The Commercial Finance Application Process Explained

Understanding the commercial finance application process can make all the difference in securing funding efficiently. Whether a business is looking to invest in growth, restructure existing debt, or improve cash flow, knowing what to expect at each stage helps prevent delays and improve outcomes. 

This article explains the process, how to prepare, and where we at TBP can add value and support throughout the journey.

Initial Discovery and Preparation

The starting point is always a conversation. This initial discussion helps uncover the purpose of the finance, the appropriate type of finance, the amount required, and the urgency behind the request. It also gives us, as their business adviser, an opportunity to understand the applicant’s business model, financial health, and trading history.

At TBP, this stage involves more than just ticking boxes. We work with accountants, solicitors, and other professionals to gather the right context. 

Is the business looking to acquire another company? Is the funding needed to cover a VAT bill, purchase a property or purchase new machinery? Different needs require different facilities and different lenders.

A clear understanding of what you want to achieve means we can tailor our approach accordingly. This might involve exploring options such as asset finance, commercial mortgaging, invoice finance, or a working capital loan; sometimes the solution is something a bit more out of the box and built around a short and medium term plan.

We’ll also outline what’s needed next – namely, documentation.

Document Requirements

Once the outline is agreed upon, the next step is to gather supporting information. Funders each have their own internal criteria, but there is a standard set of documents that most will require.

This includes:

• Latest full-year accounts
  
• Year-to-date management accounts
  
• Bank statements (typically 3–6 months)
  
• Details of existing finance facilities or liabilities
  
• Background information on the directors or key decision-makers
  
• Information on the asset being funded (where relevant) 

Each product will have different additional requests but the above are the base for most requests and accurate and up to date information is important.

Having these documents ready – and in the correct format – helps prevent delays. We often find that the biggest holdups are due to missing or incomplete paperwork. That’s where a broker adds real value: ensuring everything is packaged clearly and professionally, tailored to the lender’s expectations.

Application Submission: What Happens Behind the Scenes

Once we have the documents, the application process begins. This is where the broker matches the client with the right funder, based on their needs, sector, and risk profile.

At TBP, we’re not tied to a single lender, which means we can present your case to multiple funders – but only where it makes sense to do so. This avoids duplication and keeps control over who sees what and when.

Each funder will review the application through a credit committee or underwriting team. They assess affordability, collateral, business risk, and sector appetite. If they have questions, these are typically routed through the broker. A good broker anticipates these questions in advance and will pre-empt them in the submission.

We also help shape the narrative, especially where there are issues like recent losses, seasonality, a drop (or large increase) in turnover, or new directors. Explaining the context clearly and openly increases the chances of an application being approved the first time.

Common Barriers and How to Overcome Them

Not all applications are straightforward; many seemingly vanilla applications can become relatively complex.

Some of the most common issues we see include:

• A lack of up-to-date financials
  
• Poor presentation of the funding requirement
  
• Multiple directors with poor credit history or CCJ’s
  
• High sector risk (e.g. construction or hospitality)
  
• Over-reliance on a small customer base 

In many cases, the funding need is valid, but the lender needs more reassurance. This might involve adding security, personal guarantees or debentures, shortening the term, or structuring the deal differently.

We’ve also helped clients improve their credit ratings through third-party specialists before submitting an application. In one case, a client’s rating was increased within a few days, which enabled us to secure a facility that was previously out of reach.

It’s essential to be transparent about any challenges and work through them. This is also what separates a transactional broker from a strategic partner.

From Offer to Drawdown

If the lender is satisfied, they’ll issue Heads of Terms or a formal offer. This outlines the key conditions of the finance: loan amount, term, interest rate, security, and any fees.

At this stage, the client can review the offer and ask questions. It’s essential to understand not just the rate but also any covenants, repayment terms, or restrictions.

Once accepted, the transaction moves to the legal stage. Depending on the type of funding, this might involve:

• Drafting loan agreements
  
• Carrying out valuations
  
• Reviewing security documentation
  
• Liaising with accountants or solicitors 

Depending on complexity, this process can take anywhere from a few days to several weeks. For example, an unsecured working capital loan may complete within 3–5 working days. A commercial mortgage with multiple directors and layered security could take several weeks.

Once all documentation is in place, the lender will release funds. We manage this final stage to ensure everything completes smoothly and on time.

Conclusion: A Smoother Process With the Right Support

The commercial finance application process doesn’t have to be difficult, but it does require preparation, communication, and a clear understanding of what’s required at each stage.

At Trusted Business Partner, we guide clients through the entire journey, working alongside their professional advisers to ensure that each application is presented correctly, matched with the right lender, and progressed with care.

Whether your client is exploring finance for the first time or revisiting their current arrangements, we’re here to help simplify the process and deliver the desired result.

If you have a funding opportunity to discuss or want to explore how we work with advisers like you, feel free to get in touch today.