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Five tips for applying for business loans

Holly Thomas / 02 April 2015

With the banks clamping down on lending, it is getting harder to borrow the money needed to start or develop a business. Holly Thomas shares five tips to make your application for a business loan successful.

Shoot sprouting from a pile of coins
Make sure you have a good business plan

Britain is being hailed as the “self-employment capital” of Europe, with around 4.6 million people now working for themselves.

Many people are able to simply go self-employed and do their job on a freelance basis. But others will need funding to get a business going – or to expand.

Read our guide to setting up as a sole trader. 

It’s not as easy as it once was to find business loans, with a clamp down by banks having been stung by many bad debts in the recession. But the major banks still all offer them and if your business plan, credit score and homework is all in place, it’s certainly worth applying.

Here are five things to know when looking for funding:

1 Know how you will be assessed

The funding available will be based on at the stage your  business is at, what your plans are for the future, along with the financial situation.

Get your documents and finances in order so that you can provide anything you’re asked for at the touch of a button. Work with your accountant to make sure you haven’t missed anything.

Did you know lenders will check your business' credit report? Make sure yours is squeaky clean by checking it with Experian's simple pay-as-you-go service.

2 Tell your story

Each business’ circumstances are unique, so you will need to explain exactly what your business does and what you need. Don’t assume everyone at the bank knows the ins and outs of every industry – they don’t.

3 Be honest

It is vital that businesses are completely transparent when approaching a bank, and are able to demonstrate a clear plan regarding how the money will be used and how long it may take to pay back.

A good business plan will enable banks to gain a distinct picture of a company, as well as presenting the ideal opportunity for business leaders to demonstrate their passion and drive for their company.

4 Turned down by a high street bank?

There are some alternatives to banks these days. Peer-to-peer lending businesses offer the chance for businesses to borrow from individuals willing to lend their own money. In fact, if you’re a small business customer of Royal Bank of Scotland, you can now expect to be referred to a peer-to-peer lending platform.

The bank, which is 81% taxpayer-owned, has just announced a new deal with two such lenders, Funding Circle and Assetz Capital. RBS isn’t the first high street bank to acknowledge peer-to-peer as an alternative way for businesses to raise money. Santander already has similar arrangements in place.

Angel investors are another funding source that many small business owners are engaging. This can be very helpful if the investor or syndicate of angels have experience and contacts in the specific industry.

What about crowdfunding? Find out more.

5 Getting advice

There is a wealth of help around for small businesses whether you’re just starting out or wanting to expand. There is help available online at and also from the government business support helplines. The more help you get, the better your chances.

Want to hear about other ways to raise money for a new business? Click here.


The opinions expressed are those of the author and are not held by Saga unless specifically stated. The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.