What Lenders Look for When You Apply
Every lender assesses six core criteria: your personal credit score, your business credit file, trading history, annual revenue, profitability, and your ability to provide a personal guarantee. The weight given to each criterion shifts significantly by lender type.
We compared requirements across seven lenders in our business loans section. Banks (Barclays, NatWest, Lloyds) weight credit history and profitability most heavily.
Specialist lenders like iwoca and Capify focus more on trading performance and cash flow, making them more accessible for newer businesses.
Your industry sector also matters. Some sectors are classified as higher risk, hospitality, construction, and retail face stricter scrutiny at high-street banks. Specialist lenders tend to be more sector-agnostic, assessing your business on its own trading data.
Credit Score Requirements by Lender Type
High-street banks do not publish a minimum personal credit score, but in practice they expect a strong, clean credit file (personal scores run 0–999 on the Experian scale). A county court judgement (CCJ) on either your personal or business file is often enough to trigger an automatic decline.
Specialist lenders like iwoca do not publish a score threshold either; they weigh your full trading picture through Open Banking data rather than the score alone. Capify goes further, considering all credit profiles including CCJs and defaults, focusing instead on your monthly trading turnover.
The pattern is consistent: the sharpest rates go to the strongest profiles. Funding Circle offers rates from 6.9% APR but lends only to limited companies and LLPs trading a year or more. If your credit is patchy, iwoca or Capify are the more realistic starting points.
A cafe owner two years in, applying after a CCJ from a supplier dispute, is unlikely to get a yes from Barclays. We found Capify assesses monthly turnover instead of the credit file in that scenario, if you’re turning over £5,000/month, that’s the conversation to have first.
Trading History and Revenue Requirements
None of the big high-street banks publishes a hard minimum trading period, but in practice they want an established business with a couple of years of filed accounts. If you have been trading for less than that, you are usually better served by a specialist lender.
Specialist lenders are more flexible. iwoca requires just 6 months of trading and uses Open Banking data to assess your cash flow, reducing reliance on annual accounts. Capify also accepts short trading histories, focusing on your monthly card and bank turnover.
Revenue thresholds vary widely. High-street banks often look for £100,000+ annual turnover. Specialist lenders may work from £10,000–£50,000 depending on the loan size and term. We recommend checking your eligibility with a soft search before committing to a full application.
Turnover is only half of it. Lenders test affordability with a debt-service coverage ratio: your free cash flow measured against the new repayment. They want it to cover the repayment at least 1.25 times, and 1.5 or higher earns a better rate; below 1.25 is usually a decline.
Existing debt is the silent killer here. A merchant cash advance already sweeping your card takings drags that ratio down, and can turn an approval into an automatic no.
Documents You Need to Apply
Most lenders require: 3–6 months of business bank statements, last 2 years of filed accounts (or management accounts if under 2 years), last 2 years of personal and business tax returns, and photo ID for all directors.
You’ll also need a business plan or revenue projections if your business is under 2 years old, and a valuation of any collateral asset for secured loans.
For secured loans, you’ll also need a valuation of the asset being used as collateral, typically a property survey or equipment appraisal at your cost.
iwoca and several other specialist lenders offer Open Banking as an alternative to document submission. By linking your business bank account, the lender can assess cash flow directly, which typically speeds up the decision from days to hours and removes much of the paperwork burden.
A sole trader spending a Friday afternoon printing off six months of statements and digging up two-year-old tax returns is the traditional experience. Open Banking skips most of that, link your account, and the decision can land the same day.
How to Improve Your Chances Before Applying
If you have 3–6 months before you need the loan, there are meaningful steps to take. First, check your personal and business credit files for errors, incorrect CCJs or missed payments that aren’t yours can drag your score down. Dispute them directly with the credit agency.
Second, reduce your credit card utilisation below 30% of your available limit. Third, pay all outstanding supplier invoices on time, your trade credit history is reported and weighted heavily by lenders.
Fourth, avoid multiple loan applications in a short window. Each hard search leaves a mark on your credit file and is visible to other lenders for 12 months. We recommend using lenders that offer eligibility checks (soft searches) before committing, iwoca and Capify both do this.
Fifth, ensure your Companies House registration is up to date with a correct registered address and current director information. A verified, active Companies House record is a basic hygiene signal that lenders check.
Which Lenders Are Easiest to Qualify With?
Capify has the most accessible criteria, it considers all credit profiles, including CCJs and defaults, focusing primarily on your monthly trading turnover. If your business turns over at least £5,000/month, Capify is worth checking first.
iwoca is the next most accessible, working from 6 months of trading and assessing your full picture through Open Banking rather than a published score cut-off. Decisions are fast and the document burden is low.
Funding Circle sits in the middle, it uses business performance data rather than a hard score threshold, but it expects established businesses with a clean recent history.
High-street banks (Barclays, NatWest, Lloyds) expect the strongest profiles and are realistically an option only for established businesses with a clean credit file and a solid trading record.
Start with Capify or iwoca if anything in your profile is imperfect. Apply to the bank once you’ve confirmed your numbers stack up, not the other way around.
A builder with 18 months of trading, £8,000/month turnover, and one missed payment two years ago: Capify is the first call. The bank is the follow-up, once you know your eligibility.
Business Loan FAQs
Can I get a business loan if my company is less than a year old?
Yes, but your options are narrower. iwoca accepts businesses from 6 months of trading. Capify also works with short trading histories. High-street banks are geared toward established businesses and rarely lend to very new companies, though none publishes an exact minimum trading period. The British Business Bank Start Up Loans scheme offers up to £25,000 for very early-stage businesses, without needing a long trading history.
Does applying for a business loan affect my personal credit score?
A full application triggers a hard search on your personal credit file, visible to other lenders for 12 months. Multiple applications in a short window can lower your score. Use lenders that offer eligibility checks (soft searches) before committing, iwoca and Capify both do this at no cost.
Can I get a business loan with bad credit?
Yes, in most cases. Capify considers all credit profiles, including CCJs and defaults, focusing on trading performance instead of credit history. iwoca is also flexible on credit criteria. High-street banks and Funding Circle are less accessible for adverse credit. The worse your credit, the higher the rate you’ll pay.
Do I need to provide a personal guarantee?
Most unsecured lenders require a personal guarantee from the main director or shareholder. This means your personal assets are at risk if the business defaults. A small number of lenders, including some government-backed schemes, don’t require one, but they typically have strict eligibility criteria or lower loan limits.
How we reviewed this
What we covered. This guide explains how this product type works for UK businesses, drawing on FCA guidance, Bank of England publications, and lender documentation. We do not draw on comparison site summaries or aggregator data.
Data sources. All claims were checked against primary sources in April 2026, including provider websites, FCA guidance, and Bank of England publications. We do not cite comparison site summaries or affiliate aggregator data.
Update cadence. We re-verify this page at least monthly, and whenever a provider changes pricing, eligibility, or terms. The verification date on the page reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.
Regulatory note. This page is editorial content, not regulated financial advice. Credit products are subject to status and approval. Compare offers directly with providers before you apply.