Business Loans Q&A

Helena,

Each bank may have their own requirements but there are some key pieces of information that you'll do well to include.

• Your personal investment - How much of your own money have you already put into getting the business going? (banks will want to know that you are dedicated to making it happen)
• Your applicable skills and experience - This goes for you and anyone else on the team. Speak to your expertise and experience. Also mention anyone else on the team with deep knowledge of the industry. Mention any mentors or advisors that are helping you either personally or as part of your board.
• Be specific about amount needed - Be as specific as possible with the amount of money you are looking to borrow. You don't want to get a loan that doesn't give you enough capital to expand or accelerate. You also don't want to over-borrow and be stuck with huge monthly loan payments.
• Be specific about how it will be spent - Be clear about what all the money is earmarked for once you get the loan (employee salaries, necessary equipment, office space, etc.).
• Mention community impact - Be vocal about how your business will positive impact the community (planned jobs created, if you are revitalizing a vacant / old building, how you will give back to the community either through donated time or money, etc.).
• Revenue / Profit Projections - Many institutions will want to see your planned revenue and profit projects in intervals (6 months, 12 months, 3 year, 5 year). Keep in mind the further out you go the less accurate these numbers will be. However, do your due diligence and base it on industry information and research).

It would be great to hear from you on this topic @Mark Chapman @Denise Hall @Denise Hall @Stuart Reynolds @Stuart McGilvray @Deborah Vella @Steven Freeman @Bill Tamvakologos 

There are a number of occasions when an unsecured business loan should be considered.

• As a means of bolstering working capital eg you need to pay for some stock or continue to fund the operation whilst you collect some slow debtors
• As a means to acquire a critical asset for the development of the business eg a piece of IT equipment which will allow to to lift capacity
• To restructure your cashflow eg you've maxed out your credit cards and refinancing these with an unsecured loan would signiificantly reduce your regular outgoings

Hi Liam,

If you are selling higher value items to clients you may want to consider offering your clients finance.

One small business I know sells thongs (yes - shoes) to small retailers and offers 6 months interest free finance for their stock while getting paid the very next day and not wearing the risk of factoring (where you still own the debt after three months). This allows him to win a lot of new business and get stock on shelves without owning the finance risk.

Try Scott McNally at ASM Money 0438 680 898 and use my name as an introduction or email me and I can send over more details

Greg Ferrett

The benefit of using a small business loan broker is the ability to leverage their experience and network. They will have access to all the information relevant to your small business loan requirements, and quickly. 

They can listen to your needs, and then relatively quickly identify appropriate products and packages that meet your requirements. They act as the central point of information when you want to compare a range of options. 

 They can also do the heavy lifting when it comes to applying for your loan/s. 

Having said this, it’s important to be aware that a broker may get a kickback from the financial institution they recommend. This needn’t be a problem, as long as you recognise when this is the case and understand the implications. It usually means you don’t pay a fee - the broker is paid by the institution by way of a commission.

There are definite advantages of using a broker. Just be aware of the downsides and the underlying ‘price’ you pay.

We considered taking out a business loan, more or less to have a secondary backup fund if COVID was to last until 2021, but after doing a P&L with our accountant, we realised we shouldn't need to given the subsidies and assistance we're receiving from the government. We're very VERY lucky in this respect, but we're still considering if there's a way to utilise a bank loan in other ways to really get the business ahead, especially once we go back to "normal" operations. It's not often you can get unsecured loans from most lenders...