A business loan can be a useful tool for SMEs, offering access to capital which can help with growth, stability and resilience. Loans can facilitate investment in new locations, staff or equipment, as well as helping smooth cash flow and build business credit. When managed well, interest on a business loan can be more affordable than using personal credit cards, overdrafts or informal financing.
When applying for a business loan, lenders usually want to see a clear picture of your business’s financial health, repayment ability and future potential. The exact requirements vary by lender and loan type, but here’s a list of the most common financial information needed:
1. Business financial statements
- Profit and Loss Statement – showing your revenue, expenses and net profit.
- Balance Sheet – detailing your business assets, liabilities and equity.
- Cash Flow Statement – detailing inflows and outflows of cash.
- Aged Receivables & Payables Reports – a breakdown of outstanding customer invoices and bills owed.
2. Tax documents
- Business tax returns (usually the last 2–3 years).
- Personal tax returns (often required for small businesses or sole traders).
3. Bank statements
- Typically the last 3–12 months of business bank statements.
4. Business plan and financial projections
- Revenue forecasts (often 1–3 years).
- Expense budgets.
- Break-even analysis.
- Explanation of how the loan will be used and how it will generate repayment capacity.
5. Credit information
- Business credit score (if available).
- Personal credit report (especially for SMEs or start-ups without long financial histories).
6. Collateral (if applicable)
- List of business or personal assets offered as security.
7. Other supporting documents
- Incorporation documents or partnership agreements.
- Existing loan or debt schedules.
When applying for any business loan you’ll need to provide a clear picture of the health of your business, so that your lender gets an idea of your suitability. Lenders typically want proof of past performance (using tax returns and statements), current stability (bank records and a balance sheet) and future viability (projections and your business plan).
If you are considering a loan for your business, and want to be sure your reporting is accurate, please contact our friendly Chichester based team.