Applying for a business loan is a completely different process to that of a home loan application. To ensure you don’t lose your way, we’ve set out a clear path for you to follow.
1. Find a specialised broker
Commercial lending is very different to residential, so when searching for a broker, it is important to seek one who is not only accredited, but also experienced in commercial and business finance.
The first things you should ask a broker is what experience they have with commercial and business loans, and how many lenders they are accredited with in the commercial space. This is to ensure you are presented with a range of options that give you maximum choice.
Work with your broker to negotiate terms and product features that best suit your situation. This will help avoid extra onerous tasks that are sometimes expected with commercial lending.
2. Gather your paperwork
Unlike residential loans, where much of the paperwork is straightforward, business loans are assessed on a case-by-case basis, which means the documentation that needs to be provided varies depending on the situation.
Some of the standard things you’ll need to have ready are need proof of income and expenses, assets and liabilities, essentially anything that demonstrates the assets of the business. Other advisable forms of paperwork include tax records, exit strategies and of course, your business plan.
Every deal is taken on its own merit, so be prepared that lenders will ask for extra information outside of what you would normally expect.
3. Do a self check
Loan to value ratios (LVR) on business loans are lower than those in residential. In comparison to the potential 95% per cent you could obtain with lenders mortgage insurance (LMI) on a home loan, you may only get between 50 to 70% for its business counterpart, which means having extra money or equity to put into the deal deems you an ideal applicant.
If you are considering taking out a business loan, speak to us for more help to ensure you’re on track for a comfortable retirement. Give us a call at 08 8211 7180 or send us an email at info@centramoney.com.au.