Manage Finance
The Right Way
Business Finance:
How To Get The Right
Loan For Your Business
Complete our online application for access to specialist business lenders with multiple finance solutions. Your financial requirements are assessed through proprietary credit analysis and aligned with the best suited lender. The nominated financial institution provider guides you through the simple loan application. Finance is delivered that matches your business requirements.
What are the benefits to you?
- Multiple lending (partners) for business finance.
- Complete suite of loan products.
- Intelligent analysis of finance requirements.
- Low costs associated with interest and fees.
Best Lender Match
- Single Application
- Multiple Lenders
- Intelligent Analysis
- Relevant Solutions
- No Application Fee
Invoice Finance
Invoice Finance provides your business with quick access to funds tied up in your unpaid invoices. Some debtors can take 60 days to pay, so converting your company’s invoices can deliver a much-needed cash injection. Those extra funds allow you to take advantage of opportunities and keep your business growing. Consistent cash flow is one of the biggest challenges for any business. The challenge only intensifies when debtors are slow to pay invoices. Invoice Finance relieves cash flow strain and gives you access to cash when your business has the requirement. It gives you the flexibility to supplement existing bank and finance lines with a facility that grows in line with your receivables. Your business can secure its own funding, independent of any personal assets. Invoice Finance enables you to leverage what you already have, your unpaid invoices. You’ll no longer have to use your own personal assets as security for a bank overdraft to pay suppliers and expenses.
Cash Flow: Invoice finance helps companies that have cash flow problems due to slow-paying invoices. The improvements are often significant and can be noticed soon after financing the first batch of invoices. These improvements provide businesses with greater control over their cash flow, enabling them to better manage payments and new investments. Extend Terms: Extending credit terms to clients can be a problem for companies that don’t have sufficient cash at hand and can’t afford to wait. Invoice finance allows you to extend payment terms to clients without having to worry about slow payments. Your company can finance the invoices and get funds immediately. When used correctly, it allows you to pursue new sales opportunities and grow your business. Paying Expenses: One of the most important advantages of using an invoice finance programme is that your company will have enough liquidity to meet critical expenses such as wages, taxes and supplier payments. This liquidity is crucial for maintaining smooth operations and fostering growth. Business Growth: The financing line is tied to your accounts receivable and adapts accordingly. It can increase, almost automatically as your sales to qualified customer grow. This flexibility makes invoice finance an ideal alternative for companies that are growing and have immediate funding needs. Turnaround: The finance does not follow conventional lending underwriting criteria. It can be offered to companies that have cash flow problems and are in a turnaround situation. In these cases, the client must have a viable turnaround plan and management plan in place. Fast Solution: Most solutions such as factoring and invoice discounting, can usually be actioned fairly quickly. This can help companies that have an immediate need due to cash flow problems or new opportunities.
Equipment Finance
Equipment finance is a form of funding equipment that you require for your business. Most often, you can securitise the financed amount against the equipment itself which can lower interest rates.
The asset is legally yours from the outset. At the end of the contract you can sell it for the residual value or continue using it in your business. Your interest payments will generally be tax deductible, and you may be able to claim a deduction for depreciation of the asset. You can often structure your loan term and repayments to suit your cash flow.
Immediate outlay in the form of a deposit. If the equipment is obsolete by the end of the contract you will be responsible for its disposal. You are responsible for maintenance of the asset during the life of the loan, even though you don’t yet own it.
Line of Credit
A business line of credit also known as an LOC, is a type of business finance that allows you to draw against an agreed amount of funds when you need to access it. The agreed amount is your approved credit limit. Once your business has a line of credit facility in place you can access these funds when you choose, without having to get approval from your lender or without having to apply again. A business line of credit is available secured or unsecured from non-bank lenders. Unlike a secured line of credit, an unsecured line of credit means you do not have to tie up any collateral or assets as security against the funds borrowed. Some lenders may also offer a revolving line of credit to established businesses, meaning as you pay back your credit limit the amount you repaid will be made available to you again.
The main difference is that you start paying interest on a lump sum immediately when you take out a business loan whereas with a LOC you only pay interest on the amount of money you draw down.
You can access funds from a line of credit whenever you need them, unlike an overdraft which can only be accessed once your account goes into the red.
The lender will approve your credit limit based on your business finances including your gross revenue and cash flow. Credit limits and how they are calculated vary from lender to lender. For example, one lender may cap your credit limit at a percentage of your gross revenue, whereas another lender may cap it based on your cash flow.
Different lenders have different minimum and maximum loan terms. Here’s an example of what to expect: Line of credit – Loan term between 3 to 30 months. Revolving line of credit – No term, once you have paid back the amount, you can draw down again, this is why it’s called a revolving line of credit. The line of credit will be reviewed now and then (e.g. every 3 years). It’s a lot harder to get a revolving line of credit from a bank.
Some lenders charge a one-off application fee. This is usually based on the approved credit limit. For example, you may need to pay 0.50% to 3% of your approved credit limit. So, for a $50,000 limit the application fee would be anywhere from $250 to $1500 and there may be a minimum fee.
