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Business Loan

Securing a business loan in Australia is not necessarily difficult but knowing how to navigate your way can be the difference between success and failure.

Banks and other financial institutions offer a wide range of business finance options, from commercial property loans, commercial vehicle leases, and commercial and equipment leases, to simpler options such as letters of credit, overdrafts, and lines of credit.

Here are some tips on how to improve your chances of success.

1

Work out what is realistic

It is a good idea to find and compare credit options based on the amount of money you need to borrow, how you want it supplied and the type of security you want to provide (residential, non-residential or none at all).

2

Find a Mortgage Broker

The next step is to speak to us, who can help you work out what loan type and lender are appropriate for your business and you. We work with clients to determine their borrowing needs and abilities, select a loan suited to their circumstances and manage the process through to settlement. We also do a lot of the legal and other paperwork; we have access to a wide range of loans and are experts in the area.

3

Have a credit history and make it good

Lenders are looking for two things when it comes to your credit status: an existing credit relationship and a relatively clear history. If a borrower already has an existing loan which they are servicing on time, they are much more likely to be successful. Of course, there are options for those who are either credit impaired or just do not have a documented credit history, and a mortgage broker can help clarify these.

4

Actively show how risk will be minimised

Demonstrate how you will lessen the risk to you and to the lender. Your mortgage broker can help.

5

Be prepared

For your first meeting with your mortgage broker, have up-to-date paperwork and tax records, make sure you have done your research and have a fair idea how much you want to borrow and how you plan to spend it. You should also know your total worth, listing your assets and liabilities.

6

Have a plan

Lenders like to see a business plan that shows that you know what you want to achieve and have a clear idea of how you can achieve it.

7

Provide more than one exit strategy

Lenders want to know how they are going to get their money back and some want up to three scenarios for what is called the ‘exit strategy’.

How to select a business loan

There are different types of business loans to suit different stages of a business lifecycle and different business needs and selecting the right one can speed up the application process and minimise costs.

Finance for a start-up

For a startup company with no trading business or cash flow, it can be quite difficult to secure a business loan. An alternative is to take out an investment loan against the equity of your home or property.

Finance for quick cash flow

Similar to a line of credit, a business overdraft can be drawn down to a certain limit but is specifically a commercial loan that is priced accordingly – and more favourably for the business. A great option for those unspecified cash flow requirements that go with owning a business, it provides the flexibility of accessing funds without much prescription.

Finance for expansion or investment

Aimed at funding long-term investments, term loans are ideal for business expansion. They are fully drawn advances for a fixed length of time with scheduled repayments. Normally secured against a valuable asset, term loans are commonly used for purchasing new equipment or moving to larger premises.

Regardless of what kind of business you are financing, it is always important to have a good business plan.

To give your business a good chance of success, talk to us about finding the right commercial financing options for you.

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