Why go for a Business Loan?
Business loans are meant to help you plan major investments for the future of your business.
A typical business loan is different from other short-term forms of finance like overdraft and commercial line of credit in the way that it is used to directly fund initiatives related to business expansion, such as establishing a new office, buying new equipments, renovating existing facilities, or business acquisition.
You get all the loaned funds at the start of the contract and make regular repayments over the life of the loan.
If you are looking to acquire a range of expensive equipments for technological advancement or expansion of your business, then you can for an equipment finance which can help you achieve your goals without hurting your working capital.
With the financed funds, you can rent or lease equipments for a set period of contract. Accordingly, many different kinds of equipment finance are available, namely finance leases, hire purchase and equipment loans.
- If you want your business to stay abreast with all the technological advancements, then you can go for an equipment finance lease. This means that you can lease equipments for a specific period and then renegotiate for the same ones or new equipments after that period is over. This way you can have access to the latest equipments without spending capital constantly.
- If you’re looking to own the assets (till the contractual period is over), then hire purchase would suit your business.
- Your other option is equipment loan which is also known as chattel mortgage. It is a fixed interest loan secured by mortgaging an asset. It gives the borrower tax benefits in terms that GST is not paid on loan repayments.
Short Term Funding/Short Term Business Loans /Un-Secured or Secured Business Loan/Quick Loan to support your Business Cash flow
What you’ll need
The premiere eligibility to take out a business loan is to have running registered business. After that, the lenders would like to see that you can easily repay your loan. This is ensured by submission of documents that demonstrate your credit fitness. You might be asked to show:
- a history of financial performance
- evidence of solid cash flow
- evidence of current income and future projections
- ability to manage expenses and liabilities
- details of other loans and debts
In addition to this, you’ll have to provide a security for the loan, which can in form of residential or commercial assets of any kind. You’ll be required to provide security for the loan, in the form of either residential or commercial assets. This is known as business mortgage loan and the property in question does not have substantial existing loan over it. If the property gets accepted by the lender, then it can be a huge benefit for you as it will reduce your interest rates considerably.
Planning for the loan
Before you apply for a loan, you must have answers to the following questions:
- Do I need the money up-front or an on-a-needs basis would suffice?
- What is the maximum monthly repayment I can afford?
- Is my Loan to Value Ratio (LVR) in the appropriate range to avoid Lenders Mortgage Insurance?
- If I need a collateral, what assets can I offer?
- If the lender asks for a guarantor, who will be willing to guarantee my loan?
- How much accessible equity do I have?