How much a business owner can borrow through a small business loan will vary depending on some deciding factors between both the lender and the business itself. Due to the revenue requirements that will determine the maximum that a business can access, whereby SMEs are typically expected to be earning at least 1.25 times their operating expenses to ensure they can repay a loan, the size and success of the enterprise will be the largest deciding factor on how much you can borrow.

There will also be other criteria that will determine how much you can borrow aside from your business’s revenue, including credit score and operating history, as well as the specific loan product you are applying for and the reason you are looking to borrow. Below, we’ll cover some of the primary reasons we are contacted here at Nucleus Commercial Finance by business owners looking to expand their business ventures, and then cover how much you might be able to borrow with our own facilities.

Reasons for Borrowing Different Amounts

Across industries and sectors, whether it is for expansion or an emergency, businesses will each have their own unique reasons for needing to borrow money, and in most cases, regardless of the reason, lenders will be able to offer them a suitable facility to help their needs. Some of the most common reasons we are contacted at Nucleus for are as follows:

• Working Capital: These are loans that can help your business with day to day operational expenses, are common, and typically aid to ensure a business can keep running smoothly without any cash flow interruptions.
• Expansion: Larger amounts of money are often required for expansion, and are typically sought after when a business wants to open a new location, or purchase some additional inventory to push growth.
• Equipment Purchasing: Small business loans are often applied for to buy new, or update equipment and technology, and are essential for improving workplace productivity and efficiency, or in the case of something like a restaurant, actually being able to run.
• Refinancing Debt: Borrowing funds to consolidate and refinance existing debt can help manage payments and reduce the interest rates of any current loans that a business has taken on, and can be a good way of reducing overall losses.
• Emergencies: Unfortunately, unforeseen problems can crop up for businesses of any size, so small business loans are ideal, and they can also help manage downturns in revenue to ensure your operations remain stable.

Small Business Loans at Nucleus Commercial Finance

We currently offer two loan products as of July 2024 — business loans and revenue based loans. They each have varying amounts that can be borrowed, and are tailored to meet the unique needs of businesses across all industries. Below is a detailed breakdown of what you can expect if you are seeking a small business loan with us:

Business Loans:

• Term: 3 months to 6 years
• Minimum Lend: £10k
• Maximum Lend: £2m
• Interest Rate: From 16.5%
• Decision Time: Same day decisions with the support of Open Banking

Eligibility Criteria for Business Loans:

• At least 12 months of trading history
• Access via Open Banking
• At least one Director who is a UK homeowner
• Facilities up to 72 months require Open Accounting access
• Restricted sectors include care homes and the legal sector

Revenue Based Loans (RBLs):

• Term: 3 to 12 months
• Minimum Lend: £3k
• Maximum Lend: £300k
• Factor Rate: Between15 and 1.35
• Decision Time: Same day decisions with the support of Open Banking

Eligibility Criteria for Revenue Based Loans:

• Minimum 4 months trading history
• Minimum 5 transactions per month
• E-commerce payments and/or card takings
• Backed by personal guarantees
• At least one Director based in the UK

Non-Homeowner Option for RBLs:

• Term: Up to 12 months
• Maximum Lend: Up to £75k
• Special Features: These loans can work alongside any existing Merchant Cash Advance (MCA) facilities.

Why Choose Us?

• Fast Access to Funds: Because we use open accounting and open banking in our loan application process, if you provide us with the correct information, the process can be completed in minutes, and in many cases we have paid out to prospective borrowers on the same day of application, saving them from financial woes.
• Flexible Options: Our loan types are designed for SMEs, and we will take each application on a case by case basis, so even if your credit rating isn’t perfect on paper, we are more than happy to discuss your situation and find out what we can do for you.
• User Friendly Process: Our application process is as streamlined as we could make it, and can be started on our CRM introducer platform where the director’s name, address, and date of birth will be requested, from there your application can get underway.
• Support for Various Business Types: We want to help as many people as we can with our loans, and cater to businesses across all industries, however certain sectors like car homes and the legal sector are restricted.

