Applying for a small business loan can sometimes be challenging especially when you are applying for the first time. Unlike personal loans, it’s difficult to sometimes, meet business loan requirements. As there is more risk involved for the lender, there are some strict eligibility conditions, especially with traditional Banks. But, with little preparation in hand, getting qualified for your loan becomes a lot easier.
In this article we will talk about the 5 steps you need to secure a business loan:
- Build Credit Score: For getting a small business loan at a reasonable interest rate, it is important to build both personal and business credit scores. It is most likely that “Higher the credit, Lower the Interest rates” as with lower credit scores, more risks are involved. In order to improve your credit score, it is important to pay your bills on time, pay your creditors on time or early, keep your public records clean, have separate personal and business credit. Check the following table to see your credit score rating in Australia.
Table: Credit score rating scale in Australia
- Provide Collateral: Some lenders ask for collateral to back your loan. Collaterals are assets like your property or any types of equipment which can be taken by the lender in case of failure of the loan payments.
Small business loans require collateral with a personal guarantee from every business owner. Some Online lenders may need collateral while some do not require collateral but may ask for a personal guarantee. Each online lender have a different requirement, you just have to find the best one for you.In case you don’t have any collateral to provide, getting an unsecured business loan can be your best bet.
- Have Financial and Legal Documents Ready: If you are applying for a small business loan in Australia, following are the financial and legal documents’ checklist that you may need:
- Personal and Business bank statements
- Business and personal tax returns
- Business and personal credit scores
- Revenue Statements
- Balance sheets
- Commercial Leases
- Copy of your ID’s
- Business licenses
- Incorporation articles
- Business experience and management record.
If you are applying through banks, it may require all of the above documents and can be time-consuming. Getting loans from online lenders or private lenders can be a fast process with fewer documents required.
- Develop a Business Plan: Providing a business plan may not be required by all the lenders, but preparing a solid plan that showcases your company and your team can increase overall credibility. A business plan can include a description for company, your product/service, industry analysis, facilities, and operations plan, sales strategy, SWOT analysis, etc.
- Understand your lender’s minimum requirements: Whether you are going for bank loans or online loans, it’s good to always know the lender’s minimum requirements beforehand. Lenders need minimum criteria related to credit scores or annual revenue or age of business, etc. Each lender has different needs. Consult a loan broker before making an application.
Pineapple funding has a list of online small business loan lenders, that helps you to connect with your suitable private lender.
We first listen and understand your requirements, If you want a fast loan without much hassle, contact us today via this link https://www.pineapplefunding.com.au/contact-us or you can simply give us a call on 1300 79 32 92