Being in business has varying degrees of risk depending on your industry, experience level, systems, and support.
Business finance can be more complex and challenging than residential, with more hoops to jump through during the process. Most banks won't consider lending to business owners unless existing property is used as security.
However, with a correctly presented application, we can achieve positive lending outcomes for our business clients. When you're a business owner, it's imperative to paint a broader picture to the bank to demonstrate the future success of your business.
Don't go it alone. Engage an experienced financial adviser who knows how to position lending applications and can liaise with your accountant from the get-go to obtain the correct information for the bank.
Some industries are doing it tough due to over-inflation pressures, higher interest rates and labour supply shortages. Here we encourage business owners to review their overall lending position and see what they can alleviate to enhance their cash flow position for the next 12 to 18 months.
In 2022 we've seen an influx of new business owners either purchasing an existing business or creating a business from scratch.
To get finance for an existing business, you must do proper due diligence upfront and engage a reputable accountant. Don't just look at the financials of 2022/2021; delve into the pre-Covid financials too. Get a good understanding of the industry and where it's going.
For start-up businesses, lenders take a very conservative approach. Without information about future business performance, these are considered high-risk transactions.
Tips for business owners wanting to borrow:
Finalise your accounts for 2022 and ensure the overall business cash flow is tidy.
Engage your accountant to see how you are progressing for the 2023 financial year to help demonstrate to the bank that your business will continue to succeed after the funding. If possible, provide budgets and cash flow projections for 12 months ahead.
This article is for informational purposes only and should not be considered as financial advice. It is always recommended to consult with a qualified financial professional before making any financial decisions based on your individual circumstances.