On the whole, across all lenders, the amount your business will be able to borrow will depend on your revenue, credit score, and loan type you are seeking, and as usual, we always advise that you speak to your accountant or financial adviser before taking any steps towards taking on debt. At Nucleus, we aim to help SMEs, so if any of our facilities look like something you need and for any reason, do not hesitate to get in touch.

Small business loans are accessible to anyone who meets the lending criteria, and this will vary from lender to lender, whether it is a traditional bank or alternative lender. Understanding what these criteria are will be essential for your application so ensure you do your due diligence and speak to the correct financial advisors beforehand.

Small business loans can provide important funding for SMEs trying to achieve growth or have come across a problem in which immediate financial relief is required. If you currently find yourself in one of these predicaments, below we’ll run through some of the criteria and small business loan types to help you get started.

Eligibility Criteria

Aside from the necessary financial documentation your business will need to access a small business loan, as well as proof of credit history and any necessary collateral, there are some other lesser known factors that lenders will also consider before working with you.

• Business age: Across all reputable lenders, depending on your business model and the type of loan you are seeking, you will find that your enterprise needs to have been in operation for certain set periods. This typically being at least 12 months to secure a term loan, which is the case with us at Nucleus, or, for example, our revenue based loans require a business to have been trading for a minimum of 4 months. It is worth being aware of, and the information will be easy enough to access if you are curious about a certain lender’s criteria.
• Revenue requirements: No reputable lender should give the green light to a business’s application if it is clear they will not be able to make timely repayments on their facility, and it is why most lenders set a minimal annual benchmark for businesses to meet. While this may vary between lenders, you should expect to be earning at least 1.25 the amount of your operating expenses to ensure there will be enough money in your accounts to pay back the facility.
• Legal and regulatory compliance: If you are a business that requires licensing, such as for dispensing alcohol or you are a restaurant it will be crucial to be in good standing with all legal and regulatory requirements. With proof of all permits, be they health and safety or anything else that is relevant, you can demonstrate to lenders that you operate responsibly and with compliance.

Different Types of Small Business Loans

• Term loans: Most commonly used for businesses who are looking for a lump sum of cash and agree to repay it over a set period, typically with a fixed interest rate. These facility types require a good credit rating, as well as proof of a steady revenue, and any other basic criteria required by a lender.
• Lines of credit: Typically allow a business owner to borrow up to a limit, then pay interest only on the amount utilised by the business. It has more niche uses for business models where there might be delayed payments from clients, in consulting or law firms for example, so a line of credit will carry them smoothly between payments.
• Revenue based loans: Ideal for business models that work with fluctuating revenue such as seasonal retailers or E-commerce brands. Lenders will assess your monthly sales and you will be required to repay based on a percentage of your revenue. Thanks to the minimal credit requirements that lenders typically require for this loan, it can make it more accessible, albeit more niche.
• Equipment financing: In some sectors businesses may require equipment specifically, and this loan option is based upon the asset you are looking to acquire. The equipment acts as collateral, too, so business owners with lower credit scores might still qualify.

Loan Application Process

Most things are online in the current year, with document scanning and transferring through secure portals being the norm, however that doesn’t change the necessity of having the things you need for your application in order and readily available for your chosen lender. Below are a few pointers we offer to business owners who are seeking a loan to help them get prepared:

• Loan preparation: First, always speak to your financial advisor if you are considering a loan, as they can help ensure you don’t miss any important details, both regarding the facility you are seeking and necessary documentation. With that said, ensure you have all the financial papers that the lender requests, including statements, tax returns, and in many cases, a thorough business plan. Having everything prepared, as previously mentioned, will streamline the entire process and demonstrate to lenders you are competent.
• Application submission: Different lenders will have preferred methods for application submissions, so make sure you are aware of them before you begin. If you have done your due diligence on loan types and lender specifications, and have all your information in order for them, you should find few delays in the process. With lenders like us at Nucleus, our application process integrates with open accounting and open banking software, and we can process your application within minutes to give a quick decision to business owners in need of fast funds.
• Approval process: Regardless of how fast or slow your application is passed, your prospective lender will assess your financial health and credit score, and if they request it, your business plan, too, and should you pass all the necessary checks, your funding and repayments will commence.

