Securing business funding is a key milestone for many growing companies – but it’s also where many go wrong. A strong application can unlock new opportunities, while a single misstep can delay progress or result in rejection.
At Butterfly Advisory, we connect businesses with top-tier, FCA-regulated funding partners – and we’ve seen firsthand where applicants often trip up. Here are five common funding mistakes to avoid if you want to stay investment-ready and ahead of the game.
1. Not Having a Clear Reason for the Funding
Lenders want confidence that you know exactly how the funds will be used. A vague or generic explanation – such as “for growth” – won’t cut it.
Smart tip: Break it down. Will it fund equipment? Marketing? Hiring? Show how the funds will directly support revenue growth or efficiency.
2. Requesting More Than You Actually Need
Asking for too much can signal poor financial planning. It may also increase your borrowing costs unnecessarily or cause your application to be declined.
Smart tip: Calculate the true amount you need using cash flow forecasts. Be realistic, and include a contingency buffer if needed.
3. Overlooking Your Credit Profile
Many small business owners neglect their credit history – both personal and business. Lenders assess risk across the board, so any negative marks could affect your outcome.
Smart tip: Monitor your credit reports regularly using tools like CreditSafe, Experian, or Equifax. Fix any errors and avoid late payments.
4. Submitting Incomplete or Outdated Documentation
A strong application requires up-to-date and accurate financial documents. Missing or inconsistent paperwork is a leading cause of delay or rejection.
Smart tip: Prepare a digital folder with the following:
- Last 6 months of business bank statements
- Latest filed accounts
- Proof of ID and business address
Having this ready speeds up the process and shows professionalism.
5. Choosing the Wrong Type of Finance
Not all funding options suit every business. Choosing the wrong product – like short-term loans for long-term needs – can hurt your cash flow and growth.
Smart tip: Speak to an expert. At Butterfly Advisory, we help you assess the best-fit finance option for your goals – whether that’s unsecured loans, invoice finance, or something more strategic.
Final Word
Avoiding these mistakes doesn’t just improve your chances of approval – it enhances your credibility as a borrower and business leader. Stay prepared, stay focused, and always align your funding strategy with your long-term objectives.
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Butterfly Advisory helps small businesses access competitive funding solutions through trusted UK-based lenders.
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