Published and reviewed 13 October 2026. General information, not advice. Figures are illustrations, not lender quotes.
The short version
- Fewer than half of UK small business loan applications now succeed. Most declines are about things you can see and often fix before applying: the bank balance, credit files and late or missing accounts.
- Lenders ask three questions: can the business afford the repayments, what happens if it cannot, and can they trust the figures. Prepare evidence for all three.
- Work out your own borrowing limit first. In our example a company with £60,000 of yearly earnings could support about £109,000 over four years, not the £120,000 its turnover suggested.
- Compare total cost, not the headline rate. On £50,000, an 8.5% loan with a £2,000 fee cost about £400 more than a 9.9% loan with no fee.
- If a big bank declines you, ask why and ask to be referred under the Bank Referral Scheme. Fix the reason before you apply again, rather than applying everywhere at once.
How to get a business loan in nine steps
Getting a business loan is mostly preparation. The application itself can take minutes online. The work that decides the answer happens before you press submit. These are the steps, in order, with a section on each below.
- Define what the money is for. Write down the purpose, the amount and how long the business needs it. Is borrowing the right move?
- Check you meet the basic criteria. Trading history, turnover, profit and credit record. What lenders look for
- Work out how much you can borrow. Run the lender’s affordability test yourself. How much can you borrow?
- Choose the right type of finance. Match the product to the job and the term to the life of the asset. Pick the right loan
- Check and tidy your credit files. The company’s and the directors’. Get your credit in order
- Gather the documents. Accounts, bank statements, a forecast and a schedule of existing debts. Documents you need
- Choose where to apply. Your bank, other banks, online lenders, specialist providers or a broker. Where to get a business loan
- Apply, then compare the offers. Look at what you receive and what you repay, not the headline rate. Compare offers before you accept
- Read the agreement and draw the funds. Check the security, any personal guarantee and the early repayment terms. The application process
Fewer than half of UK small business loan applications now succeed, according to the Centre for Finance, Innovation and Technology’s April 2026 report, a rate about a third lower than before 2020. The same report found that only 34% of smaller firms planning to apply were confident their bank would agree, against 56% in 2019. A well-prepared application is no longer a nice extra. It is often the difference between a yes and a no.
Is a business loan the right move?
A loan works best when it pays for something that earns more than it costs, or that keeps the business running through a gap you can see the end of. Before speaking to a lender, answer four questions in writing.
- What exactly is it for? “Growth” is not a purpose. “Two vans and a second crew to take on the council contract” is. Lenders lend to clear plans, and a clear plan helps you size the loan.
- How much is essential? Separate what you must spend from what would be nice to have. Borrowing a little more than you need for a contingency is sensible. Borrowing far more than you need adds cost and makes affordability harder to prove.
- How will it be repaid? From existing profits, from the extra income the money will earn, or from a one-off event such as a sale or a customer payment. The answer points to the type of finance.
- What happens in a bad quarter? Run the repayment against your quietest month in the last two years. If it only works when everything goes right, borrow less, take longer or wait.
Sometimes the better answer is not a loan: asking customers to pay sooner, agreeing longer terms with suppliers, leasing rather than buying, or growing in stages. Our borrowing checklist covers these questions in five quick checks, and the funding route finder suggests a starting point in two questions.
What lenders look for
Every lender has its own rules, but they are all trying to answer three questions. Can the business afford the repayments? What happens if it cannot? Can we trust the information in front of us? The table shows the evidence behind each answer.