Most business owners who have been trading long enough will be able to get a small business loan with relative ease, so long as they meet the criteria of the banks and lenders. We reiterate to anyone who is unsure about their eligibility, always speak to your accountant or financial advisor first.

Access to a small business loan will be dependent on a number of factors, including the type of lender you are seeking a facility from, the loan itself, your own financial preparedness, and the age of your business. If all is well with your application, the largest factor will be due to the lender type.

We at Nucleus understand small business owners often face urgent financial needs when they start looking for a loan. Most often, this is due to a problem or a growth opportunity they want to seize upon, and it can be frustrating if funds can’t be reached in time. If you’d like to know some more about these factors, read on below, and we’ll go through them together.

Factors that can Influence application speed

As an alternative lender ourselves, at Nucleus, we can offer process a business owner’s loan application via open banking within minutes, however, there are still more factors that will likely affect your chances of securing the loan, regardless of speed:

• Lender Type: Traditional banks are known for their rigorous processing periods and also the amount of scrutiny they will put a business under, especially new businesses without a financial track record. Online lenders like us at Nucleus can offer fast approvals and take each business seeking a facility on a case by case basis to try and get to know your unique story and reasons behind securing a loan.
• Loan Type: The kind of loan you are trying to secure for your business will also make a difference to the application process, with facilities like term loans or lines of credit from banks taking longer due to the amount of credit evaluations that must be completed. Loans types like invoice financing or merchant cash advances are typically quicker to access, however it will all be down to the individual lender and their conditions.
• Application Completeness: Being thorough before you submit your application can also help, so make sure you have all the right documents and information on hand so the process doesn’t get delayed in any way. Once you’ve chosen the lender you want to go with, find out the specific paperwork that they want, and go from there.
• Creditworthiness: Credit rating and history will always be a point of importance where loan applications are concerned, so working to keep your business score high, and ideally your personal score if you are a startup or SME, will help ensure your loan application is successful.

What You Can Expect from Nucleus

With regards to small business finance, our application method makes us a quick and reliable option, and our track record speaks for itself. Our application process is designed for SMEs to be straightforward and fast, with the aim of helping SMEs in any financial situation they find themselves in. Of course, as with any lenders, we are subject to checks, but here’s what you can expect:

• Open banking integration: Because our loan applications are processed with the use of open banking, with your permission, we can access all of the relevant financial records instantly, speeding up our decision making tremendously.
• A quick decision: Thanks to the above mentioned open banking, decisions for loans will typically be made in less than an hour, and sometimes within minutes, meaning you won’t have to wait around for a response once the application is made.
• Same day payouts: If your loan is approved and you satisfy our requirements, we can deliver your funds on the same day of your application, providing your business with the immediate funding it needs. We hope business owners will find this beneficial for any kind of financial situation they find themselves in.
• Flexible loan options: At Nucleus we offer both business loans ranging from £10k to £2 million, and revenue based loans starting at £3k and running up to £300k. Each of our products is designed for SMEs who are seeking quick access to funds.

In all, and across all lender types, the speed of obtaining your small business finance will depend on the factors discussed above, with credit history and financial records being the biggest decider. While traditional banks and government schemes like SBA loans will tend to take longer and the borrowers be put under more scrutiny, alternatives like us at Nucleus can end up being the ideal solution for SMEs who need the fastest access to financial aid.

Small business loans work most by providing SMEs and startups with the financial support they need for growth. The right facility can provide the necessary capital for a commercial organisation’s expansion, or to aid with its inventory and operational costs.

