How to prepare a commercial finance application

You personally, an existing trading company, a new special purpose vehicle, a partnership, an LLP or a pension scheme. This is the first question every lender asks and it determines the entire panel — a lender who will not lend to a newly incorporated SPV is not a lender you can persuade.

It also has tax consequences that a broker should not be advising on. Settle it with your accountant before you offer on anything, because changing the borrowing entity after exchange means starting the application again from the beginning.

The specific documents vary by product, but the spine is the same everywhere and having it ready removes the most common two-week delay from any application.

Where you are trading through a company, filed accounts are the starting point but rarely the whole picture. Management figures matter more, because a lender assessing a case in November does not want to underwrite on figures that ran to the previous March.

Take profit before tax and add back directors' remuneration and dividends, pension contributions, depreciation, amortisation and any genuine one-off costs. That adjusted figure is what a lender assesses, and it is often dramatically higher than the headline profit in your accounts.

Then take the payment you are asking for and test it at two to three per cent above the rate you have been quoted. If the adjusted figure does not cover that stressed payment by at least 1.25 times, the loan will be cut back — so it is better to know now and ask for the right number.

For property investment, the same exercise runs on rent rather than profit. The rent used is the valuer's assessment, not the letting agent's appraisal, and it is frequently lower.

Underwriters read a lot of cases. The ones that get approved quickly are the ones where the narrative answers the obvious questions before they are asked: what the money is for, why now, where the repayment comes from, and what happens if the main plan does not work.

Two pages is plenty. What it must not do is gloss over the difficult part. An underwriter who finds a problem you did not mention starts questioning everything else you told them, and that is much more damaging than the problem itself.

The things people leave out are consistent: a director's historic CCJ, a previous company that entered liquidation, a late filing at Companies House, an HMRC time-to-pay arrangement, a second charge that was never removed from the title, a tenant in arrears.

Every one of those is workable when it is disclosed at the first conversation, because the case can be placed with a lender whose criteria accommodate it. Every one is close to fatal when a lender finds it at week four, after a valuation has been paid for.

This is the single most valuable thing on this page. Cases fail on late disclosure far more often than they fail on the disclosure itself.

Where property is involved, the title is where the time goes. Ordering office copies early costs a few pounds and can save a fortnight.

For an investment purchase, the lease pack matters as much as the building: unexpired term, break clauses, rent review provisions, repairing obligations and the tenant's own filed accounts.