What you need to know before applying for a business loan

Whether you need money to fund the growth or expansions of your business or need assistance managing your cash flow, there are a few things to consider before applying. A business loan can support activities like start-up costs, capital investment, purchasing of property, acquisition of another business, or even refinancing other types of lending. But before you apply, here are our tips on what you need to know before applying for a business loan.

1.     Get your books in order

Lenders will want to see evidence of how much money your business makes. If you’re not already keeping on top of your accounting and books, start completing and organising your book keeping and paperwork. Be prepared to share your business and personal financial documents, such as bank account statements, tax returns and projected cash flow for the company.

2.     Find out how much you can borrow.

Before you apply for a loan, do the maths and see if your business can afford the repayments. How much you can borrow depends on your annual business turnover and other eligibility factors that lenders will assess when considering your business loan application. Once you’ve considered your eligibility and personal financial situation, you should have a better idea of what amount of debt you can comfortably repay.

3.     Understand the reason why you need the loan

Why do you want to borrow money? Know roughly the amount you want to borrow, whether you’re considering a fixed or variable interest rate, the time it will take to repay the loan and whether you’ll be using an asset to secure the loan. Depending on the reason why you need the money may determine the best lending option for your business needs.

4.     Can you provide an asset or security?

Do you have an asset like property, land or equipment and be used as a secured asset? Opting for a secured loan generally increases the maximum loan amount you can access, as an asset like property or the business itself is used as security against the loan. Typically, collateral for a secured business loan needs to reflect the value of your borrowing.

We have helped business owners secure various types of loans to either support their business growth, secure equipment or manage their cashflow. If you’re considering a business loan, let SFE Loans help you. We’ve created a checklist to help you prepare before you apply for a business loan. However, we understand that Business Owners are already busy, so we can assist with your application. We’ll do the homework and suggest options and lenders based on your needs. We’ll review your situation, understand your needs and develop a plan to ensure a successful application. To discuss your business lending needs, send us an email or fill in your contact details here.

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