Although securing a loan for your business in Australia is not difficult, it can be stressful. Knowing how to navigate the process can make all the difference between success or failure.
Banks and financial institutions offer many options for business financing, including commercial property loans, vehicle leases, equipment leases, and commercial property loans. There are also simpler options like letters of credit and overdrafts. These are some ways to increase your chances of success.
1. Find out what’s realistic
It is a smart idea to compare credit options. This will help you to determine how much money you need, how you want it delivered, and what type of security you are willing to provide (residential/non-residential, or none at all).
2. Find a finance broker
Next, contact an MFAA-accredited finance broker. They can help you determine the best loan type and lender for you and your company. Finance brokers work with clients to assess their borrowing capabilities and to select the right loan for them. They also manage the settlement process. They can also handle a lot the legal and other paperwork.
3. Credit history is important. Make it good
When it comes to credit, lenders look for two things: a credit history and an existing credit relationship. Borrowers who have an existing loan that they pay on time are more likely to succeed. There are also options available for those with poor credit histories or credit impairments. A finance broker can help you clarify your options.
4. Show how you will minimize risk
Demonstrate how your actions will reduce the risk for you and the lender. The finance broker can assist.
Prepare all of your tax and paperwork for your first meeting with a finance broker. Also, ensure you have done your research to get a good idea of how much money you are looking to borrow and how it will be spent. Your total worth should be known, including your assets and liabilities.
Lenders want to see a business plan which shows you are clear about your goals and how you will achieve them.
7. Offer more than one exit strategy
Lenders want to know the best way to return their money. Some want as many as three scenarios.
Talk to an MFAA-accredited finance broker to discuss commercial financing options that will give your business a chance at success.