Serviceability
The first test is whether cash generated by the business covers the new commitment with headroom. Most lenders want debt service cover above 1.25 times on a stressed case, and they will stress the case themselves. Presenting your own downside scenario builds far more credibility than presenting only the plan you hope for.
Security and recourse
Security determines the loss given default and therefore the price. A debenture, a legal charge over property, an assignment of receivables or a personal guarantee each shift risk differently. Understand what is already pledged: existing security frequently blocks a new facility until an intercreditor or carve-out is agreed.
Management and track record
Lenders back people who understand their own numbers. Being able to explain a margin movement, a large debtor concentration or a loss-making year in one clear paragraph does more for a decision than a polished deck.
Red flags that stall deals
Unfiled or overdue accounts, undisclosed tax arrears, heavy director loan movements, single-customer concentration above 40%, and forecasts with no link to historical performance. None are automatically fatal — but discovering them late usually is.
The pack that gets a fast answer
Two years of accounts, current management accounts, aged debtors and creditors, six months of bank statements, a one-page requirement summary and a 12-month forecast with the facility modelled in. That pack alone puts a request in the top tier of what credit teams receive.
Frequently asked questions
Do I need a business plan?
For established trading businesses a concise requirement summary and forecast usually suffice. Full plans matter for start-ups, project finance and acquisitions where there is no trading history to rely on.
Will I have to give a personal guarantee?
It is common for unsecured and cash-flow lending to SMEs. Guarantees can sometimes be capped, shared or replaced by additional asset security, and this is negotiable at term-sheet stage.
How many providers should I approach?
A targeted shortlist of providers whose criteria actually match. Broad, untargeted applications generate declines that later providers can see.
Last reviewed: 2026-08-15