Business finance · 5 min read
Business finance: prepare the story before asking for the money
Business borrowing makes more sense when the amount requested can be tied to a clear purpose and a credible way the business expects to service the commitment.
Define the use of funds
Replacing a vehicle, buying machinery, acquiring premises and smoothing a short-term cash-flow gap are different funding needs. Be specific about the amount and what it will buy.
Prepare evidence of the business
Depending on the route, useful information can include trading history, turnover, filed accounts, management information, bank statements, contracts, assets and existing borrowing.
Match the finance to the asset or cash flow
Long-lived assets and short-term working-capital needs should not automatically be funded in the same way. Compare the repayment profile with the useful life or commercial purpose of the funding.
Know the exit or repayment logic
A lender or broker will want to understand how the commitment fits normal cash flow or, for short-term property finance, how the facility is expected to be repaid.