In 2017, 45% of Aussie small businesses started the new financial year with a negative cash flow balance.
To avoid this and help get your business across the end of financial year (EOFY) line, start by offering your cash flow levels the support they need with a smart business loan.
For some, the words “business loan” whispers small sounds of caution ahead. This isn’t the reality.
A smart business loan can be the adrenalin your cash flow levels need to ensure your business starts the new financial year on the front foot, as long as you find the right business loan for you.
Use these five key steps to find the perfect EOFY business loan to suit your business needs and give you peace of mind as your business grows into the new financial year.
Business loans are designed as a tool to help your business grow, on par with the old saying “you need money to make money”. If the cost of the loan outweighs the gain, there is no added value.
When selecting a lender, it is very easy to be attracted to a competitive interest rate and neglect the cost of associated fees. These hidden fees can come in the form of drawdown fees, service fees, early repayment fees and more. These fees should not be a deal-breaker, as long as the lender is honest and transparent about their pricing.
Our tip: To avoid any surprises, speak to the lender’s client services team about all their terms and conditions before applying for a loan.
Business loans should be flexible and designed for you. A flexible loan can provide you with the finance and the freedom to grow your business and remain competitive in your industry.
Find a lender that tailors the loan specifically to your business. In the decision making process, the lender should focus on the real-time performance of your business, rather than simply analysing historical financial data. They should take into consideration the larger picture of your business’ financial health, such as upcoming contracts, a business restructure, or a new location.
Our tip: A line of credit is more flexible than a traditional business loan. A line of credit allows you to use only what you need, avoiding the burden of extra debt. A lender’s draw down facility needs to be easily accessible with no waiting periods that could slow you down.
Time is of the essence. When business opportunities arise, you need to capitalise on them fast. To do this, you need quick access to finance. Lenders can approve and deliver business loans faster than ever before with innovative online technologies, so take advantage of these platforms.
Our tip: If an opportunity presents itself, do not waste your time applying for a loan with a lending facility that takes weeks to deliver a decision. There are several safe, capable lending facilities that can provide your business with the finance it needs, when it needs it.
A responsible lender will value your business’ borrowing capacity and act with caution when deciding how much finance to offer you. Your business is in their best interest and they will not place you in any situations that will burden your business with destructive debt obligations. In line with the National Credit Act, a lender must make reasonable inquiries about a customer’s requirements, objectives and their financial situation and take reasonable steps to verify this financial situation.
Our tip: When a lender asks you for information, such as more financial documents or a bank connection, take this as a sign of a responsible lending practice, not a reason to turn away.
As a continuation of responsible lending, you should not need to put your personal assets on the line for a small business loan. Responsible lenders value that many small business owners often do not have many personal assets, and what they do have should not be attached to their business. A lender offering unsecured business loans signifies that the lender has enough trust in their credit decision and your business’ borrowing capacity that there is no need to secure the loan with personal assets.
Our tip: Don’t put all your eggs in one basket. Find an unsecured lender.
With these top tips at your fingertips, kick-start the new financial year with the perfect business loan that suits your needs. Your cash flow levels will thank you.