| What they check | What usually helps | What often holds applications back |
|---|---|---|
| Trading history | Two or more years of filed accounts. Some online lenders accept 6 to 12 months of trading. | A company less than a year old, or accounts that are late or missing at Companies House. |
| Turnover and profit | Steady or rising sales and a profit that covers the new repayments with room to spare. | Losses, falling sales or one large customer providing most of the income. |
| Cash flow and bank conduct | A healthy average balance, regular income and an overdraft used within its limit. | Low balances, a permanently maxed overdraft, bounced payments, or business money running through a personal account. |
| Credit history | Clean company and director credit files, with accounts and tax paid on time. | Missed payments, defaults, County Court Judgments (CCJs) or HMRC arrears. |
| Existing borrowing | Modest debts, all up to date, with a clear schedule. | Several short-term loans or cash advances already running. |
| Security and guarantees | Property or assets with a clear value, or directors willing to give a personal guarantee. | No security for a large amount, or heavy existing charges. |
| The plan | A clear purpose, a sensible amount and a realistic forecast. | A vague purpose, or a forecast that relies on everything going right. |
Why applications are declined
The most useful evidence on this comes from businesses that were turned down. Funding Xchange, one of the platforms that receives businesses declined by the big banks, analysed 24,319 declined applications between January 2019 and September 2025. The CFIT report publishes the breakdown.
| Reason for decline | Share of declines | What it usually means |
|---|---|---|
| Liquidity and recent performance | 46% | Low current account balances, heavy overdraft use, bounced payments or trading through a personal account. |
| Credit quality | 27% | Weak company or director credit scores, including the directors’ personal credit. |
| Compliance and trading history | 13% | Late or missing filings, a short trading history or no filed accounts. |
| Behavioural risk | 7.4% | Defaults, arrears and County Court Judgments. |
Source: Funding Xchange analysis of applications referred under the Bank Referral Scheme, published by CFIT in April 2026. The four categories do not add up to 100% because a small share fall outside them.
The encouraging part is that most of these reasons are visible to you before a lender sees them. Bank conduct over the last three to six months, the directors’ credit files and the filing record at Companies House can all be checked, and often improved, before you apply. The report also notes that many young companies become eligible once they file a second set of accounts but are never told so. If you are close to that point, waiting a few months can change the answer.
How much can you borrow?
There is no standard multiple. Each lender runs its own tests and lends the lowest answer. For an unsecured or lightly secured term loan, two tests usually decide it.
- Affordability. The lender compares the money the business generates with all its yearly debt repayments, old and new. This is the debt service cover ratio. Lenders often look for cover of about 1.25 to 1.5 times, meaning £1.25 to £1.50 of earnings for every £1 of repayments.
- A size limit. Many unsecured lenders also cap the loan as a share of annual turnover, and some set a maximum by product. Secured lenders cap it as a share of the asset’s value instead, known as loan to value.
Worked example: finding your own limit
A limited company turns over £480,000 a year and makes £60,000 in earnings before interest, tax, depreciation and amortisation (EBITDA). It already pays £750 a month on a van on hire purchase. It wants an unsecured loan over four years. The lender and its tests are illustrations, not offers.
- The affordability test. The lender wants cover of 1.4 times. £60,000 divided by 1.4 is about £42,860 a year available for all debt repayments. Take off the £9,000 a year for the van and £33,860 is left, or about £2,820 a month.
- What that repays. At 11% over four years, £2,820 a month repays a loan of about £109,000.
- The size limit. This lender caps unsecured loans at 25% of turnover, which is £120,000.
- The answer. About £109,000. Affordability is the tighter test, so it sets the limit.
Stretch the term to five years and the same £2,820 a month repays about £129,800, but the turnover cap now bites at £120,000. At 13% over five years it repays about £124,000. A longer term raises the ceiling but adds interest, so it is a trade-off, not a free gain.
Two practical lessons follow. First, existing finance counts against you. Clearing a small loan or a credit card balance before you apply can raise the amount you can borrow by more than its own size. Second, lenders use the latest figures they trust. If this year is stronger than your last filed accounts, up-to-date management accounts can make a real difference. Turn any amount, rate and term into a monthly figure with the business loan calculator, and see our guide to how much you can borrow for a ready reckoner and examples with secured and unsecured limits.
