Your Finance Adviser

Australia, home to a rich culture and a bustling economy, is a land of opportunity. Any worthwhile business idea, when funded well and executed the right way, should have a good chance at success. A business loan is what you need to begin with.

There are different types of loans you can select from, taking into account the various kinds of businesses, business models and operational needs. Organisations that have poor credit or no collateral may also stand a chance to get a loan from a financial institution via alternative lending. The options are seemingly endless; but tread carefully!

BANK LOAN REQUIREMENTS

Banks are secure sources of finance given that individuals, families and enterprises deposit money in them. Since they are the primary options for business funding, they offer a wide variety of loan packages for companies, covering the amount needed as well as the ability to pay premiums. Stringent rules and regulations come with bank loans. These institutions make sure that a loan applicant is able to repay the premiums on time and with minimal threat to defaults.

Secured Vs Unsecured Loan — Which one does your business support?

The choice between the two rests with you and each has its own benefits as well as considerations.

Secured

In this type of loan, you offer an asset for the loan, such as property. The interest rate will usually be lower than unsecured. In case you are unable to repay your loan, the lender may sell your asset and recover his loss.

Unsecured

There is no asset or security offered for this type of loan and thus the business loan interest rate charged for this is much higher. While it allows you a flexibility of getting a loan without any collateral, it can be sometimes more difficult to get an unsecured loan approved.

Term Loan Vs Lines of Credit

A term loan is receiving a single, lump-sum payment, which is the most straightforward and most common loan available. You will have an agreed period of time in which to pay the loan back and will be required to pay interest on the entire loan amount even if you don’t use it all.

In contrast to a term loan, the Lines of Credit are revolving. With this facility, you are granted a certain amount of credit, which you are able to draw on as needed, only paying interest on what you use.

When evaluating which of these products is best for your business, your business loan broker will explain what is most important for you keeping in mind your repaying capacity. You can access funds from your line of credit at any time, as long as you don’t exceed the maximum amount specified in the loan agreement and provided that you meet all the requirements set by the financial institution, like making timely minimum payments.

If you need cash quickly, your best bet is going through a Mortgage Brokerwho will assist you with a line of credit or a short-term loan. Both of these products have very quick applications and, in many cases, allow you to receive funds in a matter of days.

Invoice Finance

Invoice finance is also known as “factoring” is when you sell your invoices to a lender. The lender will forward you up to 80% immediately of the invoiced amount and become responsible for collecting payment. With this kind of credit you are benefitted with immediate injection of cash without the need to wait for payment of invoices. You may use the invoice finance for covering short-term finance issues. However, there could be a drawback since you will receive less than the face value of the invoice and this type of credit is usually more expensive than loan finance.

Small business loans come in many forms today. Over 50% of Australian small businesses have a loan facility of some description.