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8 easy steps to getting a small loan

Looking to get a small loan then ensure you do the below eight steps before applying for one.

1. Check your credit report and score

An adverse credit score will make it harder for you to get a small loan. If your credit score is weak, then take steps to improve it before applying for a small loan, as lenders consider your previous repayment history when assessing you.

You may find you will be able to obtain a small loan with your current credit score, yet the interest rate may be higher.

2. Consider both online and offline lenders

People typically head to the high street banks to obtain a loan; however, banks offer little, so borrowers are turning more and more to online lenders that are not only more flexible, yet quicker in depositing the loan in a borrower’s bank account.

3. Compare the cost of the small loan

Borrowers should always shop around when comparing loan interest rates and repayment terms – what is the representative APR? What will my monthly payments be? What happens if I default on paying? How much additional interest and fees will I have to pay? Some financial institutions may provide you with a small unsecured loan whilst a local bank may offer more competitive interest rates.

Apart from comparing small loan interest rates, check what other charges you may have to pay – several financial lenders charge fees for processing the loan and an early repayment fee.

4. Check your eligibility

Banks and financial lenders require you to meet several criteria to be eligible to take a loan. Most will want the following:

  • At least 18 years old
  • Be a UK resident
  • Receive a regular income
  • UK bank account with an active debit card
  • Have a mobile phone (to verify who you are account)

Be mindful that some lenders only lend to those who are employed, some may consider self-employed and receiving benefits.

5. Acquire the correct documentation

Before applying for a loan, whether through a bank or an online lender, ensure you have all the proper documentation required for applying for the loan. Documentation could include recent payslips, benefit letters, letter of employment, utility bills to confirm current address and any photographs.

6. Select the appropriate lender

Pick a lender who provides a flexible repayment schedule and various options to repay the small loan. One way to do this is to use a small loan calculator on the lenders’ website and a budget calculator to ensure that you can afford the repayments each month.

7. Read the small loan terms and conditions

It is imperative that read and entirely understand all the loans terms and conditions. If you do not understand anything at all and have a query, then make sure you contact the lender right away and find out.

Once you have completed the steps mentioned above, you can begin to apply for the small loan – either online or through than appointment with the financial institution you have selected.

8. Applying online

When applying online, ensure that you complete all parts of the application form and upload any required documents to support your application. Importantly you will need to mention the desired loan amount you wish to borrow (the final offered amount may be different from what you initially applied for), your contact details including email address and phone number, and your intended repayment plan.

Await approval

This is the stage when all the documentation must be verified. The financial lender, whether in a bank or online, will check whether you are eligible for the small loan or not. Once all the documents are verified, they will either write to you with a decision or if applied online, will get almost instant approval and money in your bank within minutes.

Getting a small loan has become a straightforward process. Prospective borrowers can now apply for a small loan and have that loan amount in their bank account in no time at all if they apply online. For example, in the U.S., usda commercial loans happen to help all the small rural entrepreneurs kick start their businesses. Those who have already applied for this loan often tell that the process for applying is relatively easier. Truth be told, by stimulating rural economies and providing financial backing for rural businesses and properties, this loan program can help create jobs. However, before venturing on this journey, it would be a good idea to gather some knowledge regarding this.

About the author

David Bailey-Lauring is a single father of three boys so he knows what it takes to stretch a budget when it comes to family finances! David is a small business entrepreneur and regularly writes about entrepreneurship, tech, sports and personal finance in the UK, USA, and Europe.