Pick the right loan for the job
Applying for the wrong product is one of the most common reasons for a poor offer or a decline. A lender may reject a request for an unsecured loan to buy machinery that an asset finance provider would fund happily, because the machine itself secures the deal.
| If the money is for | Look first at | Why it fits |
|---|---|---|
| Growth costs: hiring, marketing, stock, fit-out | Unsecured business loan or small business loan | A fixed sum and term with no specific asset charged. |
| Equipment, machinery or vehicles | Asset finance | The asset secures the deal, so approval can be easier and other assets stay free. |
| Customers who take 30 to 90 days to pay | Invoice finance | Funding grows with your sales and is repaid when customers pay. |
| Buying or refinancing premises | Commercial mortgage | The longest terms and usually the lowest rates. |
| A larger sum against property or assets you own | Secured business loan | Security can unlock more money over a longer term. |
| Short, seasonal dips in cash | An overdraft or revolving credit facility | You pay interest only on what you use. |
Match the length of the loan to the life of what it pays for. A three-year loan for a van makes sense. A ten-year loan for a marketing campaign does not. Our guide to commercial loans compares nine types of business finance on size, term, security and cost, and secured vs unsecured business loans covers the trade-off between price and risk.
Get your credit in order
Lenders check two sets of records for a limited company: the company’s own credit file and the personal credit files of its directors. For smaller companies, the directors’ files often carry as much weight as the company’s, because the lender may ask them for a personal guarantee.
Check the company’s record
- Filing at Companies House. Late accounts or confirmation statements are a red flag, and late accounts also bring automatic penalties. Make sure everything is filed and up to date before you apply.
- The company’s credit file. Business credit reference agencies build a score from filed accounts, payment behaviour, CCJs and data shared by banks. You can buy your company’s report from the agencies. Check that the address, directors and accounts are right.
- County Court Judgments. Search the Register of Judgments for the company and the directors. In England and Wales, a judgment paid in full within one month can be removed from the register. One paid later can be marked as satisfied, which looks better than one left unpaid. Our guide to bad credit business loans covers fixing, settling and explaining each kind of record.
- Tax. Arrears with HMRC for VAT, PAYE or Corporation Tax worry lenders. If you have a Time to Pay arrangement, say so and show it is being kept.
Check the directors’ records
- Each director can check their personal file free with the main credit reference agencies. Correct wrong addresses, accounts that are not theirs and old debts shown as unpaid.
- Avoid taking on new personal credit in the weeks before a business application, and keep existing cards and loans up to date.
- Keep business and personal money separate. Running business income through a personal account is one of the liquidity warning signs in the decline data above.
Soft searches and hard searches
A soft search, often used for eligibility checks and quotes, is visible only to you and does not affect your score. A hard search happens when you formally apply. Other lenders can see it, typically for about a year. One or two hard searches are normal. Several in a few weeks can suggest the business is struggling to borrow and make the next lender more cautious. Ask every lender or broker which kind of search they use, and at what stage, before you give consent.
Documents you need for a business loan
Having these ready is the easiest way to speed up an application. Lenders that connect to your bank through open banking, or to your accounting software, may need fewer documents but will see the same information.
| Document | What the lender uses it for | Tip |
|---|---|---|
| Filed accounts for the last two or three years | Turnover, profit, assets and debts over time. | Check they are filed at Companies House and match what you say. |
| Management accounts from the last three months | How the business is trading now. | Essential if this year differs from the last filed accounts. Often expected for larger loans. |
| Business bank statements for 6 to 12 months | Cash flow, balances, overdraft use and how you manage money. | Explain any one-off dips before the lender asks. |
| A cash flow forecast for at least 12 months | Whether the business can carry the new repayments. | Include the new loan payments and a cautious version. |
| A schedule of existing borrowing | What you already owe and when it ends. | List loans, overdrafts, hire purchase, leases and director loans. |
| A short purpose statement or business plan | What the money is for and how it will be repaid. | One page is often enough for a smaller loan. Larger loans need more. |
| Identity and address for directors and owners | Anti-money-laundering checks. | Include everyone with significant control of the company. |
| Recent VAT returns and Corporation Tax filings | Checks against your accounts and for tax arrears. | Mention any Time to Pay arrangement up front. |
| Asset or property details for secured loans | Valuing the security. | Supplier quotes for equipment, or the address, title and leases for property. |
Not every lender asks for everything. Smaller unsecured loans from online lenders may need only bank statements and identity checks. Larger or secured loans need most of the list. For property, our guide on how to get a commercial mortgage covers the extra documents and the valuation.
