How to prepare your business for securing commercial finance

Whether you’re seeking commercial finance to help with cash flow, fund expansion plans, or refinance existing loans, good preparation will maximise your chance of success. Lenders will scrutinise your business before deciding whether to lend, so you want to present it in the best possible light.

Here are our five tips to help you prepare your business for securing commercial finance.

1. Get your financials in order

Your financial history is critical to a lender’s decision-making process, so ensure your accounts are up-to-date and accurate. You may need to provide at least 2-3 years of financial statements. If your business is new, ensure you have projections and a detailed financial plan. Ideally, get professional advice for this.

Key documents to prepare include:

• Profit and loss statements
• Balance sheets
• Cash flow statements
• Sales forecasts and financial projections

2. Improve your credit rating

A poor credit score can limit financing options or result in less favourable terms. Lenders will review both your business and your personal credit rating. Before applying for finance, check your credit report, correct any errors, and, if necessary, take steps to improve your credit rating.

Steps to improve credit rating:

• Pay off outstanding debt
• Pay existing loans and creditors on time
• Make sure your business current account is operating within agreed limits
• Avoid applying for new credit cards or loans before your application

3. Prepare a solid business plan

A well-thought-out business plan will increase your chances of getting a loan as it gives lenders confidence in your company’s future. Your plan should clearly outline what your business does, its target market, its growth strategy, and how the financing will help achieve those goals. Include market research and financial projections to back up your claims.

4. Consider what you can provide as security

Lenders may require security for the loan, so consider what you could offer. Typical forms of collateral include property, equipment and machinery, vehicles or accounts receivable.

5. Find the right commercial finance broker

Working with an accredited and experienced commercial finance broker can significantly improve your chances of approval. The most recent National Association of Commercial Finance Brokers (NACFB) membership survey found that one-third of broker clients have secured finance after being declined elsewhere.

Brokers have established relationships with lenders and can help you find the right financing options for your situation. They also assist in presenting your application in the best light, maximising your chances of success.

For over 50 years, ASC has been helping businesses of all types and sizes secure the finance they need. We know how to structure a lending application, who to approach and how to negotiate the best deal. To maximise your chances of commercial finance success, get in touch.