Tips to ensure you’re prepared when applying for a business loan
January 8, 2020
Whether you’re expanding your business and need access to working capital to pay for new equipment or office space upgrades or looking at purchasing a private practice, it’s likely you’ll need a business loan to meet the financial requirements of these expenses.
Business loans come in a variety of forms dictated by what you want to get out of the loan, the type of loan and the asset you’re acquiring. So how can you be prepared to apply for your loan and secure the right loan type for your needs?
Ensuring you have your affairs in order will help speed up the process when talking to a lender about applying for a business loan. The 4 key personal and business documents to have at your fingertips in case your lender asks for them include:
Proof of individual income
Both your personal and business credit scores will be looked at as part of the approvals process as well. Paying your bills on time, having an active credit profile and reviewing your credit report annually are some of the main ways you can improve your credit score.
Here at Credabl we fund 4 types of loans to businesses, these are:
Overdrafts – Borrowing money to have readily available cash rather than borrowing to purchase an asset.
Equipment Finance – Help you pay not just for heavy equipment but for any physical asset your business needs in order to operate, particularly in the fast-changing world of technological advancement.
Commercial Property Loans – Buying your own practice premises as an investment for your business starting with securing the right financial structure.
Goodwill Loans – Using the goodwill of the practice as collateral to secure your loan.
No matter the loan type, you will need to know details such as the borrowing entity, guarantor and whether you’re borrowing jointly or on your own. Some of this detail includes:
Who is the borrower?
Who or what is the legal entity that the lender will be lending the funds to? This could be an individual, Company, or a Trust. Your accountant should be able to advise as the most favourable borrowing entity.
Who is Guaranteeing the Loan?
Who the borrower is will determine who is included on the loan by the lender. Generally, if it is an individual then we will just require that individual to be on the loan, a company will require the directors and a Trust will require the directors of the trustee company.
What is the Personal Asset and Liability Position of the Guarantors?
When referring to assets we need to understand what property, motor vehicles, cash, Superannuation, and any other assets you may have. On the flip side we will also need to understand any debts that you may have in association with these assets.
Depending on the size and type of loan this may be all we require to proceed with the facility. For larger or more complex loans we will also look to get personal income details, which will relate to your ATO lodged documents to evidence income and any company/Trusts Financials if applicable.
Outside of this the information will be transaction dependant but if you can ensure the above information is available and current, then this will allow your loan application to move along quickly and easily from a lending perspective.
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