A business loan is a form of borrowing designed for commercial organisations, rather than individuals, which is paid back over an agreed period. This is usually anything from one month to up to 15 years. Business loans can be categorised into two types: secured or unsecured.

There are a number of eligibility checks your business will need to meet in order to secure a business loan. Typically, these are:

• Your credit score in order to check your credit worthiness

• The age of your business

• Annual revenue, including net operating income

• Potential collateral - eg do you have any assets (inventory, property, equipment, etc) to back the loan in case of default.

• Personal debt-to-credit-ratio - some lenders perceive being in receipt of a large amount of credit at the time of applying for a business loan to be a risk

Yes, when you apply for a business loan, a credit check will usually be run with Credit Reference agencies. If you submit multiple business loan applications, then this can send negative signals that your business may be in trouble and this can in turn have a negative impact on your credit score. With Tide Business Loans, pre-eligibility checks are carried out before you apply. This can reduce the likelihood of your application being rejected and adversely affecting your credit score.

Other ways in which a business loan can influence your credit score include if you default or fail to make repayments on time. However, using credit wisely and ensuring you always pay on time will help to grow your business credit score.

The length of time it takes to approve a business loan depends on the type of funding you have applied for. Some products, such as Merchant Cash AdvanceFlexible Loans or revolving credit have a very short turnaround and the approval process can take as little as 2 business days. Other types of funding, such as Start-Up Loans or Equity and Grant finance have a much longer approval process which can take several months.

With Tide Business Loans, we run pre-eligibility checks on potential funding options. You will only be presented with business funding options for which you may already be eligible, therefore increasing the likelihood that your applications will be successful. This will also help to maintain a good business credit score, as you are unlikely to make multiple applications that are unsuccessful.

A secured business loan is money borrowed or secured against an asset you already own. This could be something like a car, premises or anything or value that will be used to secure payment to the creditor in the event that you are unable to repay the loan. In contrast, an unsecured business loan doesn’t require you to provide anything as security. Instead, you borrow a lump sum and then pay this back with interest over an agreed timeframe.

Firstly, it’s worth checking your credit score by getting copies of your business credit reports. You can review these for any errors and question anything you believe to be inaccurate with the credit agency. The best next step is to start to increase your creditworthiness. This can be done by using a credit card, or opening a line of credit. There are also sources of funding available, such as Start-Up loans, which help new businesses with no credit history to fund their growth. Alternatively, equity and grant finance may be available that provide you with business loans based on the potential of your company, rather than your creditworthiness. 

We also offer Tide Credit Builder – designed specifically to help small businesses grow their credit worthiness and open up future options for funding.

Yes, when you apply for a business loan, lenders will run credit checks with the main credit agencies to verify that you can afford to repay your loan. There is a risk that making too many failed business loan applications could negatively impact your credit score. With Tide Business Loans, pre-eligibility checks are carried out before you apply to reduce the risk of your application being unsuccessful. This also means that all the available options displayed will be tailored to your business needs.

When starting a business, the best way to improve your chances of successfully securing a business loan is to ensure you maintain a positive cash flow. You should also pay your suppliers, taxes and all other business charges on time. This will ensure that positive signals are sent to both lenders and Credit Reference Agencies. You can also use Tide Credit Builder, a credit card or credit line to help you boost your creditworthiness.