By Kevin Gughes  September 09, 2024

Getting a business loan is not a cinch, especially when you have just started and your sales graph has not been consistently growing. Add to that, they also involve a lot of additional formalities like a business credit check and document submission. Even if you are to borrow a small amount of money, you cannot escape these formalities.

You may need a business loan for a variety of reasons. For instance, you may need it to fund your working capital, or you may want to invest in machinery. However, there are circumstances when you want to borrow money to invest in a profitable opportunity. This is the time when you need money urgently, but what if you struggle to get the nod?

A lender will check a lot of factors before deciding on your application. They will go over your credit rating and your repaying capacity. Even if your business has a separate identity, they will check your personal credit rating. Chances are you will be refused to borrow a larger sum of money if your personal credit score is not so good.

Unfortunately, it can affect the growth of your business if you cannot get money without further ado. Thankfully, there are ways to secure quick business loans.

Ways to secure a business loan quickly

Here are the ways you can use to secure a business loan quickly:

Have a business plan

If your business is not too old, you will struggle to qualify for a business loan. A lender would want to see your business history. If the loan amount is small, they will expect you to have been running a business for at least one year, but if you are looking to borrow a larger sum to be paid over a number of years, your business must be at least five years old.

Your business plan will give all the details about the following:

The purpose of borrowing money

• How you want to utilise the borrowed sum
• What if your investment fails?
• Do you have an alternative repayment plan?
• How do you want to target your customers?
• What marketing methods will you use?

A clear and precise business plan will help a lender make a lending decision.

Arrange a guarantor

A business loan can be expensive. They charge higher interest rates than other personal loans. Your lender will check your credit report to know your past payment record. However, sometimes, despite a good credit rating, you cannot qualify for the most affordable interest rates if your income is not sufficient.

If your lender suspects your affordability, they will either turn you down or they will charge very high interest rates. Some lenders may ask you to arrange a guarantor with a good credit rating. A guarantor will be responsible for making payments on your behalf if you refuse or fail to clear the dues.

Arranging a guarantor with a good credit rating is not so easy. Your guarantor will also lose their credit points if you fail to repay the debt. It is considered a bad sign that a guarantor had to settle the dues of someone else. You should take out guaranteed loans for bad credit in the UK only if you are completely sure about your repaying capacity.

Failing to pay off the debt on time will ruin your relationship with the guarantor as well. Before having someone act as a guarantor, you should ensure that they know the consequences of non-payment. In most of the cases, guarantors are usually a family person.

Improve your credit score

You should do up your credit rating if you want to get a business loan as fast as possible. When your payment history is excellent, your lender will not have any doubts about your ability to pay on time. When your credit score is good, you can easily avoid getting through the formalities of arranging a guarantor. You will be asked to secure your loan only when you borrow a larger sum of money.

However, in addition to a good credit rating, you should also have a strong income source. With a good credit rating and high revenues, you will be able to qualify for a business loan even if you are a start-up. However, you will be asked to submit a business plan.

Borrow less money

Chances are your lender is reluctant to lend you a large amount of money. If that is the case, you should try to borrow a small amount of money. Borrowing less than what you need can help increase your chances of approval. Bear in mind that a lender will examine whether you can repay the whole of the debt, which includes interest payments as well.

Use online loan calculators to estimate how much the debt will cost you. Assess whether you will be able to pay off the debt on time. If you have a good relationship with your lender, you are more likely to get a nod for lower interest rates.

To wrap up

To secure a business loan as quickly as possible, you should try to maintain a good credit score. If your credit rating is not perfect, try to arrange a guarantor and borrow a small sum of money. Use a business plan if you have a start-up. With a business plan, a lender will gain insight into your business and figure out whether it is a good idea to lend you money or not.

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