Each lender will have its own criteria for business loans, but there are a few general standards that most lenders will require.
1.Prove you are profitable and growing
You will need to provide the lender with bank statements from a set period of time which must show that the company is doing well and moving in the right direction. Most lenders will need bank statements, annual accounts, VAT returns and/or an aged debtor listing.
2.Keep well-managed bank accounts
Your bank accounts will need to be clear and properly managed. This involves keeping accurate records of all income and costs, which allows for much clearer financial projections. Having a good bookkeeper or accounting software can make this process much easier.
3.Have minimal short term debt
Considerable amounts of short term debt, including overdue tax payments, will be a red flag for the lender, who will be reluctant to take on additional risks by lending to a company already in debt, as this would be over-crediting a business that cannot carry any additional debt. You should be cautious of lenders who are willing to finance businesses in debt.
4.Build a good credit history (company and directory)
The lender will want to check that both the small business and its director have a good credit history. This can be built by keeping credit balances low and always paying your bills on time.