A new survey has revealed that Glasgow is the leading city in the UK for business loan application success, with nearly a third of startups approved for funding.
The research, from the business finance experts at money.co.uk business loans, surveyed more than a thousand aspiring entrepreneurs to reveal the state of business lending in the UK.
UK business funding insights:
| Rank | Have you ever applied for financial support (business loan or grant) for a business idea? | % of respondents |
| 1 | No, never | 69% |
| 2 | Yes, and I was accepted (once) | 16% |
| 3 | Yes, and I was rejected (once) | 9% |
| 4 | Yes, and I was accepted (multiple times) | 4% |
| 5 | Yes, and I was rejected (multiple times) | 2% |
According to the survey, over two-thirds (69%) of aspiring entrepreneurs have never applied for a loan. This may be due to one of the other top barriers reported by a third (31%) of respondents – the ‘fear of failure or financial risk’. Additionally, only one in seven (13%) say they are very confident about getting financial support from a bank or financial institution for their business idea.
Despite this, only around one in 10 (11%) who have applied have been rejected for a business loan or grant, and one in five (20%) survey respondents have been accepted for business funding at least once in their entrepreneurial journey. This shows that it is possible with the right application.
Of all the 15 UK cities surveyed, Glasgow (27%) and Southampton (25%) reported the highest success rates for business loan applications, based on the share of respondents who had been approved at least once. Glasgow residents also have the highest percentage of respondents who are ‘very confident’ (24%) in getting financial support from a bank.
Joe Phelan, money.co.uk business loans expert, offers his tips on how to have the best chance of being accepted for business funding:
- Improve your credit score
Why? “Credit scores are mentioned a lot in the financial world, and for good reason. A good credit history will show lenders that you can be trusted with a loan to make your repayments, making them more likely to offer you funding.
How? “One of the most effective ways to build a better score is to apply for a business credit card. Responsible lending and timely repayments through a credit card – such as processing affordable business purchases – can help build your credibility as a lender.
- Develop a detailed business plan
Why? “A well-formulated business plan that outlines revenue projections demonstrates that you are a serious entrepreneur and makes it easier for potential lenders to understand how you will afford your repayments.
How? “The most important things to consider and document when developing a business plan include market analysis, cash flow and projected revenue figures, and proof of concept – such as current sales figures or social media following.
- Offer a clear repayment plan
Why? “When distributing money, lenders tend to ask, ‘How likely is it that I will get my money back?.’ By laying out a clear plan of action regarding the repayment of a loan or investment, you will instil better confidence in the lender – giving your application the best chance of success.
How? “Like a business plan, a repayment plan should outline cash flow and time-stamped revenue projections. Lenders appreciate financial transparency, so outlining when they can expect to receive their return on investment is key.”
