Business Loan Eligibility: What UK Lenders Require in 2026

The Business Loan Eligibility Checklist

You can predict most decisions before you apply, because lenders weigh the same four things: how long you’ve traded, your credit, your turnover, and whether your Companies House filings are up to date.

Your odds split by lender, not by one national pass mark.

You’ll find high-street banks set the highest bar and the lowest rates, while alternative lenders like iwoca and Capify approve thinner files on cash flow but charge more. We map each requirement below so you can aim at the right lender first.

How Long You Need to Have Been Trading

Your trading history is the first filter, and it varies more than any other criterion. High-street banks usually want two years of your filed accounts; Funding Circle also needs two years, and you can’t have been dormant in between.

iwoca sets no fixed trading-history minimum and will even consider a startup (capped at £10,000), while Capify wants six to twelve months for a loan, or four to six for a merchant cash advance, reading your cash flow. The shorter your history, the higher the rate you pay for it.

You can still start with Barclays or NatWest as a startup: both accept your forecast figures instead of a track record. If you’ve only just started trading, that’s where we’d point you first.

The Credit Score Lenders Look For

Your personal credit file matters even when a limited company is borrowing — lenders check every director and anyone holding 25% or more of the equity.

You won’t find a hard score cut-off published by UK lenders. As a working guide, a clean file scoring 700 or above earns the best rates, and a CCJ or recent default on a director can trigger an automatic decline whatever the business looks like.

Your company builds its own commercial score too, with agencies like Experian or Creditsafe. We read both files the way a lender does: late trade payments and a stretched debt load on the company file cost you, even with clean personal credit.

Turnover and Affordability

You need enough turnover to make the repayments look comfortable, and the minimums vary widely. iwoca starts at £10,000-£20,000 a year; Funding Circle looks for £40,000-£50,000; Capify wants £10,000 a month in card takings.

Your turnover alone isn’t the test, though — affordability is. Lenders model whether your free cash flow covers the new repayment on top of existing debt, so a profitable month with heavy commitments can still fail.

We’d add up your current loan, overdraft, and card commitments before you apply. If a merchant cash advance is already running, many lenders won’t stack a second one on top without buying out the first.

Which Business Structures Qualify

Your business structure decides which doors are open. Sole traders, limited companies, partnerships, and LLPs can all borrow from the high street — but the alternative market has tightened.

Funding Circle stopped accepting sole traders and ordinary partnerships on 23 February 2026, and iwoca lends only to limited companies and partnerships. If you’re a sole trader, you’ll lean on the high-street banks, Capify, or a Start Up Loan instead.

A dormant company can’t borrow. If yours is registered dormant at Companies House, you’ll need to reactivate it and build six to twelve months of trading and your cash flow before a lender will look.

Secured vs Unsecured: Different Eligibility Bars

You clear a different bar depending on whether the loan is secured. An unsecured loan rests on your cash flow, credit, and trading record, and almost always needs a personal guarantee above £25,000.

You pledge an asset for a secured loan — commercial property, machinery, or land — so eligibility hangs on a valuation. Lenders typically lend up to 70-75% of the asset’s value, at lower rates and over longer terms, up to 25 years.

That’s the secured trade-off, and the valuation costs you time.

Startups and Thin Files

You face the tightest market as a startup, with no filed accounts yet to prove your cash flow can service the debt. Two routes stay open: a lender that assesses your forecasts, or a government Start Up Loan.

A Start Up Loan lends each founder up to £25,000 at a fixed 7.5%, over one to five years, with no security or guarantor needed. Since April 2026 you can apply if you have traded for up to five years, not just three.

We rate the Start Up Loan as the first stop for a thin file: the rate beats most commercial startup lending, and the 12 months of free mentoring is worth claiming.

Why Applications Get Declined

You can avoid most declines by knowing what triggers them. The big four are recent CCJs or defaults, too little trading history, overdue Companies House filings, and weak affordability.

Picture hitting ‘apply’ with an overdue confirmation statement: the lender’s automated check reads it as administrative distress and declines you before a human ever opens the file.

We’d clear those flags first — file anything overdue, settle or explain a CCJ, and don’t apply in the same week you’ve maxed your overdraft. Each one moves you from an automatic no to a real assessment.

Checking Eligibility Without Hurting Your Credit File

You should start with a soft eligibility check, never a full application. A soft search shows what you’re likely to be offered and leaves no mark on your credit file.

A full application triggers a hard search, which stays visible for 12 months and dents your score if you rack several up. So compare on soft checks first, then apply once, to the lender most likely to say yes.

You can use a soft check at the quote stage with most lenders, Funding Circle and NatWest among them. We use it to shortlist before anyone runs a hard search on your file.

How to Strengthen Your Application

You can improve your odds in a few weeks without borrowing a penny. Keep your Companies House filings current, because an overdue account or confirmation statement is an instant red flag.

Connect your accounting or open banking so the lender sees clean, consistent cash flow, and keep your business account out of unarranged overdraft in the months before you apply.

Tidy filings and steady cash flow do more for you than a polished pitch.

We’d also right-size the ask: request what your turnover comfortably services, not the maximum, and have your last accounts and six months of statements ready so underwriting doesn’t stall.

Business Loan Eligibility FAQs