Commercial and Business Loans
A business loan can provide you with the funds that you need to start or grow your business, whether you’re a sole trader, a partnership, a company or a discretionary trust. There are many different types of business loans that you can get, including:
Asset Finance
Car Loan
Property Development Finance
Truck Loan
Land Banking
Finance for Commercial Property
Applying for a business loan
Since business loans are used to finance business operations, equipment or property, lenders need to know about the financials of your business when you’re applying for a business loan.
You need to demonstrate to the lender that your business will generate the cash flow necessary for you to meet your business loan repayments, as well as all of your other essential business expenses. A solid business plan (including realistic financial budgets and forecasts), a good credit rating and a profitable trading history will help your business loan application to be approved
There is a wide range of business lending products available to suit different business purposes and budgets.
You can generally tailor your loan repayments to suit the cash flow of your business.
Loan interest and fees are tax-deductible from business income.
Making your repayments on time will help you to develop a good credit rating so that you can continue to borrow funds to invest in (and grow) your business.
Business loans are generally perceived by lenders as being higher risk than many other types of loans. Lenders therefore usually charge higher interest rates and have stricter lending criteria that you need to meet for business loan approvals.
The repayments on a business loan will impact the cash flow of your business.
If you miss your repayments or default on your loan, it will harm your business’ credit rating, making it difficult for you to get any finance in the future.
Comparing business loan products
Major factors to consider when researching the business loan market and choosing a finance product include:
the size of the loan
Business loan amounts are often for larger amounts than other types of loans. In general, the higher the amount borrowed, the higher the risk.
the interest rate
Lenders in Australia often advertise two interest rates on their products: the nominal rate and the comparison rate. The nominal rate is the lower of the two and only includes the interest charge. The higher comparison rate, on the other hand, includes both the cost of interest plus any associated loan fees and charges. Make sure you always use the comparison interest rate when evaluating the business loan products of different lenders.
You also need to choose whether to have a fixed or variable interest rate. Fixed interest rates provide you with repayment certainty. On the other hand, if you choose a variable interest rate, your repayments can go up or down in line with market interest rate movements.
The repayment schedule
It’s crucial that the repayment schedule on your loan suits the cash flow of your business.
The length of the loan
Most business loans are for periods of between one and seven years, but periods of 10 to 15 years are also available.
How ARG Finance can help
The business lending market in Australia is very competitive. There is a huge range of lenders and business loan products available. Choosing the most appropriate lender and type of business loan is a crucial financial decision.
Even a small difference in business loan terms and conditions and can make a huge difference to your business cash flow and the total repayments that you need to make over the life of your loan.
At ARG Finance, our experienced team of business finance brokers can help you to find the right business loan product. We’ll take the time to understand your business’ needs before recommending a lender and loan for you.