- Lenders look at your ability to repay, your records, your experience and your plan.
- Clean financial records and a clear purpose for the money raise your chances.
- Compare the total cost of borrowing and avoid anyone who asks for large upfront fees.
The Short Answer
Lenders want to know one thing: will you repay? They look at your business records, your cash flow, your experience, your credit history and what the money will be used for. The better your records and your plan, the better your chances and terms. Borrow only what you can repay, and compare the total cost of every offer. This is general information, not financial advice.
What Lenders Usually Look At
| Area | What they check |
|---|---|
| Business registration | Whether your business is properly registered. See our CAC registration guide |
| Financial records | Bank statements, sales records and accounts |
| Cash flow | Whether the business earns enough to make repayments |
| Credit history | Your record of repaying past loans. See how credit scores work |
| Purpose | What you will do with the money and how it will help the business earn more |
| Security or guarantees | Assets or guarantors, if the lender asks for them |
Prepare Your Documents
Gather your registration documents, tax identification, identification for the owners, six to twelve months of bank statements, simple profit and loss records, a list of debts and a short plan explaining what you need the money for and how you will repay. Keep your business and personal money separate.
Write a Clear Loan Purpose
Say exactly what you will buy or fund, how much it costs, how it will increase income or lower costs and how soon it pays back. A loan for equipment that brings in new customers is stronger than a vague request for “working capital.”
Compare Offers
Compare the interest rate, fees, repayment period, total repayment amount, early repayment rules and what happens if you pay late. A loan that looks cheap monthly can cost more over a longer term. Read the contract carefully and ask questions before you sign.
Alternatives to Consider
Depending on your situation, you may consider invoice finance, supplier credit, a smaller loan, grants or savings. Read our guide on invoice financing and factoring and compare business cards in Brex vs Ramp. Also check how insurance can protect your business in our business insurance guide.
Avoid Loan Scams
Be careful of anyone who asks for large upfront fees to “release” a loan, guarantees approval or asks you to pay into a personal account. Check that the lender is licensed by the proper regulator. See our guide on spotting scams.
Frequently Asked Questions
Can a new business get a loan? It is harder, but possible. A strong plan, some savings of your own and a guarantor can help.
How much should I borrow? Only what you need and can repay comfortably, even in a slow month.
What if I am refused? Ask the reason, fix the problem and try again, or consider other funding.
Do I need security? Some loans do, and others do not. Check the terms carefully.
Action Checklist
- Register your business and keep separate accounts
- Prepare statements, records and identification
- Write what the loan is for and how you will repay it
- Check your credit report and fix errors
- Compare the total cost of each offer
- Verify that the lender is licensed
- Never pay large upfront fees to get a loan