Where to get a business loan
There are more places to borrow than most business owners realise, and each suits a different kind of company.
| Source | Best for | Typical speed | Watch for |
|---|---|---|---|
| Your own bank | Established companies with a good account history. | One to several weeks. | Often the strictest criteria. Treat it as one quote, not the only one. |
| Other high street and challenger banks | Companies with good accounts looking for a competitive rate. | One to several weeks. | May want you to move your current account too. |
| Online lenders | Speed and smaller unsecured loans, including younger companies. | A few days. | Rates are often higher. Check fees and early repayment terms. |
| Asset and invoice finance providers | Equipment, vehicles or unpaid invoices. | Days to a few weeks. | Read the end-of-agreement terms and any minimum contract period. |
| Lenders under government-backed schemes | Viable companies with limited security. | As for the lender. | The guarantee protects the lender, not you. You still owe the full amount. |
| Community development finance institutions | Viable companies that banks have turned down. | Several weeks. | Usually regional, with smaller loan sizes. |
| Brokers and introducers | Reaching several lenders with one set of documents. | Varies. | Ask how they are paid and which lenders they work with. |
Under the Growth Guarantee Scheme, the British Business Bank guarantees 70% of an accredited lender’s loss on an eligible loan. That can help a lender say yes where security is thin, but the company still has to show the loan is affordable, and the directors may still be asked for a personal guarantee.
For a business that is not yet trading or has only just started, the government-backed Start Up Loans programme lends to individuals for business use, with free mentoring. It is a personal loan, not a company loan, so it sits outside our introduction service, but it is worth knowing about. Our start-up loans page explains how it works.
Using a broker
A good broker can save time and steer you towards lenders whose criteria you meet, which reduces wasted hard searches. Ask three things before you start: how they are paid, whether they charge you a fee, and how many lenders they work with. A broker that only works with a few lenders cannot compare the whole market, and that is fine as long as they tell you.
The application process, step by step
- Eligibility check or quote. Many lenders give an indication from a few questions and a soft search. Use this to rule lenders in or out.
- Full application. You give consent for a hard search and upload documents, or connect your bank and accounting software.
- Underwriting. The lender checks the detail and may ask questions. Answer quickly and completely. Slow replies are a common cause of delay.
- Offer. You receive a loan offer or facility letter setting out the amount, rate, fees, term, security and conditions.
- Checks and signing. Read every page. For a secured loan or a personal guarantee, take independent legal advice before signing.
- Funds released. Once the conditions are met, the money is paid. For property and some secured loans this follows a valuation and legal work.
| Type of finance | Typical time from application to funds |
|---|---|
| Unsecured loan from an online lender | A few days to two weeks. |
| Unsecured or lightly secured loan from a bank | Two to six weeks. |
| Asset finance | A few days to a few weeks, depending on the supplier and the asset. |
| Invoice finance | Usually one to four weeks to set up the facility. |
| Secured loan or commercial mortgage | Commonly six to twelve weeks, longer for complex property. |
Timescales are indicative and vary by lender. Missing documents, unexplained items on bank statements and slow answers to questions cause most delays.
Compare offers before you accept
When an offer arrives, compare three numbers: the cash the company actually receives, the total it repays, and the regular payment. The headline rate on its own can mislead, because fees, the way interest is calculated and early repayment terms all change the real cost.
Worked example: the lower rate that costs more
A company is offered two loans of £50,000 over four years, both with fixed monthly repayments. These are illustrations, not quotes.
- Offer A: 9.9% a year, no fees. The company receives £50,000 and pays about £1,266 a month. Total repaid is about £60,755, so the cost of borrowing is about £10,755. The equivalent APR is about 10.4%.
- Offer B: 8.5% a year, £2,000 arrangement fee taken from the advance. The company receives £48,000 and pays about £1,232 a month. Total repaid is about £59,156, so the cost of the £48,000 it actually received is about £11,156. The equivalent APR is about 11.2%.
Offer B has the lower rate and the lower monthly payment, yet it costs about £400 more and delivers £2,000 less cash. If the company needs the full £50,000, Offer B would have to be larger still.
Check more than the price
- Security. Is the lender taking a charge over property, a debenture over the company’s assets, or nothing?
