Inside the mind of a lender – what affects their decisions? 

Each lender will have their own lending criteria but there are a few things lenders are specifically looking for. To make it simpler for your business to borrow money, it helps to have an understanding of what the lender is looking for.

The ideal situation for any business is to have a large choice of lenders and different finance products available as opposed to being limited to one lender on the market who is prepared to lend to you on their terms.

Therefore, to be in the most ideal situation, a business will need to understand what factors a lender considers when they’re making their decisions.

Credit Score

When assessing your risk of defaulting on a loan, a lender will use your credit score. The higher your credit score, the higher the chances of being approved for a loan and receiving a lower interest rate.

Ability to repay the loan

One of the key areas for a lender is knowing if the business will be able to repay the loan. They will look at your income and expenses to calculate how much you’ll be able to afford to borrow.

Business’ financial health

A lender will review your business’ income, expenses and assets to determine and know more about your business’s financial health.

The purpose of the loan

The lender will want to know what the business intends to use the loan for and see if this is something within their criteria.

As well as understanding the most important factors that lenders are looking for, there are ways to increase your chances of getting approved for a loan.

Improve your credit score

Your business credit score is more than just a number – it can play a role in your business’ overall success when applying for finance and with that in mind, there are a number of ways to improve your credit score.

Healthy cashflow

Presenting a healthy cashflow will show a lender that you’re less likely to miss a payment as you have a healthy cashflow with working capital. If you’re looking at ways of improving your cashflow, you could raise your prices, review and cut down on expenses and switch energy supplier for example.

Know the market

Some businesses may not be aware but the commercial finance market has changed over the years with more innovative finance solutions available. The new types of finance products that could be more suited to your requirements, less expensive and more flexible.

Using a Commercial Finance Broker

A good commercial finance broker will have access to a panel of lenders from well known high street names to lenders who specialise in specific finance products and/or industries. 

Some brokers like ourselves can arrange a full suite of finance solutions from unsecured and secured business loans, property finance, invoice finance, acquisition finance and even funding to franchise your own business.

With insight into a lender’s mind, a business will be able to take steps into improving their chances of being approved and receive the funding that they need to grow their business.

To increase your chances further of being accepted for business finance, consider using a commercial finance broker like ourselves. Rely on our experience and knowledge whilst taking the stress away from sourcing a finance facility. For a no-obligation discussion, call us on 01270 44310 or complete our enquiry form and we’ll get in touch as soon as possible.


Amplo Group
11 Mallard Court, Mallard Way,
Crewe, Cheshire, CW1 6ZQ

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