4 Common Business Loan Mistakes

Access to finance is essential for Australian small businesses to grow and thrive in a competitive market. However, not all business loans are the same, and any type of lending should be tailored toward the business’ long term goals and requirements.

In this article we look at 4 common mistakes we see with our clients’ business loan applications, particularly with first time business borrowers. Minimising errors in your loan application not only improves your chance of approval, but also can save thousands of dollars and hours of your time.

Not enough preparation

The paperwork required for a basic business loan needs to be accurate to allow lenders to determine whether the loan is financially viable for your business. Basically, you need to provide the lender proof that our business and its directors are creditworthy and able to repay the loan according to the set terms. The more documents you have to prove this, the better.

As a minimum, you will need to show 2 years of income plus proof of identity and business registration. If you have other loans, you’ll also need to provide statements showing the balance and a history of good repayments. Prepare to have:

    • Business tax returns
    • Personal tax returns
    • Business registration documents
    • Drivers license or passport and Medicare card

Our Speedy Finance staff are always happy to help explain the document requirements to prepare for your loan application.

Choosing the wrong business loan product

Not every lender offers the same range of products, and some products suit business goals better than others. For example, an equipment finance loan is a cost effective option for purchasing cars or business equipment, whereas a flexible business loan may be better for property purchases. Selecting the right lender who offers a product in line with your business goals is an important factor in financing a successful business.

At Speedy Finance, we work with our clients to ensure their lending portfolio aligns with their short and long term business goals.. Our business lending specialists are sure to find a loan that will help work toward your business goals.

Taking out multiple business loans

Lenders are only able to offer a set lending limit depending on your income, expenses and business history. To overcome this, small businesses sometimes take out multiple loans across multiple lenders. Not only does this negatively affect your credit record, it is also far more expensive than having a single well-structured loan as you are subject to multiple fees and interest rates.

Missing payments

The lender is required to assess your income and determine whether you can truly afford to repay a loan as part of the application process. To keep your rates low, we expect our customers to make repayments on time, so missed instalments on business loans are subject to a fee. If you become aware that you may not be able to meet your repayment schedule in future, simply contact your lender and a good lender will work with you to get back on track without additional charges.

If you are looking for a business loan to suit your business goals and needs, contact the business lending experts at Speedy Finance to see how we can help you today. Ready to go? You can start your application here.

Ellie Shedden