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How to Get a Small Business Loan

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Plenty of people ask us tips to get a business loan, and so in this quick 5-minute article, we will answer this question.

Firstly, we ought to understand if you’re yet to begin running a business and searching for a start-up loan, or if you are an active company in search of a small business loan.

Although these situations might seem similar, they are really vastly different, as are the conditions and measures creditors use to decide on whether they will lend you the money.

Although Hamilton Wood and Company only provides loans to companies already trading beyond the twelve months mark, we can point you in the correct direction if you’re only just starting out.

We do not provide Start-Up Loans!

So, in the event that you’re here searching for a Start-Up Loan, you ought to pay a visit to the fantastic Start-Up Loan Company.

They can help those just starting out on their business journey with loans of up to £25,000 however, the average amount awarded is in the £6000-£12000 range.

The beauty of their scheme is that it’s backed by the Government and the loan APR’s (or cost of borrowing) is low too.

If you’re here as a business already trading past the one year stage, and you are searching for flexible small business loans, we can certainly help you.

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How to Get the Best Small Business Loan in the UK

For virtually every small business, obtaining affordable credit is vital for a number of reasons, it helps you access the funds your company needs to scale up, invest in new apparatus, improve available working capital and lots of other reasons covering anything from helping to cover wages should there be a temporary gap in available money, to paying VAT bills etc.

Among the other questions, we frequently get asked over and over again is ‘How can I find the best business loan‘ and this quick post tries to make clear the commercial finance space a little bit for you, our clients.

This post provides a lot of information you might struggle to get anywhere else so let’s dig in.

If your company is planning to get the most affordable business loan it can, then it seems sensible to undertake just a bit of prep work and planning during the weeks leading up to when you apply, even though we appreciate this isn’t always feasible.

  • Make certain all of your current outstanding invoices are paid and up-to-date.
  • Make sure all essential bills have been paid off e.g. those that will hit your credit score
  • Make sure that there has been a good inflow of cash to your bank account leading up to when you apply

Affordability is one of the major areas a lender will concentrate on in relation to granting your loan or not.

The irony is that those who are the best prospective customers for loans are frequently those who don’t want a loan, and the ones who want that loan sometimes have a more challenging time trying to secure one.

It’s true, we live in a world of opposites.

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How to Get a Business Loan UK

The main thing a lender needs to be sure of is that the money they lend you will be paid back and that you won’t default or run for the hills with their money.

  • Credit responsibly employed might help your company grow.
  • Credit used unwisely could put it in the ground.
  • Credit is a business tool, nothing more.

Bad debtors and businesses that have used credit unwisely can finish up struggling with a downward spiral on a number of fronts.

To begin with, when you have not repaid previous loans, don’t be surprised if your loan provider insists on increased APR’s in order that they stand a chance of recovering money from you.

Equally, they can be keener to protect the loan against assets that you own and that they can recover in case you default.

And so, the ability to obtain the funds your organization requires at a reasonable and affordable rate is key to keep the cogs in the engine of your small business ticking over smoothly; and here is where we could help you.

There are lots of Providers offering ‘quick Finance’ but all that glitters is not precious metal.

You’ll find quick company loans often feature higher APR’s, and APR’s are reflective of the total cost of borrowing the cash across the agreed term.

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How to Get a Business Loan

Financial loans over a much longer, more protracted-time period will often come with lower rates of interest as compared to shorter-term small business loans but this isn’t always true and we recommend looking for a loan with the lowest interest rates you can.

There’s more than just the interest that affects the total price of borrowing.

You should keep an eye out for the arrangement or agent fees too.

Some unethical lenders will hammer Organizations with top-notch Credit ratings with high APR’s and high setup fees because they’re trying to make a ‘fast buck’ at your expense, and this is improper for a whole variety of reasons that we are vehemently opposed to.

For some providers to literally ‘stitch up’ a Company with a decent credit history can make it more likely that this could expose the lending company to unnecessary risk.

When a Business finds themselves having to pay more for a loan they could have got cheaper somewhere else, this can lead to a never-ending pattern of debt that can become increasingly challenging to manage.

This tends to put the firm at greater commercial risk, risk of closure, peoples livelihoods in danger, staff facing lay-off etc.

Possibly even worse, if a Company was required to give security for the loan to be authorized by securing against held assets, these can be ‘recovered’ or taken from the Company should it default so you can see the risk some unscrupulous loan providers are subjecting businesses to.

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When you get a loan through Hamilton Wood & Company, you can have confidence that we will only deal with lenders we would be happy to use ourselves.

More recently two of the big lenders we have blacklisted including one bank for deliberately misleading people with the Governments Bounce Back Loan, CBILS and Recovery Loan scheme (RLS) by claiming eligible applicants were ‘uneligible’ for the Government-backed scheme but they were more than happy to offer you their own more expensive loan secured against your assets just as interest rates are beginning to rise. (We wonder why?)

Unlike unethical loan providers, we take our obligations to treat you and your company fairly extremely seriously.

With us, you’ll get a great deal on a great loan.

So, where do Hamilton Wood & Company differ and how can we help you get a competitive, affordable small company loan?

With Hamilton Wood & Co., we will provide your business with a variety of choices when it comes to your looking to borrow.

Our loan set-up fee is low, our APR’s competitive. We are on your side to make sure you get a great deal on the loan your business needs.

Our company is your strategic business partner throughout your small business journey. We are here to help your business succeed.

Things we will ask you for when you make an application for a business loan are:

  • Your up-to-date management accounts
  • Your last 3-6 months business bank statements
  • Your personal details
  • The last 2 years submitted accounts
  • Evidence of at least £2000 cash in-flows to the business each month.

Transparency is key here.

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We get it, occasionally all businesses could find themselves dealing with a little dip in turnover and this is the reason we are able to take a more balanced look at your business performance over the last few years or at least the last year.

We are able to offer financial loans up to £600m subject to conditions and terms or from as low as just £1000.

As with all small business loans, our offers are made subject to terms and conditions.

We provide a full choice of cost-effective business loan products and services. We hope to play a role in your business’s on-going success and look forward to working for you.

To get a loan now or to ask us any questions pertaining to a business loan, please get in contact by visiting here or by taking our loan eligibility checker here.