Every lender runs the same basic playbook: they're trying to answer one question — "will this business pay us back?" Knowing what they look at, and in what order, lets you fix the weak spots before you apply instead of getting a decline that quietly dings your file. Here are the five things that carry the most weight.
1. Cash flow and trading history
This is the number one factor for almost every business lender. They want to see that money is coming in consistently and that it comfortably covers your existing commitments plus the new repayment. Most will ask for the last 3–12 months of business bank statements and read them closely — looking at average balances, the pattern of deposits, and how often the account runs to zero.
Strong, steady revenue that clearly covers the proposed repayment is the single best thing you can show. Lumpy income isn't a dealbreaker, but be ready to explain the seasonality.
2. Time in business
Lenders treat longevity as a proxy for stability. The common thresholds are 6 months to qualify with specialist online lenders, 1–2 years for mainstream unsecured products, and longer for the sharpest bank rates. If you're newer than that, you're not locked out — but your options narrow and pricing rises, so it's worth comparing lenders who specifically fund younger businesses.
3. Credit history — business and personal
They'll look at both. Your business credit file shows how you've handled trade accounts, prior finance and any defaults or court judgments. Your personal credit score matters too, because directors typically provide a personal guarantee, so your own track record is part of the picture.
A few late payments won't necessarily sink an application, but unexplained defaults or a recent flurry of credit enquiries will raise questions. Which leads to an important point about how you shop for a loan.
4. Existing debt and commitments
Lenders assess your serviceability — whether your income can absorb the new repayment on top of everything you already owe. They'll add up existing loans, equipment finance, overdrafts, tax debt and any director loans, and check there's genuine headroom. Two businesses with identical revenue can get very different answers here purely because one is already heavily geared.
- Outstanding ATO or tax debt is a common sticking point — disclose it upfront and have a payment arrangement in place if you can.
- Multiple small "stacked" loans from short-term lenders are a red flag; consolidating first can strengthen your position.
5. The purpose of the loan
Lenders want the funds going toward something that helps the business generate or protect income — stock, equipment, expansion, a clear cash-flow bridge. A well-defined, growth-oriented purpose is reassuring. A vague reason, or borrowing simply to service other debt, makes assessors nervous. Being specific about what the money is for and how it pays off works in your favour.
Putting your best foot forward
- Have clean, recent bank statements ready — ideally 6 months.
- Know your numbers: revenue, existing repayments and roughly what you can service.
- Disclose tax debt and explain any past credit blemishes rather than hoping they go unnoticed.
- Be clear and specific about the loan's purpose.
- Compare before you apply — so you only submit to lenders you're likely to qualify with, instead of collecting declines.
That last point matters more than people realise. Applying scattergun to lots of lenders can leave a trail of enquiries on your credit file. Comparing your options first — through a soft check that doesn't touch your score — means you approach the right lenders the first time.
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