Wednesday, February 23rd, 2022

Steps to Applying for Your First-Time Business Loan

One of the greatest challenges every startup and small business faces is a lack of funding to turn their dreams into a success story. And a loan can help bridge that gap. While applying for a first-time loan is a relatively simple process, new Gold Coast business owners typically don’t have the experience banks and lenders are looking for. So here are a few simple tips to help make sure you get that loan your new business needs.

Have your business plan ready

This is the most complex step in applying for a first-time business loan, but an essential one. A detailed and well-researched business plan helps set a lender’s mind at ease that you are committed to making a success of your business venture. A business plan shows your lender that you understand the challenges your business may face and have plans to overcome them.

Know and understand your finances

You may have an accountant or bookkeeper handling the nitty-gritty of your accounting, but you need to understand everything that is going on with your business’s finances. A good way to get an overview of the money coming in and out of your business is with a cash flow statement. It can give you information on:

  • Current income
  • Expenses
  • Operating Cycle (how long it takes between paying for raw materials, to receiving payment from sales)
  • Net profit
  • Projected/estimated future income

Be clear about why you need a loan and what you can afford

Is there equipment or other resources you need to invest in? Do you want to be sure you can cover wages for a certain period while your business gets on its feet? Be clear about exactly how you’re going to utilise the loan to ensure success.

But most importantly, make sure that you will be able to meet your loan repayment obligations. Speaking to a trusted finance professional about what the most sensible amount for you to borrow, the best way to use those funds and how to ensure you can repay it in both the short and long term will pay off for loan approval.

Investigate your loan options

Not only are there a variety of lenders and banks to approach for a first-time business loan, but there are also different types of loans you can apply for. We can help you analyse your options carefully for:

  • Costs
  • Interest payments
  • Other hidden terms, charges or conditions

A financial broker can help with this if you’re not sure. Remember that different types of loans have different GST and tax implications for you and your business, so make sure you understand them fully before doing your application.

Time to apply

Remember that banks and lenders have much higher expectations regarding paperwork for businesses, so ensure you have everything you might need prepared and waiting just to be safe. This includes:

  • Proof of identity
  • Your personal financial information
  • Your business financial reports for at least three years (if they’re available)
  • Interim Financial Data (P&L and Balance Sheets)
  • Financial forecasts
  • Any licenses or certifications you or your business may need to legally operate
  • And that business plan you prepared earlier

It is always best to get proper financial advice from an expert before applying for any type of loan for your business, but this article will help you get started. One of the key benefits of utilising a Broker to assist with your Business FInance needs is that you only need to tell your story once – we then can leverage our pool of lenders to assist with your immediate and longer term financial goals.

Feel free to contact us to discuss Business loans in more detail, and let us help you get started with this first step to building the business of your dreams! Get in touch today on 0421 934 033 or 07 5597 6049.