The biggest issue which results in a frustrating, lengthy and time-consuming loan approval process, is…
When applying for a business loan, there are steps you can take to avoid unnecessary delays and frustration.
Whilst economists are painting an optimistic outlook for the Australian economy, Lenders are adopting a more cautious approach, seeking detailed information and taking longer to approve borrowings.
Against this background, there are steps business owners can take to make the process easier:
Applying for a Business Loan - Don’t Delay!
Our experience is that business owners will avoid borrowing money unless they need it.
Whilst this is a prudent approach, applying for a business loan should not be delayed until the monies are urgently needed.
Apart from creating cash flow issues and stress, it can raise doubts in the minds of Lenders. “How good is their management if they left it until now to apply?”
In the current environment, where it is taking longer for finance to be approved, the sooner you start the process, the better.
Outdated Financial Information
(Given the impact of COVID-19, many businesses will also be asked to provide financial projections at least for the forthcoming 12 months that show the ability to service all borrowings).
Whilst many business owners get frustrated with the focus on financials by Lenders, it is worth remembering they are the prism through which lenders understand a business and interpret performance.
Applying for a Business Loan - Defined Purpose
Not Addressing Issues That May Concern Lenders
Believing all Lenders are the Same!
A mistake business owner can make believing if their current Lender will not approve the finance, no one will.
The policies and appetite to lend can vary widely depending on the institution’s view of the market and their strategy at a particular point in time.
Today, there are also many niche players in the market targeting particular types of lending and/or industry segments.
Lenders are no different to any other supplier to your business. It is therefore important when seeking finance to understand what is available in the market before committing one way or another.
You may be told it is a great offer – but compared to what? If you don’t test the market, you have no actual basis for comparison.
This does not mean you necessarily need to change Lenders, but ensuring the finance package you accept is truly market competitive
There is no denying that at present it is taking longer for finance to be approved.
This will hopefully change as more evidence of a broad-based economic recovery emerges.
However, as outlined, there are practical steps business owners can take to more readily access the finance they need
If you would like to learn more don’t hesitate to give me a call