10 things you need to know about applying for a business loan

Thinking about taking out a business loan through Funding Circle? Have a read through our list to make sure you have all the information you need.

1. Who can apply for a business loan?

Our aim is to help established and creditworthy businesses access finance through our marketplace. Limited companies, limited liability partnerships (LLPs) and non-limited companies that have at least 2 years of filed or formally prepared accounts can apply. We’ll typically need to see a minimum annual turnover of £50,000 in your latest accounts. You can check if you’re eligible for a Funding Circle business loan online in just 30 seconds.

2. Types of business loans we offer

  1. Unsecured loans – up to £350,000
    These are highly flexible loans that can be used for a wide range of purposes, including working capital, expansion, buying new equipment and more. As they are unsecured, this means you do not put assets forward as security.
  2. Secured loans – up to £1 million
    These loans can be used for a wide range of purposes and can help you to borrow more for your business.
  3. Asset finance – up to £1 million
    If you’re thinking about purchasing a new asset or refinancing an existing one, then this could be the best solution for you. We can also fund the VAT if required.
  4. Property finance – up to £3 million
    We offer the full suite of property loans including finance for development and investment purposes, as well as bridging finance. Please contact propertyfinance@fundingcircle.com to find out more.

A personal guarantee from the majority shareholder(s) is required for all of the above.

Candy from Suffolk Canine Creche used her business loan to expand

Candy from Suffolk Canine Creche

Candy Rose from Suffolk Canine Creche has tripled her turnover after getting an £84,000 unsecured business loan to expand her doggy day care business. 

3. What do we look for when we make our decisions?

Once you’ve checked your business is eligible you will need to complete our short online application and provide the following:

  • Most recent filed / formally prepared accounts
  • Last three months of business bank statements

We may also request management accounts, depending on the age of your most recently filed / formally prepared accounts, and other supporting documents for certain products. The credit assessment team will then use the information you’ve provided, as well as information from credit bureaus (for example, Experian) and other third parties to make a final decision.

4. You have a dedicated account manager

At Funding Circle you’ll have a dedicated account manager as soon as you have completed our simple application. They’ll be on hand to guide you through the process and if you have any questions you can give them a call directly. Let us worry about your loan while you focus on your business.

5. How long does the process take?

We combine the latest cutting-edge technology with years of experience in credit assessment so we can give you a decision typically in just 2 working days. In January 2017, 85% of applications were reviewed within 24 hours. If your application is approved your funds will be available to drawdown within a week.

6. What interest rate will your business pay?

If your loan application is successful, the loan will be given a risk band. This will be one of six: A+, A, B, C, D or E. The final interest rate you pay back on your loan will depend on many factors, but the risk band is the most influential. Interest rates start at 4.9% per year.

7. What fees do we charge?

One of the best things about taking a Funding Circle loan is that there is only one fee, and unlike other lenders there are no early repayment fees, so you can settle your loan early with no extra cost. You will only pay interest for the time you borrow, so if you pay back early, you pay less. 

The fee will depend on the risk band and loan term you have requested. Use our small business loan calculator to get an estimate of what your monthly repayments could be.

8. How are the repayments structured?

You’ll need to pay your loan back in equal monthly instalments over your chosen time period (please note the repayment structure of some property development loans may vary).

Make sure you get your ID documents to us to set up a direct debit as soon as you can, as your first repayment is due one calendar month after your loan request closes. This is to ensure payments are on time for the investors who have lent to you.

9. Who’s lending to me?

With more than 55,000 investors, including individuals, local councils, universities and the Government-owned British Business Bank*, the marketplace gives all types of investors, big and small, the chance to participate in your loan.

Each loan request is listed on the marketplace and is either funded in full by a large investor, like a local council, or as a partial loan, where thousands of investors can offer as little as £20 each to fund your loan.

They will have access to key financials for the business, for example the credit score and details of why you need the loan. Investors can also ask you questions about your application, and we recommend answering these as quickly and in as much detail as you can!

10. Can I apply for a second loan?

It’s easy to apply for another loan, as you’ve been through the process once before. You’ll typically need to have made at least 3 monthly repayments on your existing loan before applying. You’ll need to get back in touch with your account manager to apply for additional finance.

If you’re interested in taking out a business loan through Funding Circle, you can have a look at the website for more details, or start the application here.

Have a question?

If you are unsure about any of the above or would like to discuss your options, our team are more than happy to help. Call us on 0800 048 8747.

*Funding Circle is supported by British Business Bank Investments Ltd, the commercial arm of the British Business Bank, a development bank wholly owned by the UK Government. In 2017, British Business Bank Investments Ltd committed £40 million, in addition to its £40 million commitment in 2014, alongside other investors, to support economic growth by providing more efficient finance to smaller businesses.