There comes a time when every small business owner needs to consider a loan for business. Before you take the plunge and apply for a loan, there is a range of questions to consider.
Purpose of the loan for business
The first step is to determine the purpose of the loan. As part of the approval process, most lenders will want to know what you will use the funds for as there are many reasons for getting a loan for business. It could be to overcome a cash flow shortage, purchase equipment, buy inventory or launch a marketing campaign. Along with other factors, lenders will consider how the money will be used because this will be a factor in your ability to repay the loan.
When getting a loan for business in Australia, there are many finance options available beyond the traditional bank term loan. Common options include a line of credit, business overdraft, credit cards and unsecured business loans. Some loans are fixed term and need to be repaid according to a predetermined schedule. Other loans, such as overdraft facilities, are revolving lines of credit and offer flexibility when making repayments.
Return on investment
If getting a loan for business for marketing, inventory or equipment, you will want to determine what the return on investment will be. This will determine if you will be able to repay the loan as agreed to.
Time in business
The amount of time in business will affect your ability to get access to funds. A new business will find it challenging to get a loan. For some types of bank loans, you might be required to create a business plan that provides details of your new venture. This is where a PMG Finance broker comes in handy – their inside knowledge and relationships with lenders will increase the likelihood of the funds being approved.
Both your personal and business credit score and history will play a role in getting a business loan. Things such as late payments, defaults and previous credit applications will affect your credit score. Learn more in Understanding the credit health of you and your business. Know your credit score!
If you are interested in finding some finance options for your business, contact the team at PMG Finance – 07 4639 1011 or submit an enquiry.