2 min read
Debt service cover ratio = cash available for debt ÷ annual repayments — a core lender affordability test.
Step 1: collect overdue invoices
The fastest way to lift visible cash is to chase what you are owed. Reducing your debtor days brings money into the account a lender can see. A short push on collections before applying can noticeably improve your free cash figure.
Step 2: trim non-essential outgoings
Pause or cut discretionary spend for the period before you apply. Every pound of avoidable outflow you remove lifts the cash available to service debt, improving your cover ratio. It need not be permanent — just clean during the assessment window.
Step 3: tidy the bank account
Lenders read your banking closely. Avoid returned payments, keep the account out of unauthorised overdraft, and make sure income lands where it can be seen. A clean recent statement tells a better affordability story than a chaotic one. See how lenders assess affordability.
Step 4: reconcile and forecast
Reconcile your bookkeeping so the figures agree with the bank, and prepare a grounded forecast. Organised numbers read as a well-run business. See forecasting cash flow.
See the effect on cover
Use the calculator to watch your cover ratio improve as free cash rises.
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.
Frequently asked questions
How can I improve cash flow before a loan application?
Chase overdue invoices to reduce debtor days, trim non-essential spending, keep your bank account clean, and reconcile your books. Each lifts the free cash a lender can see, improving affordability.
Does chasing invoices really help my application?
Yes. Affordability is measured on the cash in your account, so collecting what you are owed brings visible cash in and lifts your cover ratio — directly improving what you can borrow and how you are priced.
How long before applying should I do this?
A few weeks is usually enough to show cleaner banking and improved cash on your recent statements, which is the window most lenders review. The improvements need only be genuine during the assessment period.
Related reading
How to forecast your cash flow
A cash-flow forecast is simply a calendar of money in and money out, projected forward. Built well, it tells…
Read →
How to check if your business can afford a loan
Before you apply for a loan, spend twenty minutes checking whether your business can comfortably afford it…
Read →
How lenders assess business loan affordability, step by step
Affordability is not one check but a sequence. An underwriter starts with the cash your business actually…
Read →
Business loan affordability: what lenders check and how to pass
Affordability is the single biggest thing standing between your company and a yes. A lender is not asking…
Read →How to improve your business credit score
A business credit score responds to deliberate action. Most of what drags it is fixable, and most of what…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.