As with any finance product, line of credit interest rates vary from lender to lender. The lender will approve your credit limit and interest rate, which applies each time you draw funds. Generally speaking, you will only pay interest on the portion of funds you draw. For example, if you had a $25,000 line of credit and you withdrew $10,000, you would only be responsible for paying interest on the $10,000, not the entire $25,000. This gives you greater flexibility and should cost you less than short term business loans. You will need to keep meeting your interest payments on any amount you draw until it’s paid back, so it can get costly if you only pay the interest and not the principle. On the flip side, you wouldn’t need to pay any interest during times when you do not access any of the funds.
Some line of credit facilities come with a monthly service fee for the privilege of having access to the funds. The monthly fee is payable whether or not you are using any of the funds. The fee varies between lenders and it’s important to understand all fees before you agree to a line of credit. It’s always best to check the comparison rate (interest rate and fees combined) when comparing lenders.
Time in Business – How long you’ve been in business is a big factor. Banks usually require a longer time than non-bank lenders. Serviceability – Can your business afford to borrow and keep meeting the monthly payments? Several factors will be taken into consideration, such as your business cash flow and liabilities. Again, the banks are likely to be more demanding than FinTech lenders. Security – When getting a line of credit from a bank, you will need to offer an asset as collateral, such as residential or commercial property or equipment. However, many non-bank lenders are much more flexible and can issue you an unsecured line of credit usually up to value of $50,000. Beyond this amount they too will generally require some form of collateral. Credit Score – Your personal credit score will be checked. Bank Statements – You will need to provide at least 6 months of your most recent bank statements. Purpose – How will you use the funds?
Easy application process (non-bank lenders) – Fast access to money – funds available within 24 hours – Only pay interest on the actual funds you draw down, instead of full loan – Greater control – draw funds as and when you need them – Great for unexpected expenses
Interest can add up if you don’t pay down the balance – Higher interest than a traditional term loan – Not recommended for capital purchases
Unsecured Business Loans
An Unsecured Business Loan allows you to cover any business-related finance need. It is a short-term facility, usually up to a maximum of 12 months. You’ll repay the loan and interest daily or weekly. No security (collateral) is required to get a loan. Unsecured Business Loans can provide a boost to your working capital and allow you to make investments in inventory, equipment, renovate, hire new staff, any business activity. Some business owners use this type of business loan to cover cash flow fluctuations and even for new business opportunities.
Application processes are usually fast, simple and online. Finance available without the security of property or other fixed assets. Provided to smaller businesses that do not meet the strict lending criteria of banks.
Unsecured business finance is a higher risk for the lender, so interest rates are likely to be higher. Terms, rates, fees and conditions may result in higher borrowing costs. Depending on the amount you borrow, you may need to provide a personal guarantee, which means you will be responsible for repayment if your business is unable to meet its obligations.
Bad Credit Business Loans
An unsecured business loan is where you do not have to provide any security (assets) to receive the funding. Each lender will have their own risk appetite and lending criteria, but with so many to choose from there’s a much greater chance that you’ll be able to access the business funding you need. You’ll even find that there are plenty of lenders who specialise in loans to businesses or businesses owners, with a bad credit rating. You may still qualify for a loan, so long as your business is performing well and meets the other important lending criteria. The most important of which is your capacity to make your repayments on your loan.
The interest your lender charges for your business loan not only enables them to make a profit, it also compensates them for the risk involved in lending to you. Should your business be late with repayments, or worse, be completely unable to repay your loan, the lender will lose money. If you or your business have a history of defaulting on your financial obligations, many lenders (including the high-street banks) simply won’t take the risk that you will do so again. Those lenders who will take on the risk expect to reap high enough returns to make that risk worthwhile.
Each lender will have a formula they use to decide how much you can afford to borrow, given your income and expenses. As a borrower with a low credit score you may find they are only willing to lend you a limited amount. This is your opportunity to begin repairing your credit record and build up a history of on-time payments. Once you have proven that your business is reliable, you may be able to take out a larger business loan in future.
Taking out a bad credit business loan can give you to access the funds you need and may not be able to get elsewhere. Paying a little extra for this funding is reasonable and you may well decide that the cost is outweighed by the benefits to your business, the cost of the loan versus the money you will make from the opportunity. However, there are some lenders who will seek to charge higher rates for bad credit finance. In today’s highly competitive market there is less need to transact with these types of lenders. When evaluating potential lenders, it’s not just the interest rates you need to look at. Many loan products have a whole host of additional charges, including administration or management fees. You need to seek an independent, unbiased expert opinion before signing in to any loan agreement. One of the most important things to look out for is penalties for early repayment. The best way to cut the cost of your finance is to pay off your business loan as quickly as you can. It’s in the lender’s interest for you to borrow and keep paying interest for as long as possible. Therefore, they may impose penalties to discourage extra payments or charge fees to repay early. Alternative lenders are not currently regulated in the same way as Australian banks, which means they can impose restrictive terms that could interfere with the way you do business. For example, you may find you are not permitted to deal with customers who have defaulted on their payments, or that you can no longer offer credit terms to your clients. Be sure to read all the terms and conditions carefully before committing to a business loan and seek professional financial advice if you’re in any doubt as to which is the right product for your business.
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