So what do you as a business owner need to do to give yourself the best opportunity to get your finance application approved?
- Remember that funders will be looking for a professional well documented application which must include a Business Plan… the lenders will want to know that you have credibility as well as credibility and that you know what you are doing and where you and the business are going.
- So what are lenders going to be searching for in your application? They will be looking at your past repayment history, can you be relied upon to do what you say you will and how accurately did you meet your Budget Forecasts in the past? Remember also that Cash Flow is often king so make sure that your Cash Flow Analysis and Profit and Loss tied to your Business Plan is realistic and achievable.
- They may, particularly if they are a bank, be looking for security in the form of “bricks and mortar” or asset mortgages and a personal guarantee. You may decide not to be giving them security over all of your assets particularly your home or other assets so that these remain clear if there is a future need for future borrowing or you just like to feel peace of mind. At present the big banks are rejecting over 70% of small business applications so it’s a tough one.
- Fortunately often ‘non bank” lenders won’t be so focused on “security”… they may be more interested in how your business performs and how you meet their eligibility measurements. They will be drawn to sound Business Plans and being convinced that you know what you are doing. How good your management ability is in growing and maintaining the business will be key. Interest rates for non bank lenders will often be higher than the established banks because of the risk factor and lack of security.
- The process for applications can vary enormously with established banks taking in some cases over two months to process applications due to the long paper trail demands… again the non bank lenders are generally much more nimble because of their concentration on secure technology systems. Quicker analysis and therefore quicker “turn around’ is often the result with funders coming from many diverse areas. Again provided you do your homework, concentrate on thorough preparation of the application with all the “back up” paperwork this process can be very straight forward.
- As always do your homework and find a broker who has access to multiple finance sources. Ask lots of questions in relation to the type of Contract which may be offered to you and be aware of the total cost of the loan and whether there are penalties to exit early if you need to refinance or simply pay out the loan.
So it comes down to these factors…
(a) Find a broker who is working in your interest and understands your business and what you are trying to achieve.
(b) Your broker needs to have access to multiple and varied lenders and ideally should be backed by an up to the minute IT enabled processing “back room” to assess your data and submit it to multiple lenders for their appraisal.
Why talk to us at Grow-Capital?
- Grow- Capital has over 86 funders to look at all types of Commercial and Industrial lending.
- Over 6 years in very successful business with the Managing Director having 20 years in finance including time with CBA Bank and Macquarie Bank.
- A large portfolio of established clients who , once they are established within the IT systems, have the ability to seamlessly seek more funding with minimal dramas as part of the “family” type client arrangement.
- Feel free to talk or email Garry Gilkeson (Grow Partner) anytime to discuss your requirements on a confidential basis. It could be the smartest call you ever made!
Contact Garry Gilkeson anytime for more information: