What do lenders look for when you apply for a business loan?

Monday 22 February, 2021

Applying for a business loan doesn’t need to be daunting. Whether it’s your first application or your tenth, there is one simple rule you need to stick to – chat to your local broker.

Our dedicated commercial brokers have years of experience in all forms of commercial lending and will leave no stone unturned to find the right solution to achieve your business goals.

We also provide the option to work closely with your accountant to ensure you maximise your cash flow and tax savings.

If you’re having trouble securing a business loan, maybe you need to consider the 5 C’s.

Character – While oddly named, this generally refers to your credit score and credit history. Did you know that each time you apply for a loan and are rejected, it negatively impacts your credit rating?

Capacity – This refers to your ability to meet your repayments. It’s simple really – lenders need to look into your cash flow to ensure you’re able to make the required payments.

Capital – Although not a must, sometimes it can be favourable to put capital behind your potential investment. Often, you will find banks are more willing to lend to owners who have invested some of their own money.

Collateral – Offering additional collateral (or assets) gives the lender assurance when approving a business loan. These are also known as secured loans. While not a necessity, it’s an option if you need some extra help getting your loan over the line. In ‘home loan’ terms, this is similar to having a guarantor on your mortgage.

Conditions – The condition of your business – whether it is growing or sitting and what the funds are required for. It also considers the state of the economy, industry trends and how these factors might affect your ability to repay the loan.

It sounds complex, but we promise it isn’t. Planning ahead, obtaining the right advice and doing your research – simple!

Oh, and 1 more C…

You might also like...

Finance Brokers Tasmania selling a house Hobart

Preparing for Interest Rate Hikes!

When you consider a ‘hike’, what is the first thing that springs to mind? A walk through the bush or a sharp rise? The RBA lifted the official cash rate by 25 points to .35 percent last week – the first rise in 11 years. While we understand that a rate rise is never a good thing, interest rates are still at historic lows and we wonder if the use of the word ‘hike’ is a necessary one!

Finance Brokers Tasmania Lance Cure Gary Casboult

What is a SMSF?

Self-managed super funds (SMSF) are a different way of saving for retirement. A SMSF gives flexibility and control over where your retirement funds are invested, including the opportunity to invest in residential and commercial property.

Finance Brokers Tasmania - fixed interest rates

Government Grants - A budget Update 2022/23

If you missed the 2022-23 budget announcements this week, you may have missed the incentives announced for home buyers. While most are not new, the government have increased the number of spaces available for eligible home buyers through their Home Guarantee Scheme.

FBT Hobart Bec and Dini

Do you need pre-approval?

We are often asked if you need pre-approval before looking for your dream home. Pre-approval is not essential but it is one way to ensure you don't miss out!