Applying for Business Funding? What Lenders Want to See in Your Numbers

Getting funding approved in the construction or engineering space can be tough, especially when projects are long-term, payments are staggered, and margins can swing dramatically.

Whether you’re applying for funding to purchase new equipment, finance upfront labour, secure larger tenders, or expand into new contracts, you’ll need to present more than just ambition.

In this sector, lenders don’t just check if you’ve made a profit, they want proof that your numbers are resilient, predictable, and built for scale.

Here’s what they really want to see and how to make your numbers speak their language.

1. Cash Flow Forecast

Why it matters: Construction businesses often carry the weight of upfront costs, labour, materials, insurance, before a single payment is received. Add in 60-day payment terms and stage invoicing, and cash can become dangerously tight.

For lenders, this raises a clear question: Can you manage your working capital and still repay a loan on time?

How to measure & control:

• Build a project-based rolling 12-month cash flow forecast

• Include retention payments, VAT timing, PAYE, subcontractor outgoings

• Highlight payment timing for key clients and expected drawdown dates

What they’re checking for:

• Does your forecast account for delayed stage payments and retentions?

• Is there a buffer to absorb project overruns or payment delays?

• How do you plan to fund project start-up costs before loan funds are used?

2. Historical Accounts & Management Information

Why it matters: Construction funding is often unsecured, so lenders rely heavily on your accounts to assess your credibility. A strong track record of well-managed project costs and clean accounting boosts trust.

How to measure & control:

• Provide year-end statutory accounts + up-to-date monthly management accounts

• Break down performance by project or site where possible

• Explain large debtor balances or WIP entries (work-in-progress)

What they’re checking for:

• Are costs escalating on projects compared to revenue timelines?

• Do your actuals line up with forecasted numbers from past tenders?

• Are you reinvesting back into the business, or over-distributing?

3. Profitability & Gross Margins

Why it matters: It’s not what you win it’s what you keep. Lenders scrutinise margins because this tells them how well you manage subcontractors, material costs, and overhead spread. A business running on sub-15% margins may not be robust enough for large debt obligations.

How to measure & control:

• Track gross margin = (Revenue – Direct Costs) ÷ Revenue

• Monitor per project, per quarter, and against similar jobs

• Adjust for scope creep, design variations, and price inflation

  
  

What they’re checking for:

• Are margins stable and consistent across projects?

• Are losses on one site being hidden by profit from another?

• Do you show the ability to manage costs at scale?

4. Existing Liabilities & Supplier Credit

Why it matters: Construction companies often carry large trade creditor balances and complex CIS obligations. Lenders want to understand not just your debts, but how well you manage your supply chain and tax commitments.

How to measure & control:

• Provide a creditors ledger aged by 30/60/90+ days

• Disclose outstanding CIS, VAT, and PAYE liabilities clearly

• Clean up long-overdue trade balances before applying

What they’re checking for:

• Are you stretching suppliers too far?

• Are there hidden short-term debts not disclosed on the P&L?

• Is there HMRC arrears that haven’t been declared?

5. Use of Funds & ROI

Why it matters: Lenders want to fund growth, not patch holes. Saying you need money “to grow the business” is vague. But saying, “We need £150K to purchase plant machinery that will increase tender value by £1M in 12 months” builds confidence.

How to measure & control:

• Break down funding requirements by use (e.g. £70K for kit, £30K for staffing)

• Show what return this unlocks, bigger tenders, shorter project cycles, less hire cost

• Link funding to contracts in hand or pipeline conversions

  
  

What they’re checking for:

• Are the funds driving new business, or replacing poor cash flow?

• Is the return on investment clear and achievable?

• How quickly does this move the company forward?

  
  

6. Financial Ratios for Large Funding Applications

If you're asking for a loan that exceeds your average monthly revenue, or one that pushes your gearing higher expect lenders to dig deeper using financial ratios:

✅ Debt Service Coverage Ratio (DSCR)

Net Operating Income ÷ Total Debt Payments

Target: 1.25+ Lenders use this to assess your ability to meet debt repayments comfortably.

✅ Current Ratio

Current Assets ÷ Current Liabilities

Target: 1.2–2.0 Shows whether you have enough liquid assets to cover upcoming obligations.

✅ Gearing Ratio

Total Debt ÷ Equity

Target: < 2.0 Indicates financial risk. Highly geared companies may be seen as unstable.

✅ Gross Profit Margin

Construction target: 15–25% depending on niche Lenders use this to assess how well

you manage project cost control.

What they’re checking for:

• Can this business handle additional debt comfortably?

• Do they have short-term liquidity, or will this loan add pressure?

• Is there enough equity and retained profit to support risk?

How JFA Can Help

At Jones Financial Accounts, we’ve supported construction and engineering businesses from £500K to £15M+ turnover with funding applications for:

• New plant and equipment

• Project startup cash

• Working capital top-ups

• Business acquisition funding

We help you:

✅ Build funding-ready cash flow forecasts (inc. retention + CIS impact)

✅ Break down project-level performance and margins

✅ Clean up credit reports and tidy overdue liabilities

✅ Model ROI on plant, staffing, or growth initiatives

✅ Present ratios and repayment analysis lenders want to see

Our approach gives you more than clean accounts, it gives lenders the confidence they need to say yes.

Ready to apply? Book a free finance health check today

Wrapping up today’s insights, tomorrow we simplify another accounting challenge.