Introduction
Applying for a loan can be intimidating, but with the right preparation, it doesn’t have to be. Before you start the loan application process, it’s important to gather the necessary business documents.
Documentation Requirements
The specific documentation you need may vary depending on the type of lender you choose. Banks, for example, often require more documents to mitigate risks, such as a business plan or insurance. Other lenders may have fewer requirements.
Alternatively, working with a broker can streamline the application process, as they offer online applications with reduced documentation needs.
Business Bank Statements
Business bank statements are crucial for verifying your company’s income and expenses. These monthly statements provide a summary of your transactions and help determine your financial health.
Financial Accounts
Financial accounts offer a comprehensive view of your company’s finances for the entire financial year rather than solely relying on bank statements. They include turnover, profit and loss statements, and balance sheets that illustrate your business’s assets, liabilities, and equity.
Additionally, financial accounts contain important details like your company registration number (CRN) and registered address, which you may need to submit.
VAT Returns
If your financial accounts are not up to date, VAT returns can serve as an alternative. Updated quarterly, these returns provide a snapshot of your business’s finances during that period. Please note that not all businesses are subject to VAT.
Management Accounts
Management accounts offer real-time insights into your business’s performance and help lenders project future financial results. While there are no set rules for management accounts, they typically include profit and loss statements, as well as balance sheets.
Accounting software, such as Sage or Xero, can assist you in generating the necessary financial reports for your business loan application.
Details of Company Directors and Financiers
Most lenders require an application form that includes information about company directors, shareholders, and other financiers involved in the business.
Proof of ID and Address
Proof of ID, such as a driving licence or passport, and proof of address, such as a utility bill or bank statement, are necessary to verify your identity and prevent fraud or money laundering. These documents also help confirm that you meet any age requirements, such as being over 18.
Consult Your Broker
If you’re still uncertain about the required documents for a business loan, consult with your broker. They are knowledgeable about the process and can guide you through the documentation requirements, as well as address any other questions or concerns you may have.
About the Author: Adam Parker is the Commercial Director of credit broker SME Loans.
Learn More about Business Loans
Best small business loans in the UK – Explore whether a loan is the right finance option for your small business and discover some of the top loan options available in the UK market.
