How to write a funding proposal a credit team will actually read

Why does the proposal matter so much?

Credit decisions for established SMEs are made by people who have never visited your premises, met your customers or watched your team work. They see paper. A relationship manager or lending specialist champions your request, but the analyst and the credit approver decide on what’s in front of them.

A well-structured proposal does three things. It makes the analyst’s job faster, which matters when files queue. It shapes how the numbers are read, because you’ve explained the adjustments before they’re guessed. And it signals a finance function in control — itself a credit factor.

business.gov.au notes that lenders typically want identification, a business plan, financial statements and forecasts, lease agreements and personal financial information. Those are the ingredients. The proposal is how you present them.

The structure credit analysts expect

Section	Length	What it answers
1. Summary	1 page	What, why, how much, security, repayment, exit
2. The business	1 page	What it does, customers, market position, management
3. Financial performance	2 pages	Results, trends, adjustments, explanations
4. Debt and ratios	1 page	Existing debt, proposed debt, ratios before and after
5. Forecast	1–2 pages	12–24 months, assumptions, downside case
6. Security	1 page	What’s offered, values, existing encumbrances
7. Risks and mitigants	1 page	What could go wrong and what you’d do
8. Appendices	As needed	Statements, management accounts, aged ledgers, ATO statement

1. The one-page summary

Write this last and put it first. It should state:

• Amount and structure — e.g. a term facility plus a revolving limit
• Purpose — precisely what the funds will do
• Repayment — from trading cash flow, an asset sale, a refinance
• Security — properties, guarantees, general security
• Key numbers — turnover, EBITDA, proposed DSCR, leverage
• Exit — how the facility ends or is refinanced
• Timing — when funds are needed and why

If an approver read only this page, could they understand and support the request?

2. The business

One page on what you do, who you sell to, how you win work and who runs it. Name the management team and their tenure. Mention customer concentration openly if it exists — our guide on customer concentration explains how to frame it.

3. Financial performance

Three years of results in a simple table, then explanation:

• Why revenue and margins moved
• Every adjustment to EBITDA — owner salaries, one-offs, related-party items — with a one-line reason
• Working capital trend: debtor, inventory and creditor days. The working capital cycle calculator helps.

Don’t make the analyst reverse-engineer your story from the statements.

4. Debt and ratios

A complete debt schedule across all lenders — including equipment finance, cards and any ATO arrangement — then ratios before and after the proposed facility. Use conservative definitions. The guide to debt service cover and interest cover explains how lenders adjust earnings, and the debt service cover calculator gives a quick check.

If you’d like a specialist to sanity-check your pack before you send it anywhere, start an enquiry — no credit check is involved.

5. Forecast

A monthly or quarterly forecast for 12 to 24 months, reconciled to the latest actuals. State the three or four assumptions that matter most. Include a downside case — revenue down, margin down, debtor days up — and show the business can still service its debt.

6. Security

For each property: address, owner, type, estimated value and basis, existing mortgages and balances. For other security: what’s offered and any PPSR registrations. For guarantors: who, and their relationship to the business.

7. Risks and mitigants

This is the section most proposals skip and the one that most impresses credit teams. List the three to five genuine risks — a major customer, a key person, input costs, a regulatory change — and what you’d do about each. Candour here builds trust everywhere else.

Handling the difficult items

Every established business has something awkward in its history. The rule is simple: disclose it before it’s found.

• ATO debt. State the balance, how it arose, the arrangement in place and the plan. The ATO may report business tax debts of at least $100,000 overdue by more than 90 days where a business isn’t engaging — an analyst will check, so tell them first.
• A past covenant breach. Explain the cause, how it was cured and what’s changed.
• A loss year. Show the bridge from the prior year and the recovery since.
• Related-party transactions. Explain the commercial terms and whether they’ll continue.
• A decline from another lender. Say why, briefly and honestly.

Common mistakes

1. Leading with history, not the request. The analyst wants the ask first.
2. Unexplained add-backs. Every adjustment without a reason is treated as a normal cost.
3. Forecasts that don’t reconcile. A forecast that starts from a different base than the latest actuals undermines everything.
4. Missing debts. An equipment contract or card facility found later damages credibility.
5. Hockey-stick projections. Aggressive forecasts are discounted, and they make everything else look less reliable too.
6. Omitting the exit. Particularly for short-term or property-backed facilities, the exit is central.

Adapting the proposal to the purpose

• Refinance: emphasise why you’re moving and what the new structure achieves. See refinancing business debt.
• Acquisition: add the target’s financials, due diligence findings and a combined forecast. See acquisition finance.
• Annual review: shorter, focused on results, covenants and outlook. See preparing for the annual review.
• Working capital: centre on the cycle, the gap and why the limit is the right size.

A final check before sending

• Could someone outside the business understand the request from page one?
• Does every number reconcile across sections?
• Is every adjustment explained?
• Are all debts listed?
• Are the risks named, with mitigants?
• Is the exit clear?

An example one-page summary

Illustrative only; no real business. The following shows the level of detail that works on page one.

Request: A property-backed term facility and a revolving working capital limit, to refinance two short-term loans and three equipment contracts and to fund the stock required by a new national supply agreement.

Business: Wholesale distributor of commercial cleaning products, 14 years trading, about $17 million turnover, 38 staff, operating from an owned warehouse.

Performance: EBITDA of about $1.6 million after normalising the owner’s salary, stable margins over three years, revenue growth driven by two new contracts.

Repayment: From trading cash flow. Pro forma debt service cover improves after the refinance because daily-repayment debt is removed.

Security: First mortgage over the company’s warehouse; director guarantees.

Risks: The new supply agreement will represent about a fifth of revenue; mitigated by a three-year contract term and the business’s broad existing customer base.

Exit: Term facility amortises over the agreed term; revolving limit reviewed annually. Refinance to a bank facility considered once two years of enlarged turnover are in the accounts.

Notice what’s absent: no history lesson, no adjectives, no marketing language. Everything on the page is a fact or a number the analyst can verify in the appendices.

Tone: write for a sceptical reader

Credit analysts are paid to find reasons a loan might fail. Write for that reader. Use plain statements, show your working, and avoid words like “conservative” or “significant” unless a number backs them up. Where you’re uncertain, say so and explain how you’ve allowed for it. A proposal that sounds measured is read as lower risk than one that sounds enthusiastic.

Want a second pair of eyes?

A proposal written this way is valuable whichever lender you approach. If you’d like to know how it’s likely to be read — and which funder’s assessment best suits your business — share it with us.

Enquiring doesn’t involve a credit check, and your proposal won’t be forwarded around a panel of lenders; one specialist reviews it and approaches the right funder. Please enter accurate amounts, purpose and security on the form so we can respond with something useful on the first call. See if you qualify.