3 min read
Understand what a commercial lender needs to see
A lender's primary question is: can this business service this debt reliably, and what happens if trading is worse than expected? Your plan needs to answer those questions with evidence, not assertion. A well-structured plan demonstrates that you understand your business, your market, and your risks — which itself is a positive signal about management quality.
Keep the plan concise. A lender reviewing dozens of applications will not read a 50-page document in full. Ten to fifteen pages covering the key sections clearly is more effective than an exhaustive document that buries the important points.
Structure your plan around the core sections
A business plan for a commercial finance application should include: an executive summary (purpose of the loan, amount, term, and how it will be repaid); a business overview (legal structure, trading history, key personnel); a market and competitive context (your sector, customers, and competitive position); an operational plan (how the business works, key dependencies, and risks); and a financial section (historical accounts, cashflow forecast, and P&L projection).
The financial section is the most important. Everything else provides context; the numbers are the substance. Ensure your cashflow forecast shows surplus cash after all debt service obligations, even in your downside scenario.
Present three years of historical accounts
If your company has been trading for three or more years, include your filed statutory accounts for the last three periods. If accounts are available from your accountant but not yet filed, include those alongside a note of the filing status. Lenders will pull your Companies House record anyway — flagging late or missing accounts before they discover them is better than leaving unexplained gaps.
Accompany the statutory accounts with a brief narrative explaining any unusual features: a sharp revenue drop in one year, a change of business activity, a one-off cost or gain. Lenders will ask about anomalies; addressing them proactively saves time and demonstrates transparency.
Build a credible 12–24 month cashflow forecast
Your cashflow forecast should be built from the bottom up — starting from specific contracts won or pipeline, not from a top-down revenue growth assumption. Show your key assumptions explicitly: expected new contract wins, average invoice value, payment terms, headcount changes, and any capital expenditure. A forecast built on named customers or confirmed orders is far more credible than one based on a percentage growth assumption alone.
Show the forecast on a monthly basis, not annually, and include a debt service line showing the proposed loan repayment. Lenders want to see that after all operating costs and the new debt repayment, your business generates a positive cash surplus. If the numbers are tight, consider whether a longer loan term (to reduce monthly repayments) or a phased drawdown is more appropriate.
Include a sensitivity analysis and risk section
A sensitivity analysis shows what happens to your cash position if revenue is, say, 15–20% below forecast or if a key customer pays 30 days later than expected. If the business remains solvent and can service its debt under these scenarios, say so explicitly. If it cannot, address what mitigating actions you would take — cost reductions, drawing on a revolving facility, or deferring capital expenditure.
Acknowledge the main risks to your business: customer concentration, regulatory change, key-person dependency, or supply chain risk. Demonstrating that you have thought about these and have mitigations in place increases lender confidence, not the reverse.
Frequently asked questions
Do I need a professionally written business plan or can I write it myself?
You can write it yourself if the financial section is accurate and your narrative is clear. A well-presented plan written by the director often reads more authentically than one produced by a consultant. However, for larger facilities or complex structures, a corporate finance adviser can help frame the numbers and manage the lender process more efficiently.
How important is the executive summary?
Very. Most lenders read the executive summary first and decide whether to read further based on it. It should be no more than one page and should answer: who you are, what you want to borrow, what for, how you will repay it, and why you are a good credit risk. Write it last but place it first.
Will the lender check the assumptions in my forecast?
Yes. A lender's credit team will interrogate your key assumptions — revenue growth rate, margin, debtor days, cost inflation. They may run their own sensitivity analysis. Assumptions that cannot be explained or evidenced will reduce confidence in the plan. Realistic, well-evidenced forecasts are more persuasive than optimistic ones that cannot be supported.
Funding for UK limited companies
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