What criteria do lenders consider?

There are hundreds of alternative lenders in the UK outside of the mainstream banks, each with their own specific lending criteria.

Whilst this level of variation is a good thing for SME owners, it can also make it very challenging to know which is the best lender to approach for your specific circumstances.

Whilst each lender will have their own rules for what they can and can’t approve, they will generally all look at the following areas:

Values

The minimum/maximum amount that a specific lender can lend.

Terms

The minimum/maximum time that funding can be borrowed over.

Turnover

Some lenders will require a client to have a minimum turnover, whereas other lenders can consider any application irrelevant of turnover levels.

Trading Time

Some lenders will require a client to have been trading for a minimum amount of time, whereas some lenders are happy to consider any length of trading history, including start-up companies.

Homeowner Status

Whilst there are plenty of business finance options that do not require any lending to be secured against property, there are some lenders that will only lend to UK homeowners - even on an unsecured basis.

Adverse Credit

If you or your business have adverse credit (CCJ’s, defaults, returned items on bank statements, etc) some lenders will be willing to help whereas, for others, this will result in an immediate decline of the application.

Type of Company

Whilst most lenders are able to assist with any business type, some lenders will only lend to LTD companies and are unable to help Sole Traders or Partnerships.

Industry

With some industries having a higher volume of commercial failures or specific industry-relates challenges, there are a number of lenders that will not consider applications from specific industries (IE construction, legal, used car sales, etc) – irrelevant of how strong that particular business is.

Location

Whilst most lenders will cover all of mainland UK, there are some lenders that will not consider applications from Scotland or Northern Ireland, due to different legislative requirements to that of England and Wales.

Documentation

On top of this, the documents required to support an application can also hugely vary from lender to lender – some lenders are happy to proceed with just 3 months bank statements whereas some lenders will require 12 months bank statements, 2 years filed accounts, the last 4 Quarterly VAT returns, cashflow forecasts, draft accounts/MI and any mixture of these documents.

About Yorvik Business Finance

Yorvik Business Finance are a broker. We work closely with all of our panel of lenders, regularly staying up to date with any changes to our lender’s criteria. This means that our clients benefit from their application only being sent to lenders where the client meets the required criteria – saving valuable time, avoiding unnecessary credit searches and giving the application the best chance of being approved for funding.

Enquire with Yorvik