How to best prepare my company for a finance application

How to apply for business funding

When preparing your company for a finance application, it’s key to present the business in its best light whilst also providing realistic projections, your plans for the funding, and how it will help the business grow.

Unless you need finance urgently, you should take as much time as possible to develop a compelling case, ideally with professional support. It's important to understand your figures and the market you serve so that you can demonstrate how you would deal with issues that might arise in the future.

A well-considered business plan with supporting documentation offers reassurance to lenders that you understand your figures and can afford the repayments for the loan term. This, in turn, presents you as a lower risk to them.

So, what do you need to consider and how do you best prepare your business for a lending application?

Build cash flow forecasts into your financial management

Lenders need to see comprehensive cash flow projections that clearly illustrate your business’s positive cash situation mapped over time - without sufficient cash, the risk of defaulting on the loan increases.  

If you don’t already use cash flow forecasts, it’s important to incorporate them into your everyday financial management. In fact, they're vital to maintain control over your business’s cash situation whether you’re applying for finance or not.

You can reassure lenders that their risk is low by presenting evidence of positive cash flow over the months leading up to your application. This can result in better deals, including lower interest rates and higher lending amounts.

Check your business credit rating

As well as operating with a positive cash flow, your business’s credit rating is a key factor in whether you’re accepted or rejected for a loan. If your credit score is high, you pose a lower risk to a lender, and vice versa.

For example, if your company’s credit file shows historic repayment issues, such as defaults or County Court Judgments (CCJs) it can lower your chances of being accepted for a loan or negatively affect the cost of borrowing.

Start developing a thorough business plan

It’s never too early to start a business plan when you’re looking for funding. A business plan is a comprehensive document that offers lenders a complete picture of your enterprise, your key goals, and how the funding will improve profitability.

You should present a market and competitor analysis, financial forecasts, marketing strategies, and information on suppliers and target customers. Noting your skills and prior experience can also reassure lenders that you understand your industry and that their funding is in safe hands.

Professional support to prepare your business for a lending application

Effectively preparing your company for a finance application takes time and careful consideration but we can help you at every stage. Our experienced team at UK Business Finance consistently helps clients secure the commercial funding they need using our market knowledge and close attention to detail at the preparation stage.

We can also make an application on your behalf and liaise with lenders throughout the process. Please get in touch to discuss your plans – we operate offices around the country.