What lenders check
There is no single UK standard for business loan eligibility: each lender sets its own criteria and the best way to find them is the lender's own page or a broker. The usual checks are how long you have traded, your turnover and profit, whether the profit can cover the repayments alongside your existing debts, your business and personal credit history, the type of business and whether you can offer security or a personal guarantee.
This calculator lets you enter the three checks that can be measured from your figures: debt service cover, months trading and credit standing. It then shows whether the loan you want meets each, and how much you could borrow if the profit were the only limit.
Worked example: a £60,000 loan
A business that wants £60,000 at 9% over five years pays £1,245.50 a month, or £14,946.02 a year. With £6,000 a year already going on other debt, yearly debt payments rise to £20,946.02. On £35,000 of yearly profit the debt service cover is 1.67, against 1.25 required, so the profit is £8,817.48 above the cover needed. With 36 months trading and a good credit standing against a lender who wants 12 months and fair credit, it meets all 3 of your criteria.
The loan is 20% of the £300,000 turnover and 1.71 times the yearly profit. The largest repayment the profit supports on a new loan is £1,833.33 a month, which is a loan of up to £88,317.85 over five years, £20,964.01 over one year, £57,652.48 over three years, £113,948.94 over seven years and £144,726.44 over ten.
When the profit does not cover the loan
Debt service cover is the yearly profit divided by the yearly payments on all debt. If the profit on the same loan is £15,000, the cover is 0.72, the profit is £11,182.52 short of the 1.25 required and the largest loan the profit supports falls to £24,086.69. The result becomes: meets 2 of your 3 criteria.
Existing debt reduces what is left. With £30,000 a year already going on other debt and £35,000 of profit, the cover is 0.78, the shortfall is £21,182.52 and the profit supports no new loan at all at that cover. Trading history works the same way: a business that has traded for 6 months against a lender who wants 12 fails that check even when the cover is comfortable.
Government-backed Start Up Loans
The government-backed Start Up Loans scheme has its own rules: you must live in the UK, be 18 or over and have a UK business that has traded for less than five years, and the loan is unsecured and subject to a credit check. Use the start up loan calculator for that scheme's repayments, and this page for an ordinary lender's criteria.
For Start Up Loans repayments, use the start up loan calculator.
What this pre-check leaves out
This is a planning check, not a credit decision. It does not model how a lender adjusts your profit, scores your credit, values security or looks at your sector, and it does not check the structure of the business or the purpose of the loan. The criteria you enter are your assumptions: use the figures your lender publishes. A lender may also decline a loan that passes every check here.
For the full cost of a loan with fees and APR, use the business loan calculator.
Use the right country page
This page stays in pounds and uses UK terms: credit standing, debt service cover and a lender's own criteria. The country choices above the inputs open separate local pages. Choosing United States opens the US business loan eligibility calculator, which uses credit score bands and can apply SBA 7(a) coverage and size and term limits. The inputs reset and amounts are not converted.
Inputs for the business loan eligibility calculator
Loan you want, interest rate and term
The amount, the nominal yearly rate you expect and the years to repay, in whole months.
Yearly turnover
Sales over the last 12 months.
Yearly profit before interest and tax
Profit before interest, tax, depreciation and amortisation, after fair pay for the owner.
Yearly payments on existing debt
What you already pay each year on business loans and leases. Enter zero for none.
Months trading and credit standing
How long the business has traded and your credit standing from a credit report.
Cover, months trading and credit standing your lender requires
Your lender's own criteria. The calculator checks the loan against them.
CALCULATOR QUESTIONS
UK business loan eligibility calculator questions
How do I know if I qualify for a business loan?
Lenders set their own criteria, usually time trading, turnover and profit, credit history and cover for the repayments. Enter your lender's figures and the calculator shows which you meet.
What is debt service cover?
Yearly profit divided by yearly payments on all debt. £35,000 of profit against £20,946.02 of payments is a cover of 1.67.
How much can my business afford to borrow?
Divide profit by the cover your lender requires, subtract what you already pay on debt, and turn the remaining yearly payment into a loan. £35,000 at 1.25 cover supports up to £88,317.85 over five years at 9%.
Does a longer term let me borrow more?
Yes. The same affordable repayment supports £57,652.48 over three years and £144,726.44 over ten years, but the longer loan costs more interest.
Can a new business get a loan?
Sometimes, often with a personal guarantee or through the government-backed Start Up Loans scheme, which is open to businesses trading for less than five years.
Is this a guarantee of approval?
No. The lender decides, using your full circumstances and credit history. A loan that passes every check here can still be declined.
What happens when I change country?
The United States option opens the separate business loan eligibility calculator, in dollars, with credit score bands and SBA 7(a) limits. Your inputs are reset rather than converted.