It can be quite daunting applying for finance for the first time for your business. The process and requirements are different to applying for a Home Loan and can take a lot longer. Lenders have different appetites for different types of lending and navigating this can be tough. Below are 5 helpful tips to help obtain the finance you need.
Ensure your financials are up to date confirming consistent income
When applying for business finance, the first thing a Lender will want to see is the businesses historic financials, confirming the business can afford to repay the debt. Keeping accurate and up to date records is very important as financial information confirms the businesses profitability. Generally, Lenders will want to see the previous two years Tax Returns and Financials for the business, the directors personal tax returns and up to date management accounts from your accounting software confirming the income is consistent. They will also request confi rmation you have no outstanding tax liabilities, so ensuring your BAS and Tax is lodged and paid is important. For new businesses, management accounts, BAS Statements and cashflow forecasts are critical. Going through these with your Accountant is highly recommended to ensure they are realistic and achievable for your business.
Consider what you are requesting – does it makes sense?
A Broker and Lender will always need to know what the funds you are borrowing are being used for. We will need to consider if this makes sense in the context of your business and industry. We, as Finance Brokers, pride ourselves on getting to know your business and understanding how these funds will improve your business and help you move to the next stage.
Show a positive payment history
Lenders will always want to see that you are maintaining debts, ATO repayments and debtors well and ensuring payments are made on time. Lenders will want to see statements for accounts held and confirmation you have no Tax liabilities.
Know your Business
Lenders will need to be assured you have done the necessary due-diligence within your business. Knowing your financials, who your competitors are and preparation for any potential challenges will help. It is important your Broker/Lender understands how your business operates and the infrastructure you have in place to run your business successfully.
Shop around for finance
Ensuring you have the best structure for you and your business is important. It is best to engage your Accountant so you are aware of any tax implications and then find a Lender that offers you a solution that makes sense for your business. A Finance Broker is a great place to start, as they can use their knowledge to understand your business, know what is important to you and work with you and their panel of lenders, to find the most suitable solution.
Credit Representative 490860 is authorised under Australian Credit Licence 389328 www.finarc.com.au Your full financial situation would need to be reviewed prior to acceptance of any offer or product. ‘Subject to lenders credit criteria, terms and conditions, fees and charges apply’
