Do I Need a Business Bank Account to Get a Loan?

Generally business loan lenders require you to have a business bank account.

However, if you are self-employed, in the early stages of your business or have not launched yet, you can still apply for different loans using your personal current account. This includes personal loans, peer-to-peer loans and guarantor loans which are often used by individuals for business purposes – and later, you can always transfer the money to their business account.

Your eligibility is based on your own personal income and credit status, hence the amount you can borrow might be less (around £1,000 to £50,000)

By comparison, with a business bank account and specialist business loan, your eligibility is based on your credit status, trading history, any collateral but also your company’s revenue – so you could borrow significantly more (around £1,000 to £1 million).

What types of business loans are available?

  • Unsecured business loan (business bank account)
  • Secured business loan (business bank account)
  • Commercial business loan (business bank account)
  • Invoice finance (business bank account)
  • Merchant cash advance (business bank account)
  • Revolving credit (business bank account)
  • Guarantor loans (personal account)
  • Personal loans (personal account)
  • Peer to peer loans (personal account)
  • Secured loans (both)

Some types of business loans will always require a business current account to confirm your eligibility and to pay money into. For something like invoice finance or merchant cash advance, the amount you can borrow is based on your trading history and business turnover, and therefore a personal account does not meet the criteria.

How can I open up a business bank account?

Opening a business current account is simple. The days are gone where you needed to visit bank to meet a bank manager face-to-face in order to proceed. Nowadays you can easily open an account online with most providers although often you will need to provide details of your company, proof of identity and address.

You can usually be approved and have access to your account within a few days, however, a number of providers on our site can offer you an instant bank account so you could be up and running today.

What information is required for a business loan?

To be eligible for a business loan, banks and online lenders will require the following:

  • UK business current account
  • Dependent on trading history you may be required to provide VAT returns and / or annual accounts prepared by an accountant
  • Your business bank account statements
  • Personal information on the directors.

Everything Financial can help you get a competitive business finance quote in less than 5 minutes. We need some basic information about your business, how much you would like to borrow and how long for. Get a free and no obligation quote for your business here.

How much can I borrow through a business loan?

Through most online lenders, you can borrow up to 25% of your annual turnover and repay over 1 to 5 years.

If you wish to borrow more, you might be able to do so using extra security or collateral. This might be valuable equipment, stock, vehicles or the offices premises and using this as security in order to borrow larger amounts. The interest rate will typically be lower on a secured business loan, but your assets could be at risk of repossession if you are unable to keep up with repayments.

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