How to prepare your business for a finance application

1. Documents lenders commonly ask for

Requirements vary by lender and loan type, but having these ready usually shortens the approval process:

• The last two years of business financial statements (profit & loss and balance sheet) and business tax returns.
• Recent Business Activity Statements (BAS), typically the last four quarters.
• An ATO integrated client account or portal statement showing any tax debts and payment arrangements.
• Business bank statements, usually for the last 6 to 12 months.
• Aged debtors and creditors reports, particularly for working capital or invoice finance.
• Year-to-date management accounts if the last financial year ended more than a few months ago.
• ABN/ACN details, trust deeds or company constitutions where relevant, and identification for all directors and guarantors.
• A statement of assets and liabilities for each director or guarantor.

2. What lenders look for

• Serviceability: whether the business generates enough cash flow to meet repayments. Many lenders assess this using EBITDA and a debt service cover ratio.
• Trading history: most mainstream lenders prefer at least two years of trading, although specialist and low-doc options may exist for newer businesses.
• Conduct: consistent account conduct, no dishonours, and BAS and tax lodged on time.
• Security: the type and value of any property or assets offered as security, and the resulting loan-to-value ratio (LVR).
• Credit history: both the business's commercial credit file and the directors' personal credit files.

3. Practical steps before you apply

• Check your business and personal credit reports with Equifax, Experian and illion, and correct any errors.
• Bring BAS and tax lodgements up to date, and formalise a payment plan with the ATO for any tax debt.
• Avoid submitting multiple applications to different lenders at once, as each credit enquiry can be recorded on your file.
• Prepare a short summary explaining the purpose of the loan, how it will be repaid, and any one-off items in your financials.
• Keep business and personal spending separate so your statements clearly reflect business performance.