The Intermediary –- May 2026 - Flipbook - Page 74
SPECIALIST FINANCE
Opinion
Structuring
business finance
deals for success
I
n today’s small to medium
enterprise (SME) landscape,
structuring a business finance
deal for success requires far
more than just presenting
a funding opportunity. It
demands a disciplined and evidencebased approach.
The biggest component behind
every successful funding proposal
is confidence – giving risk teams
the certainty they need to give a
commercially viable approval. The
confidence to do this is built by
demonstrating the borrower’s ability
to service the debt, the reliability of
the financial information found in the
proposal and the security surrounding
the transaction.
Commercial brokers play a crucial
role in gathering this information
and shaping strong submissions.
This requires a tailored approach that
reflects the nature of the business –
whether it’s a new start, an acquisition
or an established enterprise.
Business acquisitions require
careful consideration of how the
two entities will combine. Not only
do funders want to see an acquiring
business on a stable footing, but they
want to know how the acquisition fits
into the business model.
Importantly, funders want to
determine if the acquisition will
strengthen or strain the business,
so optimistic assumptions around
cost savings or revenue growth can
easily undermine a case without the
necessary evidence.
New-start businesses present a
different challenge. With limited
trading history, the focus shis to
projections and the experience of the
directors involved.
Those projections need to be
grounded in reality and demonstrate
an ability to repay, even with slower-
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The Intermediary | May 2026
than-expected growth.
Existing businesses by contrast
offer greater data, whether that’s
historical accounts, trading trends or
balance sheets.
These all allow funders to build a
clearer picture of financial resilience.
We know though that it is far from
plain sailing for many SMEs, so any
inconsistencies or volatility have to
be explained to give funders some
confidence of future performance.
Debt serviceability
Across all transaction types, debt
serviceability remains a critical factor.
Funders have to be satisfied that the
borrower can meet their repayment
obligations, even under pressure.
Robust underwriting includes stress
testing financial projections to assess
how resilient the business is under
adverse conditions – whether that’s
reducing revenues, increased costs or
delayed growth. While a proposal may
work in a base-case scenario, it could
fail under modest stress.
Equally important is aligning
repayment structures with the
borrower’s cashflow cycle. If poorly
structured, this can create a liquidity
strain for even the most viable of
businesses. A well-structured deal
ensures that repayments remain
sustainable throughout the term.
Security safeguards
Just as crucial for funders is adequate
security. The most common security
instruments include director
guarantees, debentures and fixed or
floating charges over business assets.
In higher-risk scenarios – such as
acquisitions or new starts – additional
layers of security, such as cross
company guarantees or property
charges may offer a beer chance
of approval.
GARY THOMPSON
is sales director
at Asset Advantage
Rather than purely a fallback or a
recovery route, security can enhance
the overall quality of a proposal when
structured correctly. By identifying
available assets, clarifying ownership
structures or recommending
appropriate guarantees, brokers can
strengthen a proposal before it even
reaches underwriters.
Trusted advisers
There’s no question how
important brokers are in shaping
successful outcomes. The ability
to translate raw information into a
coherent and risk-aligned proposal
is oen the difference between a deal
that progresses and one that stalls
under scrutiny.
Expanding from a funding
opportunity to an approvable deal
means refining the narrative. Funders
ultimately need to know the story
behind the numbers, understand why
the deal makes sense and importantly,
how risks are being mitigated.
It can oen feel like we’re in a
funding environment where appetite
is low when it comes to acquisitions or
new-start deals. It’s definitely an area
where specialist funders continue to
thrive, working with brokers to really
understand the cases put before them.
In an increasingly complex
environment, the focus must remain
on the fundamentals of credible
financials, strong serviceability and
appropriate, but not excessive security.
When these elements come together
and they are clearly presented,
they offer a deal that not only gets
approved, but succeeds for both the
borrower and the funder. ●
