How to prepare for finance: A step-by-step guide for businesses

Written by Aaron Sanderson from Avante Financial

Securing business finance is essential for growth, managing cash flow, and making strategic investments. Whether you’re looking to fund new equipment, cover operational costs, or expand your business, being well-prepared increases your chances of approval.

This guide outlines the key steps to getting finance-ready, helping businesses navigate the process efficiently.

1 Identify your financial needs

Before applying for finance, define:

• How much funding you need – Be specific about the required amount.
• Why you need it – Is it for expansion, equipment, or working capital?
• Which type of finance suits your business – (See section 4).

2 Get your financial documents in order

Lenders assess financial stability before approving applications.

Ensure you have:

• Business bank statements – Typically covering 6-12 months.
• Profit & loss statements – Showing revenue and expenses.
• Cash flow forecasts – Demonstrating how repayments will be managed.
• Balance sheets – Summarising assets and liabilities.

Tip: Well-organised financial records speed up the approval process.

3. Improve your credit profile

Lenders evaluate business and personal credit scores to determine creditworthiness.

Improve yours by:

• Paying suppliers and debts on time.
• Reducing outstanding debts where possible.
• Checking your business credit report for errors and rectifying them.

4 Understand the different finance options

The right finance option depends on business needs. Some common types include:

Business Loans

• Provides a lump sum for growth, stock purchases, or operational costs.
• Repaid over a fixed term with interest.

Asset finance

• Helps businesses acquire equipment, vehicles, or machinery.
• Spreads costs into manageable repayments instead of large upfront expenses.

Invoice finance

• Releases cash tied up in unpaid invoices.
• Improves cash flow by advancing funds against outstanding invoices.

Bridging finance

• A short-term solution, often used for property purchases.
• Provides quick access to capital while waiting for long-term finance.

Tip: The best option depends on repayment ability and business goals.

5 Strengthen your business plan

A well-structured business plan increases your chances of securing finance.

Key areas to include:

• How funds will be used and their expected impact on the business.
• Revenue forecasts and repayment strategy.
• Market research and competitive positioning.

6 Prepare for the application process

Lenders assess various factors before approving finance, including:

• Business turnover and profitability – Demonstrates financial stability.
• Existing debts and commitments – Help evaluate repayment capacity.
• Industry and risk factors – Some sectors may be considered higher risk.

7 Seek expert guidance

Navigating business finance can be complex. Many businesses choose to work with commercial finance specialists who can:

• Identify the most suitable finance solution.
• Compare lenders and funding options.
• Simplify the application process, reducing delays.

While securing finance can seem daunting, the right preparation makes the process smoother and increases the likelihood of approval.

Conclusion

By organising financial records, understanding credit requirements, choosing the right finance option, and having a strong business plan, businesses can confidently apply for funding and access the financial support they need to grow.

For further guidance, businesses can explore industry resources or consult with commercial finance specialists.