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A recent report by the Australian Banking Association showed that there are around 1 million loans provided to small businesses, and that over half of small businesses have a business loan facility other than a credit card. Access to finance as a business owner fuels business growth, but managing the loans appropriately is important to ensure viability of the business.
In this article, we share our top 5 tips for managing your business loans to ensure your business success.
1. Check the loan structure
There are hundreds of different business loan products on the market, each with different terms, benefits and drawbacks. At Speedy Finance, we can help you structure your business loan with long-term goals in mind. Over a period of years, the right loan structure can help you save literally thousands of dollars in fees and interest and protect your personal and business assets.
For example, equipment finance loans are structured specifically to minimise the amount payable for business assets, and have the added benefit of tax advantages. On the other hand, a business loan is a more straightforward loan structure that is better suited to other situations. A Speedy Finance business specialist will take a look at your portfolio and help choose the right loan for your business.
2. Maintain a healthy credit score
A strong credit rating means you will have more options for lending, which could potentially save you money. Government regulations mean that lenders have a responsibility to ensure that their clients can service the loan, and a good credit rating is an indicator of good character. Basic steps to maintaining a good credit score include making repayments on time (including tax), consolidating any credit cards and refraining from hitting the balance, and limiting the number of credit applications you make per year.
3. Avoid new debt
Whilst new debt is often necessary, it can hinder your business growth if not done properly. Any new loans need to be considered with the long-term strategy in mind. Rather than taking on new debt, you may want to consider restructuring existing debt, cutting back expenses or increasing sales.
4. Pay more when you can
Seasonal cash flow affects many industries and can be used to your advantage. When cash flow is good, allocate more funds toward loan repayments to offset the leaner periods. In addition to giving you a buffer, additional payments ahead of schedule may mean that you pay less interest over time. Before making any extra repayments, check your contract or lending adviser to ensure there are no penalties for early repayments. Note that at Speedy Finance we do not charge exit fees on our products.
5. Communicate with your lender
If you do find yourself in financial difficulty, the first course of action should be talking to your lender. At Speedy Finance, we prefer to work with our customers in times of stress to determine a win-win solution such as a payment plan or short term loan changes. Of course, it’s best to speak to your adviser in advance, rather than waiting until you can no longer afford repayments.
Speedy Finance loans are designed to help your business get ahead fast, with flexible payment options and loan terms, and no additional early exit fees. Our experienced Business Finance Specialists understand your cash flow needs, and we’re here to help!
Apply today, its obligation free.