The Right Business Finance Structure

  • 15 March, 2021
  • Greg Pierlot

While the cost of finance is important, ensuring you have the right business finance structure is even more critical.

When a finance structure is incorrect, it can have serious implications for a business. Business operations can be impaired and relationships with Lenders strained, not to mention how time consuming, and costly, it can be to unwind an inappropriate structure.

Business Finance Structure - More than a Great Interest Rate

There is no point in having a great interest rate, if the structure of the finance negatively impacts the business.

Whilst the cost of finance is a key consideration, how the finance is structured is equally important.

As a Finance Broker, many of the issues we see new clients experiencing are due to their finance structure being incompatible with their business and cashflow.

How Finance Structure Issues Arise

The reasons a poor business finance structure arises are many and varied, but can include:

  • Finance is obtained to satisfy an immediate and pressing need, without consideration to the overall requirements and cashflow of the business
  • Overly aggressive repayment programs which drain the business of cashflow
  • The finance not being aligned to the business cashflow or seasonality
  • Insufficient time being allowed for revenue benefits to accumulate before repayment programs commence
  • Long term assets being purchased with short-term debt
  • Capital items being purchased from cashflow
  • Accepting what the Lenders offer without properly testing the market
  • Lenders structuring finance to comply with policy rather than the business needs

Business Finance Structure – Look Forward Not Back!

The key to getting your finance structure right is to first undertake a review to understand both your short and long-term finance requirements.

To understand what the optimal finance structure for your business looks like.

Whilst this does take work, and will usually involve preparation of financial forecasts, it is an investment worth making.

Know Where You Stand in the Market

Having gained an understanding of your requirements, the next critical steps, overlooked by many business owners, are:

  • Not undertaking research to understand how Lenders view your business and what changes, if implemented, could improve your negotiating power and leverage
  • Not testing the market to understand what competing offers from Lenders look like!

Policies, appetite to lend to certain sectors, terms and conditions can vary widely from Lender to Lender.
If you want the optimal business finance structure, you need to understand where you stand in the market.

A Great Finance Structure – Compared to What?

If you don’t understand what is available in the market, the best you can hope for is that your Lender will do the right thing – but the reality is, you simply have no real basis for comparison.

If you approach your Lender direct, you may end up with an improved offer – but that does not necessarily mean it is market competitive!

Just as a professional sporting team would not enter a game without analysing the competition and work to leverage their own strengths and address any deficiencies – so it should be when it comes to winning at finance!


Our philosophy is that Finance is simply as a tool that businesses use to meet their objectives – that is; it is a means to an end!

But to work, business finance needs to be structured correctly – and tailored to the business cashflow and circumstance.

If you would like to learn more about how we can work with you to deliver a business finance structure that is truly market competitive, give me a call!