What lenders will look for when determining a funding decision

With more and more B2B lenders entering the finance industry with different requirements and criteria it can be difficult to understand where to go. Although lenders may have different criteria, the way their underwriting works is almost always the same, and they all look out for the following;

  1. An Overview of the Financials

Every client looking to secure business funding will need to present a set of financials. Most lenders will look for Accounts and Bank Statements, however some will look for more including VAT’S and managements. Be sure to have these to hand when applying for finance.

  1. Serviceability

The number one factor every lender will look for is ‘will the client be able to afford the loan repayments’? By looking at the cash flow of the business over the last few months an underwriter will be able to see if a business can make them repayments. When applying for finance, make sure that you can afford these repayments (speak to a broker to see what repayments may look like), without crippling your businesses cash flow.

  1. Security

Every lender will be looking for some kind of security, whether that’s from a PG, or a charge on property/assets. When applying for a loan be prepared to have to offer some kind of security, as this is mandatory on 99% of loans within the UK. A personal guarantee gives tenants and homeowners the benefit of securing a loan without a fixed charge on an asset. Lenders will look into all the available security a business and director has, making a decision thereafter.

  1. Credit

When applying for any type of loan a personal and business credit search is performed. This is to provide lenders an overview of whom they are actually lending to. If you have any CCJ’s, liquidated companies, or any adverse credit in general, this can affect your application, however there are several lenders in the market that will still look into this.

Make sure you have gone through each of the above sections before applying for a loan. If you still need help in determining if you would qualify for a loan, please make direct contact and we can discuss this further, 01371 870815.