Securing capital when your business is dealing with a lower sales period is difficult, but not impossible. If you do not want to have that unpleasant rejection experience, skip applying for loans with a traditional lender. They look at total annual sales to understand the risk quotient.

If your sales are modest or highly seasonal, the chances are high that you will encounter denial from most lenders. However, it does not mean that you cannot get low-revenue business funding. The UK lending market has evolved over time and has opened new doors of opportunity for businesses like yours.

You must search for alternative lenders, who usually pay attention to other factors besides revenue. For example, trading history could be that one aspect that these lenders focus on, and it can help in strengthening your loan application as well.

Therefore, you need to spot lenders who look beyond revenue. Take a tour of this blog to assess various opportunities in a better way.

Factors that can help you get a business loan with low revenue

You need to look for lenders who look at factors besides revenue. Loan providers focus on a combination of factors and not on one individual factor. Therefore, having low revenue cannot snatch away a borrowing opportunity from you.

These are the factors you must pay attention to while applying for business loans despite low sales.

·       Time in business

This is the tenure you have spent running the business. It can influence the lending decisions. If your business has survived several years despite ups and downs, the lender might consider it.

They are often considered more stable than any newly launched venture. The lender will assume that since you have navigated difficult times, managing repayment will be possible for you.

·       Cash flow management

Cash flow is very important, and it can overpower revenue in some cases. The health of cash flow determines if your business is operating smoothly. It indicates the amount of money going out and coming in.

If cash flow strikes a perfect balance, the lender can ignore the irregularities in your revenue. It does not matter if your business is generating modest revenue, provided your business has maintained a healthy cash flow.

·       Business credit scores

If your business demonstrates strong credit history, it can compensate for a low revenue setback. Payment history is one of the essential components of credit history. Good scores would mean that your business has been paying all the bills on time.

When expenses are met on time, the pile of debt will be minimal. This can show that repaying loans is not going to be difficult for your business. A good credit history also establishes that your credit utilisation levels are controlled.

Besides, your credit scores will reveal previous borrowing history. With good scores, it is evident that you never delay payments. This will leave a positive impression on the lender’s mind.

·       Business plan

This is a crucial document which every business should keep ready from inception itself. It will have everything about your business, your vision and projections, etc., documented in a perfect manner.

The information can clear up many confusions of the lender. A business plan shows how you have put in efforts in running your business. It should mention a clear loan purpose so that the loan provider can understand the real reason behind borrowing.

The loan provider will also rely on it to understand your future growth opportunities. It can help them make sure about the ways you can arrange funds for smooth payment of loans. This a well-demonstrated business plan, which can help you win the confidence of the lender.

The bottom line

Although revenue is one of the crucial factors, low revenue does not mean that you cannot get financial assistance for your business. There are borrowing opportunities you may explore to get small business funding in the UK.

You need to get ready with strong financial records ahead of applying for loans. At the same time, you must practise necessary steps to improve your credit scores. Keep looking for options through pre-qualification, as this will not affect your credit history.

Besides, you can easily compare pre-approved loan offers and find something according to your budget and necessities. This way, you can seal the best loan deal for your business.

FAQs

• Can I get business loans with very low revenue?

Yes, but that completely depends on the strength of the other aspects of your business. If cash flow, credit history, future growth projections and business plans seem convincing to the loan provider, getting funding with very poor sales is possible.

• Will low credit scores affect my borrowing chances?

When your revenue factor is weak, the lender will automatically pay attention to aspects like credit history. Now, there might be loan providers who specialise in helping businesses struggling with poor credit scores. Work on improving your credit history, as it can positively affect your borrowing chances.

• Are secured loans easier to obtain with low revenue?

In some cases, this might be possible depending on the lender you choose. If they are ready to let you qualify by providing collateral despite low revenue, you can apply for loans. In most cases, including an asset improves chances of approval.

• Should I apply for a smaller loan when revenue is low?

Ideally, you should be applying for a loan amount that suits your repayment capacity. This will work in favour of getting approval for loans, as you will be borrowing within a safe limit. Borrowing a smaller amount will put less financial pressure on your business.

• What is the easiest type of business funding to get with low revenue?

There are options like invoice financing, merchant cash advances, equipment finance, etc., that can be accessible even when your sales are low. Even, there are some start-up loans that you can obtain in this situation.

• What documents should I submit?

When you are applying for loans to support your business with low revenue, you must provide a few essential documents to the lenders. These are bank statements, tax returns, profit and loss statements, business plan, etc. These may vary from lender to lender.