There are several types of businesses and categories of loan applicants that can face challenges when sourcing low rate business loans requirements. Specifically, new businesses which are in the process of setting up or have only been operating for a relatively short period; small and micro businesses regardless of how long they have been in operation; and businesses that have a poor credit history and hence a bad credit score.
The challenges faced by these groups are widely known and can be a deterrent to businesses even applying for loans. Even the faintest prospect of being rejected for finance by a bank can be enough of a disincentive for businesses to completely put off applying. They dismiss relying on finance and instead either seek out alternative solutions to business needs or just proceed ‘as is’ and forego opportunities to grow and expand.
With the deregulation of the Australian financial sector, a large number of non-bank lenders have entered the lending sector. Many of these lenders have specifically identified the needs in this space and have structured their loan offerings to meet those needs.
What traditionally may have been ‘hard to get finance’ is now accessible if businesses approach the process through the appropriate channels. We provide access to those channels to facilitate the process of securing low-interest rate finance for businesses across all industry sectors.
New Business Loans
The major issues faced by operators setting up new businesses is not having the financial documentation (known in finance circles as docs) that is required to complete business loan application forms. These docs are financial records and accounts of the trading history and results of the business over a certain number of years. Clearly, if a business is only just being established or possibly only been operational for a few months, it won’t have accrued such records.
Docs can include business income tax returns; BAS statements; business annual accounts; profit and loss statements; and similar records. Without sufficient docs to support a business loan application, many new enterprises will be rejected for finance by the major banks. More information regarding business loan documents here.
For new businesses in this situation, there are lenders that offer Low Doc and No Doc Business Loans. As the names imply, these are loans that are not supported by the usual financial documentation. The difference between low doc and no doc is the quantity of information or business records provided.
Low Doc and No Doc Business Loans
These are a category of business loan applicants which are catered for through select lenders, typically non-bank lenders.
Criteria and requirements include:
- Holding a current ABN and identification.
- Good credit record. If a business has not been trading for sufficient time to establish a credit profile, the lender may review the personal credit details of the business owners/directors.
- GST registration is not an essential requirement but can be viewed positively by some lenders.
- Producing even a small quantity of docs by way of simply prepared accounts for the business operations to date and/or a business plan can be viewed positively by some lenders.
- Additional security by way of property or assets held by either the business entity or the business owner(s) may be requested.
- Cheap interest rates are achievable.
When approved as low doc or no doc loan applicant, the business can utilise that across the range of commercial loan products available:
- Low Doc Business Loans and No Doc Chattel Mortgage
- No Doc and Low Doc Leasing
- Low Doc and No Doc Rent to Own
- Commercial Hire Purchase for No Doc and Low Doc
These loans are available for all types of business assets including motor vehicles, truck loans and equipment. Other commercial loan products including overdrafts and business loans are also available.
Small and Micro Business Finance
Small businesses, especially micro-businesses, often face challenges due to their small size. They may have extensive financial records after operating for many years and a good credit profile but the small size of their turnover may be viewed by some lenders as high risk. Often these businesses do not have sizeable assets to offer as additional security or guarantee against a loan.
This sector is an extremely large and growing area of Australian business with many opting for contract and freelance status, owner-operators and running a small enterprise with an ABN only.
We have access to lenders that do appreciate the positive aspects of small businesses and are specially structured to provide loans to the sector. These loans are available at cheap interest rates across the finance product range for many purposes.
Accessing the Channels
We have connections with many banks and non-bank lenders and our consultants can assist businesses to achieve those previously elusive hard to get loans. Refer to our business loan interest rates tool to see what rates we can achieve and contact us to discuss your requirements.
Contact 1300 000 033 to discuss how we can assist you in sourcing hard to get finance
DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.