guest article Applying for a business loan


Connor Campbell from NerdWallet gives advice on what to do if you’re considering applying for a business loan.


lender with a more detailed picture, allowing them to potentially make a quicker or more appropriate decision.


• It pays to be prepared Lenders value preparedness with business loan applications. Businesses should clearly outline how they plan to spend the loan, and exactly how it will benefit the organisation. Lenders will interpret this as a sign of financial responsibility and may be more likely to view the application favourably. Outlining a repayment plan may also benefit a business loan application. It can instil additional confidence in the lender that the organisation is capable of repaying the loan.


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usiness loans can be a vital source of finance to propel growth and take a company’s performance to the next


level. However, a recent survey among 500 senior decision-makers commissioned by NerdWallet found that almost a fifth (18%) of businesses that had applied for a loan in the first half of 2022 were rejected. So, to help minimise frustration, confusion and wasted resources, here are five important checkpoints for businesses to increase their chances of success when applying for a business loan.


• Understanding your business credit score Similar to a personal credit score, a business credit score is a measure of a company’s creditworthiness. It is used by lenders to understand the borrower’s financial position, and level of financial risk. Scores usually range from 0 to 100, with higher scores indicating lower financial risk. As you might expect, the higher a businesses’ score, the better the chance of their application being approved and the more favourable the lending terms may become.


Understanding your business’ credit score


prior to applying for a loan can save a lot of time and effort, as this will give you a better idea of your chances of success – and, if necessary, it will allow a business to work on improving its credit score.


Actions that can be taken to potentially improve a business credit score include: • filing accounts fully rather than submitting


10 | housewareslive.net


abbreviated or micro entity accounts • paying bills on time • avoiding any county court judgements (CCJs) and insolvency proceedings • keeping company information, such as your registered office address, up to date


Businesses credit scores can usually be checked for free via a number of credit agencies, such as Experian or CreditSafe.


• Getting your finances in check Ensuring an organisation’s finances are in order may increase the chances of business loan application success. This will involve auditing all incomings and outgoings to ensure the company has healthy cashflow; it may also mean settling outstanding debts where possible. On top of this, an audit will help businesses better understand how much they can afford to borrow and repay. It might also be advisable to invest in new accounting software, to improve the efficiency of such financial audits.


• Do not forget your business accounts Some lenders request to check a businesses’ latest financial accounts as part of the application process. This means that the organisation’s accounts should be as up to date as possible, so if they have not been filed within the previous 12-18 months, it would be advisable to file fresh accounts. Filing accounts fully rather than submitting


abbreviated or micro entity accounts is also advisable in many instances. This provides a


• HousewaresLive.net • twitter.com/Housewaresnews September/October 2022


• Know your options There are a plethora of business loan options available, including secured, unsecured or working capital loans. The key is to conduct thorough research to find the most appropriate products, lenders and rates. Comparison websites are a great place to


start, as they outline the main details in one easily accessible place. This can save time and allows the management team to compare the choices on offer and select the right options for them – and then they can kick start their application.


Connor Campbell is a writer and spokesperson for NerdWallet UK. NerdWallet is on a mission to provide clarity for all of life’s financial decisions. As an independent financial comparison website, NerdWallet provides consumers and businesses with useful tools and insights so they can make smart money moves.


uNerdWallet.com/uk


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