What do lenders look for in a business loan application?
A business lender is answering one question: will this company repay this sum on these terms, and what happens if it does not. Everything it asks for serves that question. Six things carry most of the weight: whether the trading record shows the instalment can be afforded; how long the business has traded; what the company’s and the directors’ credit files say; what the money is for; what stands behind the loan if the trading fails, a charge over an asset or a director’s guarantee; and how the bank account has been run.
Each lender weighs them differently and publishes its own criteria, which is why the same case can be declined by one lender and approved by another on the same papers. We have access to a range of UK commercial finance lenders through our principal, White Rose Finance Group Limited. The check against those published criteria is the first thing we do, before anything is sent anywhere.
1. Affordability
The instalment is paid from profit after the owners’ drawings, so the lender reads the filed accounts for the profit the business has made and the management figures for the profit it is making now. It then reads the bank statements for whether that profit turns into cash: a profitable business whose customers pay late can still miss an instalment. The lender sizes the loan on what the figures show the business can carry, not on the sum requested, which is why a loan for a stated purpose with a stated payback is easier to size than a round number.
2. Trading time
A business that has traded for years has filed accounts and a record a lender can read. A business under a year old has no filed accounts, so the lenders open to it underwrite on bank statements and the directors instead and publish a minimum trading period in their criteria. The date on the Companies House register is the one the lender uses, not the date the directors consider the business really started. We arrange finance only once a business has traded for 3 months.
3. The credit files
Two files, read together: the company’s, from the commercial credit agencies, and each director’s personal file. A county court judgment, a default, a late filing at Companies House or a previous company that failed all appear, and each lender publishes its own view of them: the age of the mark, whether it is satisfied and the explanation all matter. An explanation offered with the application is read once; a mark the lender finds for itself is read as something the applicant hoped it would not find.
Enquiring does not affect your credit score. If you apply to a lender, it runs its own credit search, which may be recorded on your file.
4. The purpose
What the money will do, in a sentence. A machine that earns, a fit-out that lets the business trade, stock for a season, a gap between paying staff and being paid. A lender reads the purpose for two things: whether the loan will generate or protect the income that repays it, and whether the purpose matches the product. Money to cover a loss that recurs every month is not a purpose a lender will fund, because the loan runs out with the loss still there.
5. Security and the guarantee
On a secured loan the lender takes a charge over a property, an asset or the company’s assets as a whole under a debenture, registered at Companies House within 21 days, and reads the asset’s value and how easily it could be sold. On an unsecured loan to a limited company the lender almost always takes a personal guarantee from the directors, and reads the directors’ own position: home ownership, other commitments, the personal credit file. The guarantee is the lender’s answer to what happens if the trading fails, and it is enforceable against the director’s own assets.
6. The conduct of the bank account
Several months of statements, or an Open Banking connection, read line by line. Returned direct debits, an overdraft that never clears, payments to gambling sites, HMRC arrears, large unexplained transfers in or out, and the pattern of the balance across the month. A lender reads the statements as the business’s behaviour rather than its figures, and a tidy account with a thin profit is read more kindly than a strong profit with a chaotic account.
What a lender does not look for
A business plan, on most trading-business loans; the accounts and the statements do that work. A perfect credit file; each lender publishes what it accepts. The largest possible loan; a sum the figures support is approved more readily than one they do not. And the reason the bank said no, which is the bank’s own policy rather than a verdict every lender shares.
We work with UK limited companies and LLPs only, for business and commercial purposes. We arrange loans from £10,000.
Frequently asked questions
What is the most important thing a lender looks at?
Affordability: whether the accounts and the bank statements show the instalment can be paid from profit after the owners’ drawings. Everything else qualifies or disqualifies the case; affordability sizes it.
Do lenders look at personal credit for a limited company loan?
Yes. The directors’ personal files are read alongside the company’s, because the personal guarantee that is usual on an unsecured loan makes the director’s own position part of the lender’s security.
Will a lender look at my business plan?
On a trading business, rarely; the accounts and statements are the evidence. On a new venture, a purchase or a development, a forecast with its assumptions written down is read, because there is no trading record to read instead.
Does the bank declining me mean other lenders will?
No. Banks lend to their own policy, and each lender publishes its own criteria. What carries across is the pattern on the statements, which every lender reads.
Is CapExpand regulated?
CapExpand Ltd (FRN 1060885) is a credit broker and an Appointed Representative of White Rose Finance Group Limited (FRN 630772), which is directly authorised and regulated by the Financial Conduct Authority. We are a broker, not a lender. We work with UK limited companies and LLPs only, for business and commercial purposes. If you have a complaint, our complaints page explains how it is handled.
How is CapExpand paid?
We will receive commission from lenders. On some cases we also charge a fee, which we set out in writing and agree with you before you proceed.
More funding questions answered
- What is asset finance?Borrowing to acquire or release value from equipment, vehicles or machinery where the asset is the security: hire purchase, leases and refinance, and what defines each.
- What is invoice finance?Borrowing against unpaid invoices: the advance, the balance on payment, factoring against discounting, recourse against non-recourse, and what defines it.
- What is a commercial loan?Lending to a business for business purposes, as distinct from consumer lending: what the term covers, the main kinds, and what a commercial loan agreement contains.
- What is development finance?A short-term facility that funds a site and the build on it, drawn in stages against certified work and repaid from the sale or refinance of the finished scheme.
- Invoice finance with bad creditWhy lenders look at your customers' credit rather than yours.
- Do I need a business bank account for funding?Whose name the account has to be in, and why Open Banking comes up.
Read against the criteria first
The amount, the purpose and how long the company has traded are enough for us to check the case against lenders’ published criteria before anything is sent anywhere.
Sources
Checked 26 October 2026. This page describes what lenders commonly read; each lender publishes its own criteria and makes its own decision, and nothing on this page promises an outcome.
CapExpand Ltd (FRN 1060885) is a credit broker and an Appointed Representative of White Rose Finance Group Limited (FRN 630772), which is directly authorised and regulated by the Financial Conduct Authority. We are a broker, not a lender. We work with UK limited companies and LLPs only, for business and commercial purposes. We do not provide financial advice.