Business banking UK:
compare multiple quotes from Agreed Suppliers
  • Save time and money by letting us do the legwork for you

  • We will look at the most suitable and competitive providers for you

  • Our expert service is 100 % free with no-obligation

  • Get the options to make an informed decision and get the best deal

Business banking: How to apply for a business loan?

Reading time: 3 mins

Truth be told, even if it is incredibly difficult these days for companies, especially small and medium enterprises, to find a bank which accepts to issue a business loan for them, business loans are still given out. Of course, it may take much more scouting around, much more time, much more money to get a business loan, but it’s still possible. So the question of how to apply for a business loan should be thought over quite rationally, and businesses should prepare themselves in an efficient way to come to the bank and talk the talk - because it just might work. Here’s what to consider before even starting looking for a bank, and how to apply for a business loan.

 How to apply for a business loan

What to consider before even starting looking for a bank

Before asking themselves how to apply for a business loan, business owners should ask themselves if they have exhausted all other options.

Do you really need a business loan?

This question is not a way to discourage business owners interested in a business loan, but really, sometimes, you just don’t want to enter into a business finance agreement. Because you have lots of customers paying you on time, because revenue is piling in, because this ambitious investment you’re contemplating can wait a little bit longer, just so that you can secure enough savings to get things going.

Is there another business finance option which could be used?

Business loans are not the only finance option which can be considered. Personal loans, private equity, small business grants, government schemes, invoice finance can be used.

How to apply for a business loan

Now that you are really sure that you need a business loan, you need to actually know how to apply for a business loan. There a few key questions which business owners willing to get a business loan should ask themselves in order to get ready.

Do you have a business plan?

Business plans are often overlooked by business owners as long as business keeps coming in and revenue keeps tickling in. However, they should really start thinking again about their business school courses before going to the bank and ask for a loan because the banker will ask for a business plan. This is because he or she needs to know exactly how much you need, what you will do with the funds, and how you are planning to raise enough funds to pay the bank back.

Have you done a market research?

Bankers need to know more about your company, and about your market. A start-up in a booming industry sector will look more promising than an established company in a dying business area.

Have you done your homework?

When you are finally talking business with the banker, it’s time to review the proposed agreement. The most essential aspects to look out for include:

- total cost of the loan, including total cost of interest and all charges;

- simply setting up a loan agreement with the bank may incur fees;

- late payment charges can be high, so better make sure how the arrangement works;

- also check whether redemption penalties apply;

- carefully check what insurance policies are included - they’re coming at a price, and the banker won’t spend much time explaining, but you may need more, or you may need less of these policies.