How Hard Is It to Get a Commercial Loan?

Commercial loans, sometimes referred to as business loans, are specialist financial products issued exclusively for specific business purposes. They are almost always issued in the form of secured loans, where assets of value are used as security to cover the costs of the loan.

How easy or otherwise it is to get a commercial loan depends on a long list of variables. If you meet all the criteria specified by your chosen lender, qualifying for a commercial loan can be fairly straightforward.

But if you have issues with your credit history or cannot provide concrete evidence of your current financial status, you may encounter difficulties with most High Street banks.

What Kinds of Factors Influence Commercial Loan Eligibility?

All lenders have their own policies and requirements when determining an applicant’s eligibility for a commercial loan. However, most lenders base their decisions on a handful of common criteria, which can also have a major impact on the affordability of the loan, should it be issued.

These are:

• The size of the loan required and its intended purpose
• The value of the assets used as security for the loan
• The length of the repayment period
• The credit status of the borrower at the time of their application
• The overall financial situation of the borrower
• The presence of existing debts and outstanding loans
• The general financial track-record of the applicant

Understandably, preferential treatment will always be given to applicants considered to be low-risk borrowers by the lender. The further the applicant falls from meeting the bank’s preferred commercial loan criteria, the higher the likelihood their application will be rejected.

Or if accepted, the higher the borrowing costs are likely to be.

Can I Get a Commercial Loan with Poor Credit?

Increasingly, the UK’s more dynamic lenders are acknowledging the flaws in conventional loan application vetting systems. Qualifying for a commercial loan on the High Street with poor credit remains difficult at best. There is an established and growing market for loans specifically aimed at applicants with credit issues.

Many specialist lenders, including bridging loan providers rarely base their decisions exclusively on binary issues like credit scores. They instead assess all applications by way of individual merit, basing decision on a much broader range of factors.

With bridging finance for example, what matters most is the applicant’s capacity to provide assets of sufficient value to cover the costs of the loan. If so, rejection on the basis of credit issues is highly unlikely.

Independent Broker Support

The key to getting an unbeatable deal on a commercial loan lies in enlisting established broker support at the earliest possible stage.

Your broker will help you choose the most appropriate products to suit your needs, while negotiating on your behalf with an established network of specialist lenders.

Broker support can be particularly useful when applying for a poor-credit commercial loan, as it is essential to know which lenders to target with your application.