Sep 10, 2018  | Tags: business loan, finance broker

Our Insights

For most people, getting a loan is an essential step in realising the dream of owning and operating a successful business. Getting your financing wrong, however, can mean chasing your tail for years as you try to fulfil all of your financial obligations.

Here are some things to keep in mind to ensure you don’t make costly mistakes when securing a business loan.

Get the right loan for your needs

There are a wide variety of financing options on the market, and which one is right for you depends on what specifically you need the finance for. For example, if you need to invest in new equipment, such as farming machinery, there are different financing options available to you than if you want to put a deposit down on commercial property, such as a warehouse. A good finance broker will know that if it’s new equipment you’re after, an equipment loan could be sought, with the asset itself used as security. There may also be leasing options available which could be more cost effective. 

Account for everything in your business plan

A business plan isn’t just essential for securing a loan, it can help you feel confident in the amount you are borrowing, and your ability to pay it back. Take the time to construct a thorough business plan that accounts for products or services you plan to sell, your forecast revenue, overheads such as capital investments, rent, labour costs and materials, and your business’s growth trajectory. 

Get the term of your loan right

A good business plan will also help you understand the correct term you should be seeking for your business loan, and can help avoid difficulties down the line if you find you are not able to pay back your loan as quickly as you initially thought. It may seem like an efficient strategy to meet short term costs to simply get a business credit card, however, if you find yourself unable to make repayments due to unforeseen circumstances, this can be a costly error. Get the loan term right to ensure you pay no more interest than is absolutely necessary. 

Keep financial records

Much like securing finance for a home loan, lenders need to be made to feel confident that you are a sound financial manager who can be trusted to meet the repayment requirements. Thorough, professional financial records for your current business operations will go a long way towards reassuring your potential lender. When you meet with a broker or lender, make sure your financial records are up-to-date, and if required, seek the assistance of an accountant who can help make sure your business’s books are as healthy as possible. 

Check your credit record

A lender will conduct a credit check on you before agreeing to provide financing, so it will help to know what they’ll find so you don’t get any nasty surprises. Ask a broker for advice on how to access your credit record, and what your credit record will mean for your ability to borrow.

Use a finance broker

Business loans can be even more complex than home loans, and in addition to the broad spectrum of products available in the market, there are also a whole range of different options available depending on what you need the finance for. As with any purchase, thorough research is essential to ensure you get the best deal. Using an experienced broker will ensure you get the right finance for your needs, and that you give your business the best chance at success. 

Need help finding the right business loan?

Calder Financing Broking can find you the best deal for your needs, and guide you through the process.

Contact the team or call directly on 08 8373 3333 to meet an experienced broker today for a free, no obligations discussion about your needs.

Written and Supplied by Cliff O’Connell of Calder Finance Broking, for more information please visit the Calder Finance website. Please note that Calder Finance Broking Pty Ltd is a Corporate Credit Representative of BLSSA Pty Ltd ABN 69 117 651 760 ACL 391237.