How to give yourself the best chance of getting the funding result you want

Last post: Oct 21, 2021

The key determining factor for a lender in reaching a funding decision is affordability.

Can you comfortably service the loan principal and interest? How much cushion is there to absorb downturns? Do you have a strong management team with a cogent strategic plan to continue to deliver the necessary cash flow to service the debt and with the experience to respond effectively to changing market conditions?

In order to answer all these questions in a way that will reassure any potential lender, taking time to prepare a carefully thought-out five-year plan is important.

The first step is to put together a five-year strategic plan for your business – this deals inter alia with revenues, costs, marketing, marketing (including succession planning) and risk management.

This plan should not only identify the key objectives to achieve this plan but also a process to regularly review their implementation. A high-level annual profit and loss forecast should be included here too.

The next step is to prepare a detailed five-year projection comprising profits, losses and cash flow, also including a balance sheet to ensure everything has been correctly picked up.  These should be done on a monthly basis to enable identification of month-to-month fluctuations in cash flow generation.  

The first iteration of the projection will be a "base" case - year one of the forecast will then be easily referenced to the actual results for the last full completed year.  

The forecast should be supported by fully documented and auditable assumptions.  There must be well-validated reasons for growth from prior year actuals – avoid "hockey stick" forecasts at all costs!

Potential risks that could impact on the forecast should be identified, documented and evaluated with reflections on these risks and your plan to mitigate them – if you don't do this the lender will do his own, which may be less helpful for your case.

Producing these projections may feel overwhelming and yet getting this right is a key step for your business to secure the funding your need.

JFP Strategic Planning & Implementation can help you both produce five-year projections and develop a cogent written strategic plan to help give the funders have confidence in your business. JFP has provided these services to SME's across in a wide range of businesses for many years and with great results.

If you would like to discuss how JFP might be able to assist you without obligation get in touch with JFP partner Peter Tory by phone (07908 204 057) or email