Your credit score is one of the first things any lender will check. In the UK, this means both your personal credit score and, if you have one, your business credit score. Many business owners are surprised to learn that personal credit history plays a significant role, particularly for sole traders, partnerships, and directors of small limited companies.

Check your personal credit file with all three main UK credit reference agencies: Experian, Equifax, and TransUnion. You can do this for free through services like ClearScore, Credit Karma, or directly via each agency. Look for errors, outdated addresses, or financial associations with people who have poor credit. Dispute anything that is incorrect.

Check your business credit score through providers such as Creditsafe, Dun & Bradstreet, or Experian Business. Ensure your Companies House filings are up to date, as late filings can negatively impact your business credit rating. If your business has county court judgments (CCJs) or outstanding debts, resolve these before applying if possible.

If your credit score is not where you want it to be, give yourself three to six months to improve it. Register on the electoral roll, pay down existing debts, avoid applying for multiple credit products in a short period, and ensure all bills are paid on time. These steps can make a meaningful difference in a relatively short timeframe.

Not every lender requires a formal business plan, but having one prepared demonstrates professionalism and forward thinking. For larger loan amounts, applications to traditional banks, or if your business is relatively new, a business plan can be the deciding factor between approval and rejection.

Your business plan does not need to be a hundred-page document. Focus on the essentials:

• Executive summary: A concise overview of your business, what it does, and its current position.
• Market analysis: Evidence that there is demand for your product or service. Include competitor analysis and your unique selling points.
• Financial projections: Realistic revenue and profit forecasts for the next 12 to 24 months, supported by assumptions you can justify.
• Use of funds: A clear breakdown of how you will use the borrowed money and the expected return on investment.
• Repayment strategy: How the business will generate enough income to comfortably service the debt.

Lenders want to see that you have thought carefully about the future of your business and that borrowing is part of a considered growth strategy rather than a desperate measure.

One of the most common reasons for delays and declines is incomplete or poorly presented financial documentation. Before you apply for any form of business finance, gather the following:

• Business bank statements: The last three to six months at minimum. Lenders scrutinise these closely to understand your cash flow, spending patterns, and whether you are managing money responsibly.
• Management accounts or filed accounts: Your most recent set of accounts, ideally prepared or reviewed by an accountant. If you are a limited company, ensure your accounts are filed at Companies House and up to date.
• Tax returns: SA302 forms for sole traders or partnership members, or corporation tax returns for limited companies.
• VAT returns: If your business is VAT-registered, lenders may want to see recent VAT submissions as an additional verification of turnover.

Having everything ready before you start the application process not only speeds things up but also signals to lenders that you are organised and serious. A messy or incomplete application creates doubt, even if the underlying business is strong.

It might seem obvious, but many applications fail because the business owner has not clearly defined how much they need or why. Lenders are naturally cautious when the purpose of borrowing is vague or when the requested amount does not align with the stated use.

Be specific about the amount. Rather than rounding up to a convenient number, calculate exactly what you need. If you need £23,500 for a new delivery vehicle, ask for £23,500 rather than £30,000. Precision shows that you have done your homework.

Be clear about the purpose. Lenders respond well to applications where the use of funds is directly tied to business growth or operational improvement. For example, "purchasing CNC machinery to increase production capacity by 40 per cent" is far more compelling than "general business expenses."

Consider affordability carefully. Lenders will assess whether your business can comfortably manage the repayments alongside existing financial commitments. Use an online repayment calculator to understand the monthly cost before you apply, and make sure it fits within your cash flow forecasts. Overextending yourself is a red flag for any lender.

One of the biggest mistakes business owners make is applying to the wrong lender. Every lender has its own risk appetite, preferred industries, minimum trading history requirements, and sweet spots for loan size. If you apply to a lender whose criteria do not match your profile, you will be declined, and that declined application will appear on your credit file, making the next application harder.

A finance broker eliminates this guesswork. Brokers have in-depth knowledge of the UK lending market and maintain relationships with dozens of providers, from high street banks to specialist alternative lenders. They can assess your business profile and match you with the lenders most likely to approve your application on favourable terms.

Using a broker also offers several practical benefits:

• One application, multiple options: You provide your information once, and the broker presents options from across the market.
• Access to multiple lenders: Brokers have relationships with a wide panel of lenders, giving you more options to choose from.
• Expert negotiation: Brokers can often secure better rates or terms than you would get by approaching a lender directly.
• Support throughout the process: From application to drawdown, a good broker guides you at every stage.

At Compare Business Finance, we connect UK businesses with the right lenders quickly and efficiently. Our free comparison service is designed to save you time and increase your chances of approval by ensuring your application lands on the right desk.