Saving money through better business lending

It’s rare for small businesses to have such huge and regular profits that they can expand constantly into new markets, so business lending is a common method used to help them grow.

“The main way that a small business will grow will be through its own equity,” says Stephane Majman of Masons Accountants and Financial Advisors. “So to get a loan a business will need to show that it has value and is worth something as security for the loan.”

Books in order

The key to getting a loan from a bank or other financial institution is to have your balance sheet absolutely up to date. You also need to be able to explain how the money will benefit your mid- to long-term business strategy.

“A business will have to convince the lender that it intends to use the borrowed funds to expand, rather than to dig itself out of a hole,” says Stephane.

If you explain to a potential lender that the money is intended for purchasing equipment, renting property or hiring staff - all of which contribute to your business expanding - the lender may consider your loan request in a positive light. 

Choosing a business lender

Stephane recommends carefully researching the different loan options offered by the various financial institutions. Some institutions might insist on regular, frequent financial reporting to them (which eats up your accounting resources), while others might have higher interest rates.

It’s up to you - or your accountant - to decide which loan terms best suit your business.

Finance brokers are a good resource because they know which different loan products are on the market and are able to recommend those that might suit your particular circumstances and requirements.

Benefits of securing the right loan

If you choose the most appropriate loan, along with good advice it will mean:

• The loan terms are best for your unique needs.
• You don’t borrow too much and overextend yourself.
• You will get a loan that is structured to maximise tax benefits.
• You can utilise the funds to grow your business.
• You can plan strategically for the future.

Open-eyed

Going into any area you’re not an expert in leaves you open to exploitation. That’s why research and careful planning is so important. When choosing a finance broker to help you decide on a loan product, make sure they:

• are not driven by commissions
• are reputable operators
• have no affiliation with one financial institution or loan product
• can give you advice on a wide variety of loan products.

Armed with this research and with the best advice available, you’ll go a long way to securing the most appropriate loan for your needs.

Talk to a financial advisor today and ask how they can help you secure business lending to help your business expand its horizons.