Expanding Your Company: How to Secure the Right Business Loan
Not all business owners have the benefit of starting their business from their own pockets. Some companies even need to get an extra push from other sources. Securing a business loan for your company is an important step in expanding your business, which is why you need to be careful in making financial blunders.
Securing a business loan
Many lenders in Australia offer different loan types depending on the business owners’ needs. This is why you need to make sure that you find the right prospect by analysing what your company needs and what it can offer.
In this article, we will share three tips to help you in securing the right business loan for your company.
1. Determine your business’ needs
Depending on your business, you may need to take out a loan on a regular or as-needed basis. By analysing your overdraft, you’ll be able to see your excess in cash flow. This will help you determine if you’ll need partial credits regularly or you’ll need one-time transactions, such as fully drawn advance, to help you buy the essentials in setting up your business.
Upfront loans need to be paid back at regular intervals, including its added interest. The actual repayment cost is usually defined through the amount borrowed, term length, and rate of interest. Before you secure a business loan, make sure that you consider how much your projected income will be so that you can successfully pay the minimum amounts on the regular payment periods. You can also use a business loan calculator to compute your projected costs per month.
2. Consider different loan rates
The rates can either be fixed or variable rates. Fixed rates remain consistent throughout your term’s duration, while variable rates will change depending on the market’s trends. Although there’s more risk in securing the latter option, there’s also the potential that choosing a lender who has a solid track record in the market will end up with you paying fewer dues in the long run.
Some business owners are willing to risk cheaper rates with greater consequences. Sometimes you can use collateral, or security, to apply for a loan. Know that various properties, such as real estate and business assets, can be used as your security. However, you need to be vigilant about paying your dues on time because your security can be legally seised if you breach your loan contract. Only consider this option if you’re sure that you won’t miss deadlines and will meet your sales quota to pay your monthly debts.
3. Be mindful of additional fees
Different lenders have their own fees when it comes to conducting transactions with small businesses. These accessory fees can include application, early repayment, exit fees, and more. Although a lender may offer you a lower interest rate, you have to be mindful of what their additional charges are in computing for the total amount that you’ll have to pay per interval. Make sure that you point out any discrepancies in their computations to avoid being cheated from your loan.
4. Prepare your business’ documents
Banks will ask for a detailed business plan of your company. This includes your monthly statements detailing your profit and loss figures, together with your cash flow projections and updated financial history. At the same time, you need to make sure that you’re prepared with the right paperwork and ensure that you show positive figures to increase your chances of securing a better loan rate.
As a business owner, you need to make sure that all your transactions, whether in product sales or business partnerships, are made after performing the right amount of research. The key to expanding your business is by making sure that you engage in well-thought-out arrangements.
Do you need help in dealing with your business’ financing? We offer expert advice on securing a business loan in Brisbane to help you make the right financial choice for your business. Get in touch with us today, and we will assist you in directing your business’s expansion is on the right track!