BUSINESS LOANS · EAST MONEY GUIDE
What lenders actually look at in a business loan
A lender wants to understand why the money is needed, how it will be repaid and what happens if trading does not follow the forecast. A concise application links the request directly to the business numbers.
East Money · General information
Purpose determines the right facility
Working capital, equipment, fit-out, property, acquisition and tax funding have different repayment profiles. State the amount, use of funds and expected business benefit clearly.
Cash flow must support repayment
Profit is important, but timing of receipts, stock, wages, tax and loan payments can determine whether cash is available when repayments fall due. Historical statements and forecasts should reconcile.
- Revenue, gross margin and operating profit
- Cash conversion and seasonal movement
- Existing debt repayments and lease costs
- Forecast assumptions and downside buffer
Conduct and liabilities show financial discipline
Business bank statements, existing facilities, arrears, tax liabilities and payment arrangements can influence the assessment. Explain issues early and provide evidence of the current position.
Security and guarantees affect the structure
The lender may rely on financed assets, property, general business security or personal guarantees. Understand which assets and parties are being committed and what release conditions may apply.
Management and the plan add context
Experience, customer concentration, contracts, succession and the implementation plan help a lender judge how the business will manage the funding and its risks.
QUESTIONS PEOPLE OFTEN ASK
Useful points to clarify early.
Do business lenders only look at profit?
No. Cash flow, debt, conduct, security, purpose, management and industry risk can all matter.
Can a forecast support the application?
Yes, particularly for growth or a new project, but assumptions should be supported by historical performance, contracts or other evidence.
Will I need to provide property security?
Not always. It depends on the amount, facility, assets, business strength and lender, but unsecured options may have different pricing and limits.
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