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Business loan checklist

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Jan 4, 2023

Fact Checked By:
David Nicholson - Finance Editor

Business loan checklist – How to apply

Small business owners may not be eligible for traditional commercial loans, so they can get low-interest loans from state and local economic development agencies.

The good news is that online lenders and other lenders will require the same information when you apply for small business loans as you would for a medium business loan.

Each business loan program will have specific forms that you must fill out to have your loan approved. You will need the same documentation for most loans. It’s a smart idea to prepare all the necessary business loan documents before you begin the application process.

To get a business loan you will need to show business bank statements and have a good credit rating. It is hard to get any loan with bad credit.

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Business Loan Application

While the forms vary from one program to another when applying for secured business loans, or unsecured business loans, they all require the same information. These questions should be answered. This information should be prepared before you submit the application.

  • Why would you apply for this business loan?
  • If the loan is approved what will you do with the loan proceeds?
  • Which assets are required to be bought and who are your suppliers?
  • Which other business debts do you have? Who are your creditors?
  • Which members are on your management team?
  • Personal Background and personal credit score.

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Applying for a business loan

When applying for a business loan, you will need to give some background information. This could be part of your loan application, or separately.


Lenders may require proof of business management experience in order to approve loans that could be used for the start-up of a new company.

Business Plan

To be eligible for any loan program, a business plan must be submitted along with your loan application. A complete set of financial projections, including cash flow, profit and loss, should be included in the business plan.

As part of your loan application, your lender will request your personal credit report. Before submitting a loan application to the lender, it is important that you obtain credit reports from all three major consumer credit rating agencies.

Your chances of getting approved for a loan can be affected by any errors or blemishes in your credit report. Before you begin the application process, it is important to get rid of any errors or blemishes on your credit report.

Report on Business Credit

You should prepare a credit report for any business that is already in operation. Before you apply, make sure to check your credit report for business.

Income Tax Returns

Many loan programs require applicants to submit income tax returns from personal and business sources for the three previous years.

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Financial Statements

Signed financial statements are required for many loan programs from owners who own more than 20% of your business.

Either as part of your business plan or separately, you may be required to submit projected financial statements. These documents should be prepared in case you are required to submit them separately for a program.

These forms can be used to prepare financial projections:

  • Balance Sheet
  • Statement of Income
  • Cash Flow
  • Statements from banks

A lot of loan programs require that you submit one year’s worth of bank statements for a loan package.

Accounts Receivable and Accounts Payable

Many loan programs require information about a company’s current financial situation. Before you start the loan application process, ensure you have accounts payable and accounts receivable.


There are many different collateral requirements. Some loan programs don’t require collateral. For loans with higher default risk factors, you will need substantial collateral.

You can avoid the need to put up collateral by having strong financial statements and business plans. It is a smart idea to create a collateral document that outlines the cost/value of any personal or business property to be used as collateral to secure a loan.

Legal documents

Your lender might require you to provide one or more legal documents depending on the loan’s requirements. If applicable, ensure you have all the following items:

  • You will need to register and obtain business licenses in order to operate your business.
  • Articles of incorporation
  • Copy of any contracts you have with third parties
  • Franchise agreements
  • Commercial Leases
  • Organising your documents

Good records are essential to running a business and even more so when applying for loans. You must ensure that all documents you provide are correct and in order. Your lender will verify all information provided. False or misleading information can result in your loan being declined. Keep personal copies of all loan documents.

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There are many reasons to take out a business loan

With the goal of using borrowed capital to grow their business, small businesses often take out commercial bank loans. Small businesses may be able to use inventories or receivables as collateral for loans.

Borrowing money can be very expensive depending on where it originated. There are also fees and interest that come with almost every loan. Before accepting a loan, businesses should be able to calculate the total interest they will have to pay over the life of the loan.

Applying for business loans – What you will need

These are the most common items needed for any loan application from a small business:

Existing firms looking to buy real estate for expansion will likely be offered money by banks. If a company is making a profit and has a growing cash flow, and can forecast the future, expansion will usually occur. This scenario is what makes it more likely that a bank will approve a small-business loan.

A mortgage is the most common form of bank loan for real estate. Bank loans for the long term will be secured by company assets and require quarterly or monthly payments of profits or cash flow. The repayment of the loan will be subject to an interest rate and can last from 3 to 25 years.

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Leasing or buying equipment

There are two options for businesses when it comes to purchasing equipment. They can either lease or buy it. A business owner can depreciate equipment over its life span if they borrow money. If the equipment is no longer in use or outdated, it can be sold at salvage value.

To determine whether it is better to lease or buy equipment for a company, a cost-benefit analysis must be done. A bank will usually lend equipment to a company for the short term. The loan is typically repaid monthly and lasts less than three years. The equipment’s useful life will usually be the determinant of when the repayment is due.

Maintain a positive bank balance

Small businesses that have a good relationship with banks may be eligible for short-term loans that are repaid in one year. Trust can be built by making timely payments and maintaining a positive balance in your checking or savings account. Small businesses such as hospitality, retail, and agriculture are often seasonal.

A short-term loan can be used to purchase inventory ahead of time if a company is able to make most of its holiday sales. Bank loans for inventory purchases are usually short-term. Companies plan to repay them after the season ends using profits from seasonal sales.

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Working capital loan application

Working capital refers to the money that is used to run the day-to-day operations of a business. A loan may be taken out by small businesses to cover operational expenses until they reach a certain amount of earnings. A bank loan is a short-term option for businesses that have good credit and a solid plan.

Because they are considered riskier than real estate loans, working capital loans have a higher rate of interest than real estate loans. If the business is not managed well or the earnings assets cease to be profitable, it will go bankrupt.

If you are looking for a business loan contact us now to get advice on your options.