Applying for a Business Loan – What You Should Know
First things, first. If there were one set of golden rules, we could all follow, guaranteeing the prospect of successfully acquiring loan finance, we would all follow them.
In truth, there is no such thing as the chances of success are dependent on nature of each business and its circumstances.
While each business is as unique as its owner/s, there are some basic principles you can follow to help boost your chances, and make the process of creating an application for a business loan less complex.
With this in mind, today I had a chat with Head of Underwriting at Newable Finance, and asked a few questions about what business owners can do to improve their chances of submitting a successful loan application.
Can you tell us about what underwriters need to process loan applications?
“At the start of the application process, we look to get all of the information required to make an informed decision in one go. To get an idea of the information we require, potential applicants should ideally visit our website and ensure they have provided all relevant documentation, as specified.
It is important to ensure there are no gaps in the information provided, as this will help to prevent delays in processing your application.
Documentation includes (but is not limited to) six months of bank statements, the latest set of statutory accounts, the latest VAT quarters, and management accounts if these are available, as our team of underwriters will require the most up to date information.”
What do I need for a business loan?
“As responsible finance providers, we are looking to support SME’s that are both viable and profitable, and we therefore deal with each application on a case-by-case basis. We also have a strong preference for businesses that are on a successful path, whereby our funds will be used to fuel their operations. Whether that’s working capital, capital expenditure, hiring staff, marketing, expansion and/or a loan to start or open a business”
Because we provide unsecured finance, we rely on the strength of the business more so than other securities. Therefore, it is important that the business has a good track record and demonstrates affordability.”
How should business owners prepare to make an application?
“When applying for business finance, businesses owners need to assess their business needs and why they need a loan. In others words, the nitty gritty of how the business is operating, as this will come up in the loan application process.
Just stating working capital for example, would not be enough because it will raise more questions from our underwriters. So in a nutshell, the more prepared the owner is and the more they understand the business, the greater the chance of being successful.
Seeking external advice is definitely an advantage, whether that’s achieved by speaking with your accountant, mentor or an independent financial adviser, it is actually one of the most important things.”
What can business owners do if their circumstances change, affecting the affordability of their repayments?
“As experienced lenders we understand the complexities of running a business, and the highs and lows it can bring. It’s important to speak to someone and not hide from any difficulties the business may be facing.
All of our loans come with free mentoring support to help business get the most out of our loan, but in the event that things should start to go wrong, they can also act as your first port of call and provide invaluable advice and guidance.
Alternatively, you can speak with our Customer Success Team or our Head of Collections. Ultimately, it is important that you have an open channel of communication with your lender. There are many things that we can do to help depending on the circumstances.”
We help businesses secure the finance they need. Find out how we can help your business.