How to apply for a business loan: Steps, tips and documents

Published Thursday 11 September 2025

Table of contents

• Assess your borrowing needs
• Review your credit rating
• Decide how much to borrow
• Get your story right
• What you'll need
• The bank wants to approve you
• Plan your loan servicing
• Presentation matters
• Instant lending
• Finance options
• Simplify your loan application with better financial records
• FAQs on business loan applications

Key Takeaways

• Prepare comprehensive financial documentation including profit and loss statements, balance sheets, tax returns, and bank statements from the past 2-3 years to demonstrate your business's financial stability and repayment capacity.
• Calculate your exact borrowing needs by creating a detailed budget with quotes for all expenses and adding a 10-20% buffer for unexpected costs to show lenders you have planned thoroughly.
• Improve your application's professional credibility by working with an accountant who understands lender requirements, as professionally prepared applications increase approval rates by 40%.
• Present your financial data using charts and graphs to make complex information easily digestible for lenders, helping them quickly identify your business strengths and growth potential.

Assess your borrowing needs

Start by deciding if a loan is right for you. Think about why you need the funds, such as buying new equipment or managing a temporary cash flow gap. Having a clear purpose helps you show the lender you have a solid plan.

Consider other options, such as leasing equipment or improving your invoicing to get paid faster. Make sure a loan is the best choice for your business goals.

Review your credit rating

Check your business credit rating before you apply. A strong score can help you get better loan terms and interest rates. You can get a report from a credit bureau.

If your score is low, check for errors and dispute them. Pay your bills on time and reduce your debt to improve your credit profile.

Decide how much to borrow

Create a detailed budget for your project or purchase. Get quotes for equipment and list all costs. Add a buffer of 10 to 20 percent for unexpected expenses. This helps you show the lender you have planned carefully and lets you borrow with confidence.

Get your story right

Your business story should show that you can repay the loan and that your business is stable.

What lenders evaluate:

• Cash flow stability: Consistent income patterns
• Industry knowledge: Understanding of market conditions
• Management capability: Track record of business decisions
• Debt-to-income ratios: Existing financial obligations. For residential lending, the Reserve Bank of New Zealand clarifies that business loans are generally not included in debt when calculating a borrower's DTI ratio.

How professional help can improve your application:

• Expert positioning: Accountants know exactly what lenders want to see
• Application quality: Professional preparation increases approval rates by 40%
• Credibility boost: Lender confidence in professionally prepared applications
• Online options: Many accountants offer remote loan preparation services

Find an accountant or bookkeeper who can help you online

What you’ll need to apply for a business loan

You need to provide financial records, a business plan, and documents that show you can repay the loan.

Essential documents:

• Financial statements: P&L and balance sheets for the past 2 years
• Current financials: Up-to-date statements (within 90 days)
• Business plan: Clear direction and growth projections
• Tax returns: Income verification for the past 2-3 years
• Bank statements: Transaction history and cash flow patterns

Complete applications help you avoid delays and make it easier for lenders to assess your business.

Download a free profit and loss template, balance sheet template and business plan template to take the right information to the bank.

The bank wants to approve you

Lenders want to approve your loan, but they must follow new rules from July 2024. Make it easy for them by showing a clear and simple case for your business.

Banks evaluate three key factors:

• Repayment ability: How the loan will generate future income
• Business understanding: Clear explanation of your industry and model
• Documentation quality: Organised, accurate financial records

Your bank manager may need approval from senior staff. Give them organised financial statements and a clear explanation of your business to help them support your application.

Plan your loan servicing

Show lenders you can make repayments by preparing a cash flow forecast. This shows your income and expenses, including loan repayments, and proves you can afford the loan.

Presentation matters

Use charts and graphs to make your financial data easy for lenders to understand. This can help improve your chances of approval.

Effective presentation elements:

• Revenue trends: Charts showing consistent growth patterns
• Cash flow graphs: Visual proof of positive cash movement
• Profit margins: Clear demonstration of business efficiency
• Projection charts: Future performance forecasts

Implementation options:

• Accounting software: Export professional charts directly from your dashboard
• Manual creation: Use spreadsheet tools to create basic visual reports
• Key benefit: Visual data helps lenders quickly identify business strengths and opportunities

Instant lending

Instant lending uses cloud accounting data to provide rapid loan decisions, often within 24 – 72 hours instead of the traditional two to six week process.

How it works:

• Direct data transfer: Your accounting software sends financial data automatically
• Automated assessment: Algorithms analyse your business performance instantly
• No prior relationship: Lenders rely on data quality rather than banking history
• Future-focused: Emphasis on business potential rather than credit history

Key requirements:

• Cloud accounting: Clean, real-time financial data
• Bank feed integration: Verified transaction history
• Consistent profitability: Demonstrated earning capacity

This approach suits businesses with strong financial records but limited traditional banking relationships.

Online lenders will generally want to see:

• that you are making a profit or expect to make one soon
• that you have assets
• that you have a credible management team

Finance options

The lender gives you access to an agreed amount of money but you do not have to use it all – and you pay a monthly payment on what you actually borrow.

For example, you may apply for a credit line and be granted a limit of $1,000,000. If you only use half, you only pay interest on that amount. This gives you more freedom to manage your business.

Simplify your loan application with better financial records

Modern accounting software creates the reports you need for your loan application, saving you time and improving your chances of approval.

Key advantages:

• Instant reports: Generate P&L, cash flow, and growth trend reports on demand
• Real-time data: Bank feeds provide up-to-date, verified financial information
• Lender confidence: Automated systems reduce data errors and increase trust
• Faster processing: Clean, standardised reports speed up lender review

Lenders prefer applications with automated accounting data because it saves them time and shows your business is well organised.

Xero accounting software helps you keep your financial records organised and ready for any application. Start your free trial of Xero accounting software to see how easy it is.

FAQs on business loan applications

Here are some common questions and answers small businesses might have about business loan applications.

How long does it take to get a business loan?

Approval times vary by lender and loan type. Some online lenders can approve funding in a few days, while banks may take several weeks. Smaller loans are usually quicker. Having financial statements, tax records, and a business plan ready can speed up the process.

Can I get a business loan with a bad credit score?

You may find it harder to get a loan with a bad credit score, but some lenders specialise in helping businesses like yours. You may pay higher interest rates. A strong business plan and clear cash flow forecast can help.

What's the difference between a secured and an unsecured loan?

A secured loan is backed by an asset, such as property or equipment, which the lender can take if you do not repay. For example, if you borrow more than 80 percent of a property's value, it is often seen as higher risk. An unsecured loan does not require collateral, but you may pay higher interest rates