Prepare you and you business for funding...
- Kevin Dunstall
- Jul 3
- 4 min read
Why We Said No to Funding – And Why It Was the Right Decision:
This week, we had to make a difficult call: turning down a barbering business owner who approached us for funding to refurbish his shop. It wasn’t that we couldn’t find a lender—we could. The problem was that the cost and terms of the available finance would have put his business at serious risk.
Here’s why we chose not to proceed:
The business wasn’t financially prepared to take on debt
Cash wasn’t being banked
No up-to-date management accounts were available
Filed accounts showed no profits
This is a good business with strong potential—but administratively, it simply wasn’t ready for borrowing. As a result, lenders were only offering high interest rates and short repayment terms, which could have caused more harm than help. While we hate turning away clients, we will never recommend funding that puts a business in jeopardy. If you’re considering finance for any reason, make sure both you and your business are prepared. Ideally, your planning should start at least six months before you actually need the funds.
Take a look at our guide to preparing your business for funding—it could make all the difference.
How to Prepare Your SME for New or Renewed Corporate Finance:
Securing or renewing corporate finance is a strategic move that can propel your business forward — but preparation is key. Whether you're applying for a new facility or renewing an existing one, lenders expect a clear picture of your business's financial health, risk profile, and prospects. Here's how to get your business and yourself ready.
1. Prepare Your Financials:
Lenders rely heavily on the numbers. Make sure your financial records are complete, accurate, and up to date:
Annual Accounts: Ensure at least the last two years are professionally prepared and filed Whilst every business is looking for tax efficiencies, presenting low, or no-profit accounts, raises serious debt serviceability questions from lenders. If your latest accounts are more than nine months old, draft management accounts are essential.
Management Accounts: Provide year-to-date figures to demonstrate current trading performance and trends.
Cash Flow Forecasts: A 12-month cash flow forecast shows financial planning discipline and helps lenders assess serviceability.
Debtor/Creditor Breakdown: Aged debtors and creditors reports give visibility into working capital management.
Business Plan: Even for renewals, a clear, credible business plan with growth projections strengthens your case.
2. Understand Your Finance Requirement:
Define exactly what you need and why. Whether it's working capital, asset acquisition, or growth funding, be specific. A vague application raises red flags.
Purpose of Finance: Clarify how the funds will be used and how they will impact the business.
Amount & Term: Be realistic, overestimating or underestimating can both hinder approvals.
Repayment Strategy: Show lenders how you intend to service the debt from operating cash flows.
3. Strengthen Your Credit Profile:
Lenders will assess both your business’s and your personal credit standing:
Business Credit Score: Monitor and improve it by paying suppliers on time, filing accounts promptly, and keeping credit facilities within agreed terms, this includes utility companies.
Personal Credit Score: Directors and owners should check their own credit reports. A strong personal credit profile reassures lenders, especially for PG-backed lending.
Register You & Your Business: A monthly subscription to a recognised credit agency, like Experian is worth the small monthly cost.
4. Prepare Key Compliance and Legal Documents:
Ensure your corporate structure, registrations, and documentation are in order:
Companies House Filings: Up-to-date and accurate records give confidence in your governance.
Legal Agreements: Ensure contracts with suppliers, clients, and landlords are current and legally sound.
Insurance Cover: Demonstrate adequate cover for business continuity, assets, and liabilities.
POA & ID: Ensure that all company and personal documents are consistent. Make sure your details at companies’ house, match with your actual ID’s etc.
5. Demonstrate Director & Shareholder Commitment:
Lenders look for alignment of interests between owners and the business:
Director’s Loan Accounts: Avoid excessive drawings or loans from the company.
Personal Guarantees (PGs): Be prepared to offer a PG where appropriate — especially for unsecured facilities.
Capital Investment: Show historical or recent reinvestment in the business to illustrate belief in its future.
6. Choose the Right Finance Partner:
Different lenders have different appetites. Working with an experienced commercial finance broker can help:
Match you with funders aligned with your sector, size, and requirements.
Package your application professionally to maximise approval chances.
Save you time and help negotiate favourable terms.
In Summary:#
Preparing to take funding is about more than just filling out a form. It’s a sales pitch! Lenders want to lend money (That’s their job) but they want to lend to the best. It's about presenting a strong, stable, and growth-ready business, backed by owners who are committed and financially responsible. With the right preparation and guidance, your SME will be well-placed to access the funding it needs to succeed.
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