No different to other loan types, the possibility of a business obtaining the loan they seek will depend on a number of factors, from credit score through to the industry they operate in, so if you’d like to get a better understanding of these elements, read on, and we’ll explain the process.

The Factors that Might Affect your Loan Application

While different lenders will vary in what they expect from a business, from our experience there are a number of factors that you will need to be wary of, and ready to present any information relating to them if a lender requests it. Let’s take a look:

• Credit Score: For SMEs and startups seeking a small business loan, both personal and business credit scores can be important, this is because small businesses tend to have a lack of collateral. High scores will of course boost your chances of approval when it comes to securing a facility, so try your best to keep up with any credit payments that will help improve and maintain your rating, as it will show potential lenders how reliable you are at keeping up with your debts.
• Financial History: Your financial statements and tax returns will help provide lenders with a detailed idea into your business’s financial well being, and it essentially demonstrates how you manage your money or if you will be reliable to pay back a loan in the future. A consistently positive history of cash flow will also make loan approval places much smoother, regardless of lender type, so bear that in mind if you are considering a small business loan.
• Industry Type: Due to numerous risks like known failure rates, it is normal for different industries and sectors to face differences in difficulty when applying for a loan. As a result lenders will assess your risk based on historical data to know where you stand, and help set some realistic expectations for you if you choose to pursue a facility.
• Collateral: Collateral essentially means security for your lenders, as it will reduce their risk if it is secured against the loan. Anything from property to equipment or inventory can be used, and if necessary, will demonstrate to your lender that you are committed and willing to stake something to secure the finances.
• Business Plan: In most cases, lenders will expect a business plan, and even if they don’t, having your own solid business plan to go on if you succeed in your application can help ensure you continue to use the facility as intended. A business plan should clearly outline your business model, and demonstrate your due diligence through market analysis and financial projections for lenders to view. A prepared plan will also demonstrate to your potential lender that you have a clear path to profitability from the facility and it will improve your chances of success.

Different Lenders and Their Requirements

It’s worth noting that there are more options available on the market today than just traditional banks, we ourselves at Nucleus Commercial Finance are considered as alternate lenders, and compared to banks who often have stricter criteria and longer approvals on their loan options, we can give SMEs a decision in minutes. Peer-to-Peer (P2P) and microfinance institutions might be an option for businesses also seeking more flexible loan terms, especially when they are looking for smaller amounts in niche markets. Where the lenders don’t differ is in the financial documents you will have to submit to secure your funding, as discussed above.

Improving Your Chances of Securing Small Business Loans

• Work on your credit: Working on and maintaining both a personal credit score of above 700 and a business score above 80 is one of the best things you can do to ensure your loan application passes. It shows lenders that you are trustworthy, and are more likely to use the funds as intended, so ensure you pay your bills on time, work hard to reduce any debt, and regularly review your credit reports, as a proactive approach like this will ensure a good score.
• Develop a strong business plan: If it is required, building a compelling business plan will also go a long way to helping you secure a facility, so we advise that you include clear and realistic goals, and demonstrate your due diligence through thorough market analysis. A solid plan will both help your small business loan application, and also be a roadmap for you to follow once acquired.
• Financial preparation: Ensure all your necessary documentation is well organised and prepared for your lender to see, whether physically or digitally. They need to be accurate and up to date so lenders can see your financial responsibility and stability clearly.
• Choosing the right lender for you: We always advise business owners to speak to their financial advisors before taking steps towards securing any loan, and you should shop around as many lenders as you feel comfortable doing to make sure their terms match your needs. Do plenty of research, and try to find lenders who specialise in your industry, helping to ensure you get the best deal possible.

Taking your time as a business owner and doing your due diligence will help you understand all of the key factors that go into securing a loan, and by working on each of them, you can improve your chances of securing the funding you need, however, we will reiterated that you should always seek professional advice before you go ahead.