Key facts: The core checks: trading history (2+ years opens most doors; under 1 year routes to start-up products), filed accounts and cash flow (can the business service the debt?), business and personal credit records, security or a personal guarantee, and the purpose of funds. Affordability is measured by debt-service cover — lenders want profit comfortably exceeding repayments.
Trading history and accounts
Two filed years of accounts is the mainstream threshold; strong, growing figures beyond it steadily improve pricing. Lenders read: turnover trend, real profitability (with an eye on owner-salary adjustments), and balance-sheet health — existing debt, asset base, retained earnings. Newer businesses aren't excluded, just re-routed: start-up loans, asset finance (the kit is the security) and invoice finance (your customers' credit matters more than yours) all underwrite differently.
Cash flow and affordability
The central question: does cash generation cover repayments with margin? Lenders compute debt-service cover — operating profit or EBITDA against total debt payments including the new loan — and want comfortable headroom, not bare sufficiency. Bank statements get read alongside accounts (bounced payments and persistent bottom-of-overdraft balances speak loudly). Seasonal businesses should present seasonally-aware forecasts and, ideally, request repayment profiles that match.
Credit records, security and guarantees
Both files count: the business's (CCJs, late filings at Companies House are red flags) and — especially for smaller companies — the directors' personal records, since personal guarantees are standard for SME lending. Understand what a PG means before signing: business failure becomes personal liability; PG insurance exists to soften it. Security (property, assets, debtor books) unlocks larger sums and better pricing — the trade-offs run through our adverse-credit business lending guide where records are imperfect.
Packaging an application that passes
Have ready: 2 years' accounts, 6–12 months of bank statements, management figures if accounts are aged, a clear purpose with amounts (growth capital reads better than "cash flow gaps" — and if it genuinely is a gap, invoice finance may fit better than a loan), and realistic forecasts for the repayment period. Then aim once: like consumer credit, scattergun applications mark records and read as distress. A broker matches the case to lenders whose appetite it fits — the single biggest approval-rate lever available.
Getting matched before you apply
A specialist will pre-assess your accounts against live lender criteria and place the application where it passes. Find a business finance specialist through Nesto — free, no obligation.
Frequently asked questions
How long must I be trading to get a business loan?
Two filed years opens mainstream lending; younger businesses use start-up loans, asset finance or invoice finance, which underwrite differently.
Will I need a personal guarantee?
For most SME unsecured lending, yes — directors personally back the debt. Understand the exposure; PG insurance can mitigate it.
Does my personal credit affect a limited company loan?
Usually — directors' records are checked alongside the business's, and weigh heavily for smaller or younger companies.
Why do lenders ask what the loan is for?
Purpose signals risk: defined growth investment reads well; vague cash-flow patching suggests distress and may indicate a different product entirely.