An increasing need for small businesses nowadays is to have a convenient and efficient access to funds. Getting loans from different kinds of lenders may cause confusion and become tedious for some business owners, but there are tactics that can make the process run smoothly.
If you plan on getting a loan for your business, take a look at the following key areas that will increase your chances of approval.
1. Background Check
The first step that lenders do before going through the process of approval is to get a summary of your business. This includes background, history, company names, registration date, industry, and a few facts on what the business does. For your company name, include the full official name of business as what has been registered.
As you submit identification card copies, they will also do a background check on you to see if you are a good fit as a borrower. It also helps when you present yourself well to the lender during the interview and submission of requirements.
2. Business Structure
Lenders need to know your business structure for them to determine who will be responsible for repaying the loan. The business structure indicates the sole trader, corporate trustee, trust or company. If you are not the sole trader of the business, the lender would need to know the names of the owners and directors. Information regarding the directors such as their directorship tenure and industry experience will also be required.
3. Business and Personal Credit Scores
Your credit history will be analysed to determine how you handle past finances. A credit score or credit rating sums up your credit report into one number, and it shows lenders how trustworthy you are as a borrower. Give an estimate of your business and personal credit scores when you apply for a loan.
Checking your credit score is also free and easy to do. You can check your credit score by seeking out the national credit reporting bodies in the country.
4. Loan Amount and Purpose
One of the first few questions that the lender will ask you is your intention for loaning. Be clear and specific as to why you want to get a loan and how much you need. If you want fit outs for your business, document how much is needed for it. If you need a vehicle or equipment, give an authentic proof as to how much it is and where you’ll purchase it. Your loan request may include reasons such as improving cash flow, purchasing inventory, or paying staff.
The first step to choosing the right loan is to be clear on your intention of loaning and it’s one of the first questions you’ll be asked by a lender.
5. Annual Turnover
It will also help you in the loan application process if you show the approximate turnover of your business. An easy way to calculate annual turnover is to divide net sales or revenue by the average total assets of your company.
6. Additional Credit Facilities Being Used
Declare other types of loans or credit being used in your business. The lender will check if you have an overdraft, other business loans, or business credit cards. They may want to see how you’ll handle getting an additional loan, or that your finances and cash flow are good enough to repay the loan during a given period.
7. Tax Position – GST (Goods and Services Tax) and PAYG (Pay As You Go)
PAYG instalments are required of business owners who earn a certain amount of income. When you are registered for Good and Services Tax (GST), you report your PAYG instalments on your business activity statement (BAS). Lenders would need information regarding the amount of any outstanding tax liabilities, and whether your BAS lodgement is up to date.
8. Additional Information
Lenders may investigate further regarding other information on your business. There’s nothing to fear if you have good records. Be clear and honest as possible when your lender conducts the interview. As you prove the worthiness of your business, the application process will go without a hitch.
9. Paperwork Ready
Organizing your documents and proper record keeping can do wonders for your business. It helps you stay on top of all business dealings, as well as getting loan requests approved in no time. Take note of the following requirements and keep them at hand whenever you need to apply for a loan.
- Identification: may include driver’s license or passport.
- Business Number: This is an 11-digit number you get when your business application is successful.
- Documentation for Loan Amount and Use of Funds: A clear view of how much you want to loan and how you are going to use it.
- Financial Statements: These may include Balance Sheet, Income Statement, Cash Flow Statement, and Statement of Retained Earnings.
- Bank Statements: Submit to the lender your latest business bank account statements in electronic form or hard copy.
- Business Plan: Banks will usually require this. It includes your business purpose, financial management, and other factors.
- Financial Management Plan: This showcases how you’ll manage your business finances, including cash flow and repayments.
- Proof of Personal Income: Secure a documentation on how much you earn every month, which can come from your business or other income streams.
- Credit Report: You are entitled to one free credit report every month from any CRBs.
- Collateral for a Secured Loan: If you’re getting a secured loan, you’ll have to present ownership of a property or business asset that you can submit as collateral.
Getting an unsecured business loan for your company is a much safer option than taking out a secured loan and you’ll be accepted much faster.
Take the fuss out of applying for a loan by getting an unsecured business loan. Unsecured loans in the market nowadays help you get generous loan amounts in low-doc options. Bizzloans can help you get unsecured loans with just a business number, photo ID, and 3 months business bank statements. You also don’t need to secure a collateral, and you’ll be offered loan packages that suit your business needs.
