How do business loans work?

Do you need to buy new equipment or invest in a new initiative? Having a clear plan will help you decide how much you need to borrow.

If you want to borrow between £1,000 to £50,000 use the NatWest Small Business Loan calculator to explore rates and repayment terms.

It’s important to think about how long it’ll take for you to pay back a loan, and any interest. This will help you avoid any issues and charges in the future

There is a range of lending options available, from short-term loans with less interest to pay, to long-term loans offering lower monthly payments. There are also Small Business Loans specifically designed for small to medium size businesses.

It’s a good idea to check your loan eligibility* before starting an application. This way, you’ll know how likely you are to be accepted for a loan before you apply and it won't impact on your credit score.

*Only available for loans up to £50,000.

Lenders want to ensure you’ll be able to pay them back, so they may look at things like:

• Your business credit score
• Lending history
• Length of time in business
• Annual revenues
• Any assets you’ve put down as security

Carefully read through the terms and conditions of any business loan you apply for. This will help to prevent any costly surprises in the future. 

Check for any additional charges like administration and application fees. Find out if you’ll face early repayment charges if you decide to pay off your loan sooner than planned. 

Once all those steps are complete, you can gather your documents together and start an application. Usually, the details you’ll need include:

• The applicant and business name
• How the loan will be used
• The desired loan amount
• Business tax ID

If you are applying for a NatWest Small Business Loan, you'll need the following documents to complete your application:

• Address history for the past 3 years
• The date your business started trading
• Business turnover in the last 12 months
• Projected turnover in the next 12 months
• Business net profit for the last 12 months
• Details of any existing Business Loans or Overdraft repayments
• Details of any existing Personal Loans, Mortgages, Overdraft or Credit Card repayments
• Details of your business current account with any provider