- Personal guarantee. Is one required, is it limited to a set amount, and is it joint and several between directors? Our personal guarantees guide explains what you would be promising.
- Early repayment. Can you repay early, and what will it cost?
- Rate type. Is it fixed, or variable and linked to Bank Rate? Bank Rate is 3.75%, and the next decision is due on 5 November 2026.
- Covenants and conditions. Promises you must keep for the life of the loan, such as sending accounts each year or not borrowing elsewhere without consent.
Our guide to business loan quotes explains every line of a quote and where to get one without a hard credit search. Our guide to comparing business loans sets out a side-by-side method, and business loan interest rates shows typical rates by type of finance and how to convert flat, monthly and factor rates.
What to do if your application is declined
A decline is not the end, but how you respond matters. Applying straight away to several other lenders with the same weak spot usually brings more declines and more hard searches.
- Ask why. Lenders do not always give detailed reasons, but most will say whether it was affordability, credit history, trading history or the type of request. Use the decline categories above as a guide.
- Ask for a referral under the Bank Referral Scheme. Under regulations in force since 2016, nine designated banks must offer to pass your details to designated finance platforms when they turn down a business whose annual turnover, including any group it belongs to, is under £25 million. They need your consent, and must then pass your details on by the end of the next working day. The scheme covers loans, overdrafts, credit cards, invoice finance, hire purchase and leasing, with some exclusions such as requests under £1,000. The designated banks are AIB (First Trust Bank), Bank of Ireland UK, Barclays, Clydesdale Bank (Virgin Money), Danske Bank, HSBC, Lloyds Banking Group, NatWest Group and Santander UK.
- Be realistic about what a referral does. It puts you in front of other lenders. It does not change the reason you were declined. CFIT reports that only about 6% of referred businesses go on to secure finance. Treat the referral as one option alongside fixing the problem.
- Fix what you can. File overdue accounts, correct credit file errors, settle small arrears, rebuild the bank balance and keep the overdraft within its limit for a few months. If you are close to your second set of filed accounts, consider waiting until they are filed.
- Change the request. A smaller amount, a longer term, an asset finance deal on the equipment, invoice finance, or offering security can turn a no into a yes.
- Try specialist lenders. Community development finance institutions lend to viable businesses that banks have turned down.
The government consulted on reforming the Bank Referral Scheme between October and December 2025. See the consultation and its outcome for the latest position.
If you think a lender treated you unfairly, micro-enterprises and small businesses can complain to the Financial Ombudsman Service, including about lending that is not otherwise regulated. Complain to the lender first.
Getting a business loan as a new or young company
Most mainstream lenders want at least one and often two sets of filed accounts. A younger company is not shut out, but the routes are narrower.
- Asset finance is often the most accessible option, because the equipment or vehicle secures the deal.
- Invoice finance can work from the first invoices if your customers are creditworthy businesses.
- Some online lenders lend from about 6 to 12 months of trading, usually at higher rates and with a personal guarantee.
- Director support. Expect to be asked for a personal guarantee, and sometimes for evidence of your own investment in the company.
- Start Up Loans lend to individuals rather than companies, for businesses that are new or about to start.
Our guide to startup business loans compares every route for a new business by stage, with worked costs.
Build the record early: open a business bank account, keep business and personal money separate, file everything on time, and keep management accounts from the start. These are the first things a lender will look at when you apply.
Is a business loan to a limited company regulated?
Usually not. Consumer credit rules are designed to protect individuals, and a loan to a limited company for business purposes generally falls outside them, whatever its size. That means there may be no regulated affordability check, no cooling-off period and fewer rules on how the lender behaves if things go wrong.
Some protection still applies. Micro-enterprises and small businesses can take complaints to the Financial Ombudsman Service. Many banks and lenders follow the Lending Standards Board’s Standards of Lending Practice for business customers, a voluntary code. Directors who give a personal guarantee can also complain to the Financial Ombudsman in some cases. In practice, the loan agreement, the security documents and any guarantee are your main protection, so read them in full before signing. Check any broker or lender that carries out regulated activity on the FCA Register.