No Security Necessary
The main thing that makes unsecured loans more attractive than secured loans is the fact that they’re no security. It might be an obvious thing to highlight but it clearly matters. You won’t be weighed down by the pressure and worry associated with having collateral hanging over you and potentially being lost to the lender if you fail to make repayments. If you don’t want to take the risk of losing your collateral, you just need to opt for an unsecured loan instead. It’ll allow you to avoid any risks associated with secured loans.
Build Up Your Future Credit Score
By taking out a loan and then paying it off on time, you will help to build or repair your credit score. Many companies are dealing with poor credit, but by taking out an unsecured loan with a lender that is happy to lend to companies with poor credit, you can start to turn the situation around. Meeting regular repayment deadlines shows the world that you are able to stay on top of your financial obligations and pay off the money you owe, and that will only help your business going forward.
Why Your Business Might Want to Take Out an Unsecured Loan
There are lots of reasons why your business might take out a loan, as well as reasons not to. You shouldn’t take out a loan to cover running costs, but if you want to do other things, such as the things we’re going to discuss below, an unsecured business loan can be ideal.
Grow and Expand
Most entrepreneurs have big plans for their businesses. They want to ensure that their business is one that’s got a bright future. So if the time has come for you to grow and expand your business, you should think about whether taking out an unsecured business loan might help you to do that. It could be exactly what you need to get your business moving in the right kind of direction. It takes money and investment to grow your business and a loan might just be the ideal solution.
Take on More Clients and Customers
If your business doesn’t currently have the resources to deal with more customers and clients, it could be time to scale things up. However, that’s something that costs money, whether you like or not. Taking out an unsecured business loan could help improve the resources your business has available. It could mean hiring more people so that you have the human resources needed to take on more clients and make more customers happy. The loan will cover the costs associated with doing that and it’ll pay for itself if you’re able to improve your profits as a result.
Fund a New Marketing Campaign
Maybe it’s the case that attracting new customers to your business is where your problems lie. It’s not always easy to get your voice heard and make people aware of why they should be taking notice of your business. An unsecured loan could be used to fund a new marketing campaign that gets your message out there and makes more people interested in your business and what it’s offering. So if you have an idea for a marketing campaign that you think might work but you don’t have the financing for it, consider a loan.
The chance to improve your business in the many ways mentioned above offers you a real opportunity that you might want to grasp. Secured loans can offer the same access to financing but come with more risks to your business. With an unsecured loan, you can reap all the rewards that come with having the cash to invest in your business without having to worry about the risks adversely affecting the business in the future. The chance to improve with fewer risks attached to that chance should not be ignored or dismissed.
You’ll need to simply submit your business’s bank statements To ensure your business is in a financial position to take on a loan of the size you’ve applied for.
The Requirements for Getting an Unsecured Business Loan
There are some requirements you’ll need to be aware of before you take out an unsecured business loan. These aren’t too harsh or restrictive at all, but they are important.
24 Month Limit
When you take out an unsecured loan from Bizzloans, you have to pay the loan back within 24 months. That’s the maximum repayment term that’s on offer. Of course, that won’t be a problem for the vast majority of businesses out there. It’s important that you look at the finances closely and decide for sure that this is something your business is going to be able to do. You’ll have a chance to do this when you get a quote from us, so you’ll know exactly what you’re signing up to.
Business Bank Statements
To ensure your business is in a financial position to take on a loan of the size you’ve applied for, you’ll need to simply submit your business’s bank statements. This allows us to ensure that we lend responsibly and don’t burden you with a debt that is too much for you to take on. It’s in both your best interests and ours that you’re able to handle the loan that you take on.
Photo ID
To ensure everything is correct and proper, and you are who you say you are, you have to submit a photo ID. This is common practice and ensures that all financial transactions are above board and in order. It’s very easy to do and needn’t be a headache for you. Once we are satisfied with your application, you’ve provided the bank statements and we’ve checked your ID, it won’t be long before you have access to the loan you applied for.
Getting an unsecured business loan for your company could be just what it needs right now. It’s a much safer option than taking out a secured loan and you’ll be accepted much faster. Don’t hesitate to get in touch with us here at Bizzloans if you’re thinking of taking out an unsecured business loan.
