What do lenders look at for a business loan?

A lender can. If it asks a director for a personal guarantee, it assesses that director as a borrower and reads the director’s credit file with their consent. A County Court Judgment, a default or missed payments in a director’s name can affect the company’s application when the company’s own record is clean. Sole traders and partners are personally liable for the business’s debts, so their personal files are part of every decision.

There is no legal minimum. Each lender sets its own, and some lend only to companies that have filed at least one set of accounts. A business that has traded for less than 60 months can apply to the government’s Start Up Loans scheme, which lends up to £25,000 at a fixed 7.5% a year (at November 2026). A young company can also borrow against an asset it buys or against invoices it has raised.

Each lender sets its own minimum, and it can differ by sector and by type of loan. Work out your own figure first: the company’s yearly cash after tax divided by a year’s repayments on all its loans, the new one included. A figure of 1 means every pound of cash goes on repayments. The further above 1 your figure sits, the more room the lender sees if trading dips.

They ask for them when the last filed accounts are some months old. Management accounts for the months since your year end show current trading. Prepare them on the same basis as the filed accounts and reconcile the bank balance to the statements, because the lender will compare the two and ask about any difference.

A full application leads to a credit search recorded on the company’s file, and on a director’s file if that director’s credit is checked. Later lenders can see recent searches, and several in a short period can count against a new application. A soft search is visible only to you. Ask which kind will be made before you agree to it.

A lender sets the limit from your debt service cover: the cash the business generates in a year divided by a year’s repayments on all its loans. Work backwards from the minimum cover a lender accepts and you reach the largest yearly repayment, and from that the largest loan. The full answer.

A lender declines an application that falls outside its lending criteria: the bank statements, the trading history, the sector, the debt service cover, a credit file or the security on offer. Ask the lender which criterion the application missed, fix what can be fixed, and apply next to a lender whose criteria the business meets. The full answer.

For a limited company, a lender asks for recent business bank statements, the last filed accounts, up-to-date management accounts, details of existing finance, and identity and address evidence for each director. For a larger loan or a new business, add a plan and a cash flow forecast. The full answer.

A business loan is a sum your business borrows and repays with interest over a fixed term, in regular instalments. The lender prices it on the risk it reads in your accounts, your bank statements and any security you offer. Compare offers on the total you will pay in pounds, counting every fee. The full answer.