Small Business Finance Without The Bank
While SMEs account for 97 per cent of Australian businesses, it can still be difficult to make a case to a bank when looking for finance to start a new business or invest in the growth of an existing one. The good news is that applying for commercial finance through a bank is far from the only option.
A relatively young enterprise that doesn’t have a track record of success may not be looked upon favorably by banks. Banks make lending decisions based on risk. A lack of documented history doesn’t aid a business loan application, so for those who still want to go through the bank they use for transaction accounts, a personal loan could be the way to go.
The downside may be slightly higher interest rates and lower loan amounts, but a personal loan can provide a good buffer for start-ups and application is relatively easy.
If someone told me that they’re going to run off and start a new business, I’d suggest, while still working in PAYG, to secure a personal loan before doing so. Banks like to see at least two years’ worth of company tax returns, which could prove problematic for new businesses.
Private funding is when individuals lend generally through a trust account. While it can be a little more costly than the average business loan, it carries the advantage of flexibility.
“If it’s a ridiculously difficult deal to put together, with no banks wanting to touch it due to not having the appropriate documentation or being outside LVRs, then [private funding] would be an option to look at. In saying that, however, I would strongly recommend speaking with with us first. As a consumer, you’re kind of flying blind. You need to know that private funders are going to be trustworthy.
Talk to a broker
Skipping the banks entirely and talking to a commercial finance broker means gaining access to myriad finance products and loan types, as well as expertise in matching your needs to the right loan type. As an experienced finance broker, Dennis can take a broad view of a business’s finance. He can assist in business planning. Obtaining a deep knowledge of a client’s needs is imperative when looking at small business finance. Dennis wants to look beyond a simple ‘lowest interest rate’ formula in selecting a finance product. Dennis can ensure that business owners have access to the capital they need, when they need it.
Securing finance is imperative for a business’s prosperity. As a MFAA accredited broker, Dennis can assist with business planning and finding the right type of finance to support growth and success.
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