What lenders actually look for in a mid-market credit file
Credit committees are not persuaded by ambition. They are persuaded by consistency — and most declined applications fail on presentation, not fundamentals.
A capable, profitable business gets declined more often than most founders expect. Usually it is not because the underlying company was unfinanceable. It is because the file that reached the credit committee did not answer the questions that committee was always going to ask.
Consistency before ambition
The first thing an experienced credit analyst does is reconcile. Your audited financials against your management accounts. Your management accounts against your bank statements. Your stated order book against your receivables ageing. Discrepancies are not automatically fatal — businesses are messy and there are usually good explanations — but unexplained discrepancies are, because they change the analyst's prior on everything else in the file.
If your numbers require explanation, explain them in the file. Do not let the committee discover the gap themselves.
The story behind the working capital cycle
Mid-market lending decisions turn heavily on the working capital cycle: how long between paying your suppliers and collecting from your customers, and why that gap is the size it is. A ninety-day cycle in a business where that is the industry norm is fine. The same ninety days in a sector that typically runs at thirty invites a question you want to have answered in advance.
Management depth
Lenders are underwriting a repayment stream that runs for years. They are entitled to ask what happens to that stream if the founder is unavailable for six months. Businesses that can point to a second line of management — a finance head who genuinely runs finance, an operations lead with real authority — are materially easier to place than businesses where every decision routes through one person.
Positioning is not spin
Positioning a company well does not mean dressing it up. It means presenting the business to the lender who is actually suited to fund it, in the format that lender's process expects, with the obvious objections addressed before they are raised. A strong company sent to the wrong desk is still a decline.
That matching — knowing which institution has appetite for your size, your sector and your stage this quarter — is most of what a capital raising firm is for.
This article is general information about the financing landscape, current as of its publication date. It is not financial, legal or tax advice; regulations change, and every company’s position is different.
