How to Get a Business Loan

Business Loans don’t have to be time-consuming or scary, here, we’ll walk you through the basics you’ll need to have in place to apply and get the best rates.

Sometimes running your own business can feel like you're stuck in your own chicken and egg problem. After all, as the old saying goes; you've got to spend money to make money, but how can you do that without money in the first place? Small business owners (and large business owners as well!) often turn to small business loans and small business financing to help them expand and alleviate cash flow issues. A small business loan can be a more strategic and viable funding option for small businesses rather than something more short-term like business credit cards.

The idea of applying for small business financing may seem daunting but the process doesn't have to be scary or daunting at all. Over the past few years, we've seen bank loans and the paycheck protection program get widely expanded due to the effect of the coronavirus and it's never been easier to get the financial aid that your business needs. The chances are that, if you're running a well-organized business, you've got everything that you need to apply for a business loan already.

Step 1 - Check Your Credit Score

This is the first thing that any small business lenders or online lenders that you approach will look for. Just like for personal loans they'd check your personal credit score, for a small business loan, they'll check your business credit scores. Even if you're sure that you've got a good score, it's best to double-check it anyway in case there's an error or any small business administration that needs to be done.

Bad credit scores don't necessarily mean that you can't get a small business loan but could affect your loan options and terms. You'll need to make sure that the rest of your paperwork is spot on so that the application runs smoothly from this point. A bad credit score could mean that you have to pay a higher rate of interest and therefore your monthly payments could be higher.

Step 2 - Check Your Financial Records

Have a look at any outstanding debts that you might have and make sure you have the records behind them ready to submit. You may be asked questions about these previous debts so make sure you have the documents ready to answer them!

If you have any debtors (people that have received goods or services from your business but not yet paid), or anyone else that might owe your company money, make sure you have good records of this too. You'll also need to be able to explain how you'll be recouping this money, and it can't hurt to make sure that you're comfortable with your payment terms as well so you know when. the money is due back.

They will want to see your bank statements as well so make sure you have them to hand. They'll ask questions about anything that seems anomalous in there so make sure you know what these transactions are for and how you can explain them.

Step 3 - Have Your Business Accounts Ready

These will usually include a profit and loss (P&L) statement looking backward to display how profitable different areas of your business have been historically. This should be easily obtainable from your accounting platform (Xero, QBO, MYOB, etc.).

You'll also be asked to provide any business plans that you have. This will be in form of a 3-way forecast; one that is comprised of a P&L, balance sheet, and cash flow, and usually spans from 3 to 5 years. You may be asked to justify some things in your plans so make sure you know what your plans are and where the money will be used. Futrli is the number choice for creating a 3-way forecast that is lender-ready.

Step 4 - Have A Detailed Plan of What You Want To Borrow and Why

This might seem obvious but to get a small business loan, you'll need to know how much money you are looking to borrow and why. It's not going to cut it to borrow "an amount" just for the sake of having and the feeling of financial security.

That being said, this money doesn't have to be physical goods or services for your business, it just has to be for something tangible that you can justify. You can apply for loans to help with working capital, pay off debts or hire staff. Just make sure you know what it's for when you ask!

Step 5 - Prove You’ve Thought About How and When You’ll Be Paying The Loan Back

Make sure you know how you'll be paying back the loan, and even better if you can show in your forecast how you'll be paying it back and that you're still profitable even after that. This one is a part of step 3 as well, we're hoping that you finished the whole blog before you jumped into it.

Factor in as much external. What happens if your biggest customer or supplier goes bust? What happens if the price of something skyrockets? Having thought these things through is a really good sign to lenders.

Business Loan Application FAQs?

What is a directors’ guarantee?

A directors guarantee is a personal guarantee from one or more of the company directors that they will personally repay any debts of the business if the company is unable to meet the loan repayments.

Will my business loan be rejected if I ask for too much?

Strangely, you're more likely to be rejected for not asking for enough money! This happens a lot as banks may not see the investment of a small amount worth it.

Can I get a business loan with a poor credit score?

This is a possibility but not a definite reason to not get funding, although it definitely will affect the funding you get. It's a good idea to know what forms a credit score so if this is a worry of yours, you can take steps to improve it.

Are there business loans just for women?

Yes! Statistically, female-led businesses are less likely to get funding than male-led ones so there are organizations that looking to bridge the funding gap - some of them are even government backed.

Button Label

Get business advice here

Our blog holds tips, how to’s and general business advice.


The 7 reasons why SMEs struggle with cash flow management

Find out the 7 major reasons why your clients’ businesses struggle to achieve a positive, healthy, consistent cash flow.

This is some text inside of a div block.


Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat.


The 7 reasons why SMEs struggle with cash flow management

Find out the 7 major reasons why your clients’ businesses struggle to achieve a positive, healthy, consistent cash flow.


Take clients from compliance to scenario planning in five steps

Scenario planning helps your clients imagine different environments or realities in the future, guiding the plans and decisions your clients make.


Flash reports and why to build them

This short guide covers what Flash Reports are and how you could use them as a speedy solution for your clients’ reporting needs.

Small Businesses

Head of Accounting and Futrli COO discuss challenges and solutions for small businesses.

Read Dan and Helen’s thoughts on how SMEs can protect themselves during what is set to be a challenging year.

Small Businesses

What does it mean if my business is in the red?

This blog post provides handy insights about what it means when your business is in the red.


Advisory Services: the Future of Accounting

Advisory is the future of the accounting profession. Read how to make changes in the profession work for your firm.


Spring-Clean your Firm’s Digital Ecosystem

Creating new habits can happen at any time of the year. Take the opportunity to check in with your firm’s digital ecosystem and implement good habits.


5 ways to sell your clients on advisory services

Accountancy firms need to act quickly to ensure that they offer their clients a range of advisory services, move with new trends, and increase revenue sources.

Small Businesses

How to prepare your small business for MTD (Making Tax Digital)

Find out what MTD for ITSA means for you and how to MTD-proof your small business.

Futrli News

Futrli has been acquired by Sage!

Sage's acquisition of Futrli is part of its continued strategic approach to support accountants from proposal to advisory services.


What is a Purchase Order (PO) Number? Everything you need to know

PO Numbers are a crucial detail required for Purchase Orders and Invoices, helping identify and manage your customers purchase journey.


Total Cost: Formula, Definition & Examples

Identifying your Total Cost can be crucial in understanding your business's profitability. Learn how to properly evaluate your Total Cost performance.