Applying for a small business loan starts with three key steps: understanding why you need the money and how it supports your goals, organising your financial information, and finding the most suitable lender for your business.  

If you’re running an established business and thinking about taking out a loan, this guide walks you through the process step-by-step, plus examples of businesses that have successfully secured funding. 

The 3-step process on how to apply for a small business loan 

Here are the 3 steps on how to apply for a loan for your SME based in the UK, even if you have bad credit. 

1. Define your loan purpose and goal 

Before you apply, be clear about what the money is for and what you want it to achieve. Be as specific as you can, and don’t be afraid to aim high. You should ask yourself the following questions:

• What exactly is the loan for, and how does it support your business goals? For example, are you launching a new product, recruiting new staff or buying more equipment? Perhaps you just need to cover expenses in a slow period?  
• What outcome do you expect? This could include expanding the business and focusing on growth, adding new services, strengthening financial stability, or even adding an extra pair of hands to the team. 
• How quickly do you need the finances? The speed you receive your money depends on your eligibility and how prepared your documents are, so bear this in mind when applying.  
• What repayment terms are suitable for your business? Consider repayment amounts and timelines carefully to avoid cash flow strain or unnecessary interest costs. 

Most lenders ask you these questions and having clear answers will act as guidance for the direction and growth you want your business to go in the future.

2. Preparing your financial and legal documents 

Having all the relevant information and insights into your business’s performance and plans will improve your chances of loan approval. ‘Out of sight, out of mind’ can be damaging when it comes to finances. 

Be honest and transparent. Hiding your numbers causes delays or rejection, as it doesn’t reflect your real position. Any good lender will help you understand your options. 

Your lender will want to look at:

• Your business details and mission 
• Your most recent business and market plan 
• How your cash flow is performing and financial statements 
• If you have any existing finance or loans 
• Your credit history and if you have any CCJs, defaults or arrears  
• If you have any collateral  

Don’t worry too much if your credit score is poor. Alternative lenders are more flexible with loan eligibility even with bad credit. Lenders just want to get an insight into your financial performance so they can assess whether the loan amount is realistic for your repayments and if your business will continue to be stable afterwards. 

3. Research the best place to apply for small business finance

There are many loan types and business lenders in the UK to explore your finance options, but not all solutions will suit you. There is no one-size-fits-all loan. Your business is unique and deserves tailored consideration. 

Types of lenders include:

• Traditional banks like those you see on the high street, such as Barclays, Lloyds, HSBC, and NatWest. 
• Government schemes focusing on growth and investment, like the Growth Guarantee Scheme (GGS), Bank Referral Scheme, and Start Up Loans.  
• Online lenders and challenger banks that have a digital-only presence and are newer to the financial market. 
• Community-focused lenders, like Community Development Financial Institutions (CDFIs), take a more personal, supportive look at your loan application instead of an algorithm. 

The easiest loans to secure will depend on your eligibility and financial needs. Some small businesses may find non-traditional lenders more approachable with face-to-face guidance. 

How does the loan application process work with BCRS Business Loans? 

BCRS Business Loans has a simple 3-step process for a speedy application.

1. Complete an online form in under two minutes with basic details, loan amount, and loan purpose. 
2. A Business Development Manager contacts you within two working days to guide your full application. 
3. Decisions usually take two to three weeks depending on the application complexity, security required, and details submitted.  

Read the top 10 tips for a speedy loan application from industry expert and Head of Credit at BCRS, Tony Wood.  

What types of businesses get accepted for small business loans? 

Businesses across a wide range of sectors secure funding every year. Once eligibility criteria has been met, recent examples from BCRS include:

• A fabrication company supporting the cabling industry 
• Local businesses expanding into international markets 
• Electrical services companies recognising value in apprenticeships 
• Entertainment groups expanding into licensing 
• Personalised clothing specialists relocating to new premises 

Between 2024 and 2025, BCRS supported 124 established businesses and added over £51 million in value to the West Midlands economy. Read the latest Social Impact Report and discover the community growth and jobs safeguarded and created.  

Looking for an ‘excellent’ partner to support your business’s future? 

We believe in the actions and impact of small businesses, after all, they’re the backbone of our economy. If you’re looking for an investment of up to £250,000* and you’re based across the West Midlands or Wales, call our team today or submit an enquiry below to explore your business loan options. 

With over 23 years of experience supporting SMEs, you’re in safe hands. 

*Credit is subject to status. Credit checks, affordability assessments, and terms and conditions apply.