Where Business Loan Advice fits
We are not a lender and we do not give personal advice. We are preparing a service that will introduce UK limited companies directly to lenders. No lenders are confirmed yet, so we cannot currently obtain quotes or make introductions. You will not pay us a fee. If a lender pays us commission after the service launches, we will tell you before asking your permission to refer you.
In the meantime, the business loan calculator and these guides are free to use with no sign-up and no credit search. If your limited company is planning to borrow, you can register its interest and we will contact you about the service launch. Read how we are paid for the details.
Common questions
How hard is it to get a business loan in the UK?
Harder than it was. Fewer than half of small business loan applications now succeed, a rate about a third lower than before 2020, according to CFIT’s April 2026 report. Companies with two years of filed accounts, steady bank balances and clean credit files have the best chance.
What do I need to get a business loan?
Most lenders want filed accounts, recent management accounts, 6 to 12 months of business bank statements, a cash flow forecast, a list of existing borrowing, a short explanation of what the money is for, and identity checks for the directors. Secured loans also need details of the property or asset.
How much can my business borrow?
It depends on affordability and the lender’s size limits. Lenders often want earnings of about 1.25 to 1.5 times all your yearly debt repayments, and some unsecured lenders cap loans as a share of turnover. Work out both before you apply, and expect the lower figure to apply.
Can I get a business loan with bad credit?
Possibly, but choice is narrower and the cost is usually higher. Asset finance, invoice finance and secured lending are often more accessible than unsecured loans. Correct errors, settle small arrears and explain any past problems before you apply, rather than applying to many lenders at once.
Does applying for a business loan affect my credit score?
A full application usually leaves a hard search on the company’s file, and often on the directors’ files too, which other lenders can see for about a year. Eligibility checks and quotes often use a soft search, which does not affect your score. Ask which kind of search each lender uses before you consent.
Can a new limited company get a business loan?
Yes, but options are narrower. Many banks want two years of accounts. Younger companies are often better suited to asset finance, invoice finance or online lenders that accept 6 to 12 months of trading, usually with a personal guarantee. Start Up Loans lend to individuals for business use.
Do I need a personal guarantee for a business loan?
Not always, but it is common for smaller limited companies, especially on unsecured loans. A personal guarantee makes a director personally liable if the company cannot repay. Check whether it is limited to a set amount and take independent legal advice before signing.
Do I need a business plan to get a loan?
For a smaller loan, a one-page explanation of what the money is for and how it will be repaid is often enough, alongside a cash flow forecast. Larger loans, start-ups and acquisitions usually need a fuller business plan.
How long does it take to get a business loan?
Online lenders can pay unsecured loans in a few days. Bank loans commonly take two to six weeks. Secured loans and commercial mortgages often take six to twelve weeks because of valuations and legal work. Having documents ready is the easiest way to save time.
Can I get a business loan without security?
Yes. Unsecured business loans are not secured on a specific asset, but lenders usually ask directors of smaller companies for a personal guarantee instead. Unsecured loans tend to be smaller and cost more than secured ones.
What should I do if my business loan is declined?
Ask why, and if a major bank declined you, ask to be referred under the Bank Referral Scheme. Fix the reason before reapplying, for example overdue filings, credit file errors or a low bank balance, and consider a smaller amount, a longer term or a different type of finance.
Are business loans to limited companies regulated?
Most are not regulated by the FCA, because consumer credit rules protect individuals. Micro-enterprises and small businesses can still complain to the Financial Ombudsman Service, and many lenders follow the Lending Standards Board’s voluntary standards for business customers.
legislation.gov.uk: The Small and Medium Sized Business (Finance Platforms) Regulations 2015
HM Treasury: Bank Referral Scheme consultation and call for evidence, October 2025
Bank of England: Bank Rate, checked 13 October 2026
British Business Bank: Growth Guarantee Scheme
GOV.UK: Late filing penalties for company accounts
Registry Trust: search the Register of Judgments
Financial Ombudsman Service: which small businesses we can help
Lending Standards Board: the Standards of Lending Practice
Rates, tax bands and lender criteria change. Confirm the current details with the lender, your solicitor or your accountant before relying on them.