There are a few things lenders are specifically looking for. To make borrowing funds for your business easier, it helps to know how to play their game.
If you need to borrow money for your business, which situation would you rather be in?
A – Seeking out the one lender in the market who is prepared to let you borrow on their terms
B – Having your choice of different finance products
Clearly, B is a better position to be in as you may be able to borrow more, at a lower rate than in situation A.
How can you get from A to B? One of the most important things you can do is understand what factors lenders consider when making their decisions.
Here are some of the most important factors that lenders will look at:
- Your credit score, which is a measure of your creditworthiness. Lenders use your credit score to assess your risk of defaulting on a loan. A good credit score will give you a better chance of getting approved for a loan and getting a lower interest rate.
- Lenders want to make sure you have the ability to repay the loan. They will look at your income and expenses to determine how much you can afford to borrow.
- Lenders will want to know about your business’s financial health. They will look at your business’s income, expenses, and assets.
- Lenders will want to know what you plan to use the loan for. They will be more likely to approve a loan for a business that is well-established and has a good track record.
If you want to increase your chances of getting approved for a loan, there are a few things you can do:
- Get your credit score in good shape: you can get a free credit report from Swoop here.
- Ensure you have a healthy cash flow: Swoop has a range of tools to make sure you’re not leaving money on the table. Things like having the right business bank account, energy tariff and FX provider can make a substantial impact on your bottom line (for example, Swoop saves the average customer over £7,000/year on FX).
- Know the market: while banks are still the first place most people go to when they need funding, the lending market has really changed with innovative new products such as MCAs, invoice finance and more. These products are often more appropriate to business needs, may be less expensive and more flexible. Swoop will put all your options in one place so that you can have the pick of the deals.
- Use Open Banking: integrating your bank account with Swoop will make applications faster and easier. Lenders will want to see documentation to support your application and Open Banking makes this part of the process automatic. Learn more about Open Banking here.
By understanding what lenders look for and taking steps to improve your chances of getting approved, you can increase your chances of getting the funding you need to grow your business.
Getting a loan can be an uphill battle – but with the right help it doesn’t have to be. With Swoop, you can increase your chances of getting approved for the funding you need to take your business to the next level.