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What do you need to know about business loans?
Sometimes, your business might need funds to grow or take advantage of an opportunity. Other times, your working capital might be tied up so cashflow is tight and it’s a struggle to fund your day-to-day operations.
Whatever your situation, a business loan can give you the cash you need to succeed. But what do you need to know about business loans before you apply?
The first thing you’ll need to figure out is what type of finance is most suitable for your business.
Business loans are either secured or unsecured – depending on whether you use an asset as collateral for the loan.
But that’s not your only option when it comes to choosing a business loan. There’s a vast amount of different business loan products available in Australia, including:
- Term loan – A lump sum of capital you repay at regular intervals over a defined amount of time
- Line of credit – A flexible source of funds up to a predetermined amount you can access when needed
- Invoice finance – A short-term loan whose value is based on what your customers owe your business
- Vehicle and equipment finance – A specialised loan to purchase commercial vehicles, machinery and equipment
- Cashflow lending – An unsecured business loan that lets you borrow funds against your expected future revenue
What do you need to know about business loans?
Sometimes, your business might need funds to grow or take advantage of an opportunity. Other times, your working capital might be tied up so cashflow is tight and it’s a struggle to fund your day-to-day operations.
Whatever your situation, a business loan can give you the cash you need to succeed. But what do you need to know about business loans before you apply?
The first thing you’ll need to figure out is what type of finance is most suitable for your business.
Business loans are either secured or unsecured – depending on whether you use an asset as collateral for the loan.
But that’s not your only option when it comes to choosing a business loan. There’s a vast amount of different business loan products available in Australia, including:
- Term loan – A lump sum of capital you repay at regular intervals over a defined amount of time
- Line of credit – A flexible source of funds up to a predetermined amount you can access when needed
- Invoice finance – A short-term loan whose value is based on what your customers owe your business
- Vehicle and equipment finance – A specialised loan to purchase commercial vehicles, machinery and equipment
- Cashflow lending – An unsecured business loan that lets you borrow funds against your expected future revenue
Lenders will want to know what you plan to do with the money. So be prepared to give details of how or where the money will be spent in your application.
Unfortunately, that’s not the only hoop you have to jump through. The lender will also judge your application based on your business’ risk profile, paying close attention to your:
- Working capital
- Debt burden
- History
- Potential profitability
These factors also influence the rate you’ll get charged. The more risk your application poses to the lender, the higher your interest rate is likely to be.
You also need to pay attention to the payback period and what the lender will use as collateral (if the loan is secured).
Put this all together, and it’s easy to see why it’s critical to find the right lender for your business’ unique situation. But that’s easier said than done when each lender has its own set of (private) guidelines. That’s why it pays to use the services of an expert business loan broker like Commercial Loans.
Testimonials
What do our clients say about their experience?
“This was my first business loan – and I couldn’t have asked for a better experience. A friendly and professional team were on hand to assist every step of the way. I had loads of questions, and they took the time to explain everything clearly to me. Highly recommended.”
Mike R.
“Commercial Loans just make it happen. They understand your business, source a competitive deal according to your needs and constantly update you throughout the application progress.”
Nick B.
“Very professional service and outstanding communication. They make everything so very straightforward and delivered real value for our business.”
Claire B.
Why use Commercial Loans for your business loan?
Running a business is rewarding. But it can also be challenging, particularly when cash flow is tight or you lack the funds you need to expand, purchase new inventory or invest in quality tools, machinery and equipment.
The right business loan can solve this problem by freeing up or creating working capital without impacting your cashflow. Even better, by investing this capital in your business, you can set yourself up for success – so all your hard work pays off.
Unfortunately, there’s another problem.
You likely have enough on your plate without the added hassle of arranging finance.
Comparing lenders and loan products across Australia’s crowded finance marketplace takes time you might not have. Then there’s the loan application process itself – which can be lengthy and extremely complex.
Even worse, if you don’t structure your business loan application correctly or you approach the wrong lender, there’s a good chance your loan will be declined. This doesn’t just put you back at square one. It can also damage your credit score, making it harder to get approved for finance next time around.
The process can be even more tricky when:
- You are self-employed or a sole -trader
- Your business is a startup
- Your income ebbs and flows
- You have a poor credit score
Getting a competitive deal on a business loan comes down to what you know and who you know.
At Commercial Loans, we know a hell of a lot. We’ve got decades of collective industry experience. And we’ve got relationships with over 100 lenders. Over the years, we’ve helped hundreds of Australian businesses just like yours secure the finance they need – including low doc, no doc and bad credit options.
Ready to solve your problem? Speak to the expert team at Commercial Loans today.
Talk To The Commercial Loans Team Today
Email Address
admin@commercialloans.com.au
Call Us
1300 169 200