. Apply to a genuine shortlist. Each hard search leaves a mark, and scattershot applications complicate your profile.
8. Answer underwriting questions quickly. Slow replies and missing documents are the most avoidable delays.
9. Read the agreement before signing: total repayable in pounds, arrangement fees, early repayment charges, and what happens if you miss a payment.

What it costs: a worked example

Compare on total repayable, not the monthly figure. A £50,000 bank term loan at 8% APR over 5 years costs about £1,014 a month and roughly £60,800 in total.

Over 3 years the same loan at the same rate comes to about £1,567 a month and roughly £56,400 in total. The shorter term saves about £4,400 in interest but adds around £553 a month to the repayments. Whether you can carry that depends on your cash flow, which is exactly what the lender will test.

Then add the fees. Arrangement fees are typically 1-3% of the loan, which on £50,000 is £500 to £1,500. Some lenders also charge two to three months' interest if you repay early. A lower headline rate with a 3% fee and an early repayment charge can cost more than a slightly higher rate with neither. Ask for the all-in cost in writing.

How long it takes

Speed varies more by lender type than by anything else.

Route	Decision	Funds in your account
Online and revenue-based lenders	As little as 1 hour to 2 days	As little as 24 hours to a week
High-street banks	Days to 2 weeks	1-6 weeks
Start Up Loans	Depends on the application	Around a month if well prepared
Secured loans	Longer, because of valuation and legal work	Two to six weeks to completion is typical

The fastest route is rarely the cheapest. If you can plan three months ahead, you can use a bank or a secured facility and save on cost. If you need money next week, expect to pay for it.

Why loans get declined, and what to do next

The British Business Bank lists the common reasons a lender rejects an application, and they match what we see on files:

• Credit score. Lenders consider both the business and personal score.
• Age of the business. Little or no evidence of paying off debt, and some providers require two years' trading.
• Existing debt. Lenders hesitate to add to a business that already has several facilities.
• Sector. Some are seen as high risk.
• Lack of security. No assets of sufficient value, or no personal guarantee on offer.
• An application that is not well thought out. If the plan and the use of funds do not make sense together, the lender will say no.

We would add one more: a vague answer on where repayments come from. A decline is usually a result of uncertainty rather than a verdict on the idea.

If you are declined:

• Find the reason and deal with it before applying elsewhere. Reapplying unchanged tends to give the same answer and adds a search to your file.
• Try a different type of lender. Lenders differ in their appetite for risk, so one no does not mean they will all say no. A smaller amount, a longer term or a clearer use case can also move a decision.
• Use the Bank Referral Scheme if one of the major UK banks turned you down. Launched in 2016, it passes your details, with your agreement, to three platforms (Alternative Business Funding, Funding Options and Funding Xchange), which offer funding if they find a match. The British Business Bank explains how it works.
• Consider asset finance or invoice finance if your need is equipment or late-paying customers.
• Build the file for six months if you can wait: file accounts and your confirmation statement on time, pay suppliers promptly, keep business banking separate and correct any credit file errors. Lenders re-score you on current data.

Government-backed options

Start Up Loans are unsecured personal loans of £500 to £25,000 per founder, repaid over 1 to 5 years at a fixed rate, with free mentoring. Check the current rate and eligibility on the official scheme pages before you apply, because the terms have been revised recently. Applicants submit a business plan and financial forecasts. Our Start Up Loans guide goes through it.

The Growth Guarantee Scheme gives lenders a partial government guarantee, so they can lend to businesses that might not meet their standard criteria. It is the successor to the Recovery Loan Scheme and covers lending up to £2m, at commercial rates. The borrower still deals with an accredited lender, and the guarantee protects the lender, not you: you remain liable for the debt. See our Growth Guarantee Scheme guide.

The British Business Bank also runs regional programmes with Local Enterprise Partnerships: the Northern Powerhouse Investment Fund, the Midlands Engine Investment Fund and the Cornwall and Isles of Scilly Fund. UK Export Finance does not lend directly, but its Export Working Capital Scheme gives guarantees to lenders so that exporters who could not otherwise get finance can.

The UK lending market in numbers

The latest British Business Bank figures show a market that has changed shape.

• Gross SME bank lending rose 9% to £68bn in 2025, the second-highest level in 13 years after the 2020 covid peak. The year before, it was £62bn, up 4.5%.
• Challenger and specialist banks accounted for 60% of gross SME bank lending (excluding overdrafts) in 2025, up from 39% in 2012. Their share has now exceeded the big five banks for five years in a row.
• Including non-bank lenders, 68% of overall SME lending in 2025 came from challenger and specialist banks or non-bank lenders.
• 28 new providers have entered the smaller business banking market since 2013.
• About 50% of smaller businesses used external finance in 2025. The most used products in Q3 2025 were credit cards (19%), overdrafts (16%) and leasing or hire purchase (13%). The British Business Bank reads that as debt being used for stability rather than growth.
• 62% of smaller businesses said they knew where to get information on different types of finance, five percentage points up on 2024.

These figures come from the British Business Bank's March 2026 research. The practical reading for a borrower is that most of the lending is now done by lenders other than the big banks, so a refusal from your main bank tells you about one lender's criteria and little about your chances.

Frequently Asked Questions

What credit score do I need for a business loan? There is no single UK cut-off. Each lender checks business and personal files with Experian, Equifax or TransUnion and scores them against its own criteria. Banks prefer strong, clean credit. Challenger and revenue-based lenders can approve weaker scores where trading is healthy, usually at higher cost.

Can a start-up get a business loan? Yes. A Start Up Loan is built for new businesses and needs no security. Asset finance and invoice finance also work without a trading history. Once you have about six months of consistent sales, online and revenue-based lenders open up.

Do I always need a personal guarantee? Not always, but most unsecured business loans ask for one. Secured loans rely on the asset instead. Start Up Loans need no guarantor, though they are personal loans.

How much can I borrow? It is capped by what your cash flow can service. A rough guide for unsecured lending is up to twice your average monthly deposits. Start Up Loans run from £500 to £25,000 per founder, and Growth Guarantee Scheme lending goes up to £2m.

How many lenders should I apply to? Compare at least three offers using soft-search checks, then apply only to your genuine shortlist. Each full application leaves a search on your credit file.

If you want to see which lenders your numbers fit before any hard search, Deplexifi's funding check does that.

Treating an unsecured loan as risk-free. Most carry a personal guarantee that makes you personally liable, and a decline from your main bank says little about the rest of the market.