1. Define your business needs
It's important to first define and have a clear understanding as to why you need funding. Are you planning to hire new talent to your team, perhaps you’re looking to invest in marketing campaigns, expand your product line, or acquire new equipment?
Each lender and loan type has specific criteria and terms based on your purpose, so having a well-defined objective will help to determine which options are best suited for your business. As part of your loan application, many lenders will also need you to state a purpose for funding, so having this defined from the offset will help you to put together your application later on.
2. Choose the right type of funding
There are over 300 different lenders in the UK, each offering diverse lending options for businesses. How your business operates, which sector you are in and what you need the funding for will all influence which lenders and loan type are most suitable for your specific needs.
If you determine how much funding you need, whether you have assets you would like to use as security, and whether you would like your repayments to be over a long or short period, this will help to choose the right type of funding.
When you use FSB Funding Platform, our experts can help to find the right type of funding for your business.
3. Check your business credit score
Lenders heavily rely on your business credit score when assessing your eligibility for a business loan, it acts as an indicator of how likely your business is to default on the loan. Many business lenders will require you to have a credit score of at least 45/100 to consider your application, so it's important to review your business credit score and ensure you’re in a good position to apply for funding.
If you come across any negative marks on your credit score, you should take steps to correct them before applying for a loan. Having a good credit score will significantly enhance your chances of approval and accessing more favourable loan terms.
4. Gather your supporting documents
Lenders typically require a number of documents to assess your business's financial health and make an informed decision about your loan application. You should try to prepare the following documents to support your application:
- 3 - 6 months of business bank statements
- Most recent set of filed company accounts, if you have them
- Detailed information about your business and your intended use of the funding
Depending on the type of business loan you're applying for, you may also need to provide additional documents. For example, if you’re applying for a merchant cash advance, you may need your electric point of sales (EPOS) statements.
5. Applying for business funding
Whether you’re looking to buy a new vehicle or need to smooth your cash flow over a quieter period, you can access all types of business finance with FSB Funding Platform in association with Capitalise. Available to FSB members, you can apply to multiple lenders in just one simple application, while receiving dedicated support from a funding specialist.