What are the eligibility criteria for a business loan in the UK?

The Four Criteria Every Lender Checks

Business loan applications in the UK are assessed against four recurring criteria: trading history, turnover, credit profile, and affordability. What differs is where each lender sets the bar, and that’s where comparing real numbers across a panel is more useful than a generic “you’ll typically need” line.

1. Trading History

The spread runs from zero (Start Up Loans, which is designed for founders without a trading record) to 24 months at the strictest end. A business at 8 months old already qualifies for around half the panel; it needs to reach the 24-month mark before Close Brothers or LendingCrowd become an option.

2. Annual Turnover

The gap between the most and least demanding lenders on turnover is more than tenfold: £24,000 at Capital on Tap against £250,000 at Close Brothers. A business turning over £40,000 a year already qualifies for Capital on Tap, iwoca, and (with no turnover threshold at all) Start Up Loans, but is well short of Bizcap or Close Brothers.

3. Credit Profile

Lenders check both the business credit file and, for most unsecured products, a personal credit check on directors holding 25% or more of the company. What varies is how much weight each lender puts on the credit score versus other data:

• Credit-score-led: Funding Circle and Close Brothers state that a reasonable credit score and up-to-date filed accounts are expected, with unsatisfied County Court Judgements or recent insolvency events typically resulting in decline.
• Cash-flow-led: Bizcap and Capify state that decisions are based primarily on cash flow and bank statement analysis, meaning credit score carries less weight than trading performance.
• Case-by-case: Fleximize and Nucleus Commercial Finance state adverse credit is considered individually rather than triggering an automatic decline.
• Open Banking-led: iwoca uses Open Banking data and business performance metrics, which allows it to approve businesses with limited credit history or minor adverse credit; it typically declines only active County Court Judgements above £250, current insolvency, or more than 3 months of arrears.

4. Affordability

Lenders assess whether the business can service the new repayment on top of existing debt, commonly using a debt service coverage ratio (DSCR): annual net profit divided by total annual debt repayments. A DSCR of 1.25 to 1.5 is a widely used benchmark. For example, a business with £120,000 annual net profit, £12,000 of existing annual repayments, and a proposed new repayment of £18,000 has total debt service of £30,000, giving a DSCR of roughly 2.8, comfortably clear of the benchmark.

Documents That Support an Eligibility Assessment

Having these ready before applying matters more than most applicants expect. Fintech lenders such as iwoca and Capital on Tap often accept Open Banking access instead of manually uploaded statements, which removes one of the more common causes of delay.

Loan Amounts by Lender

Amount ranges vary as widely as the eligibility criteria. Start Up Loans caps out at £25,000 per director, aimed at small, early-stage borrowing. Bizcap, Fleximize, iwoca, and Funding Circle all extend to £500,000 for established unsecured borrowers. Close Brothers and Aldermore, whose asset-backed and larger commercial products span multiple facility types, extend into the millions for secured lending. The right comparison isn’t “what’s the biggest loan available” but which lender’s range and criteria fit the business as it stands today.

Personal Guarantees and Credit Searches

A personal guarantee is a director’s legal commitment to repay the loan if the business cannot. It’s standard across most unsecured products on this panel, including Bizcap, Fleximize, and Nucleus Commercial Finance, whose published credit requirements name it explicitly as a condition. Secured lending against a specific asset, such as asset finance from Aldermore or Close Brothers, relies more heavily on the asset itself, which can reduce (though not remove) reliance on a personal guarantee depending on the deal.

A soft credit search checks eligibility without leaving a visible mark for other lenders, while a hard credit search is recorded and visible, and several in a short period can affect the credit score. Lenders using Open Banking, such as iwoca, typically run a soft search first and only convert to a hard search once an application proceeds to final approval.

Improving Eligibility Before You Apply

Filing accounts on time avoids automated declines that trigger before a human reviews the file. Reducing existing credit utilisation, particularly on business credit cards, before applying can improve the credit assessment. Keeping business and personal transactions separate makes turnover easier for a lender to verify. For businesses without two years of accounts, a short business plan covering what the loan is for, the expected revenue impact, and how it will be repaid gives lenders such as Start Up Loans and iwoca more to assess than the raw numbers alone.

How Eligibility Criteria Connect to Rate

Eligibility and rate aren’t separate questions. The lenders on this panel with the most accessible criteria (short trading history, low turnover) generally quote the highest representative APRs, while the strictest criteria come with the lowest rates. Start Up Loans, with no trading history requirement, charges a fixed 6% APR to every approved applicant. Aldermore (12+ months trading, £100,000 turnover) quotes 9.3% APR representative, and Close Brothers (24+ months, £250,000 turnover) quotes 9.9%. At the other end, iwoca (3+ months, £25,000 turnover) and Capital on Tap (12+ months, £24,000 turnover) quote representative APRs of 49.9% and 49.8%. Bizcap and Nucleus Commercial Finance, both accepting 6 months of trading, sit at 43.2% and 36% respectively. Eligibility that’s easier to meet tends to cost more, because the lender is pricing for less certainty about the business.

What Happens If You Don’t Meet a Lender’s Criteria

Falling short of one lender’s minimums doesn’t rule out the whole panel. A business with 8 months of trading and £40,000 turnover clears iwoca’s criteria (3+ months, £25,000 turnover), but falls short of Capital on Tap’s 12-month trading requirement and well short of Close Brothers’ or LendingCrowd’s 24-month requirement. Lenders such as Bizcap and Capify state explicitly that they base decisions primarily on cash flow and bank statement analysis rather than a fixed credit-score cutoff, which is why they can approve businesses that a stricter, accounts-led lender would decline on paper alone. Matching the application to a lender whose stated criteria the business actually meets, rather than applying broadly, avoids unnecessary hard credit searches.

Lendus Is an Introducer, Not a Lender

Lendus is an introducer, not a lender, not a credit broker, and does not give regulated financial advice. Every eligibility decision sits with the individual lender, and the figures above reflect what each lender states about its own criteria at the time of writing; they can change, so checking directly with the lender before applying is worthwhile.