Which business lending option is right for you?
There are different business lending products for different purposes, so you’ll need a clear reason for borrowing. And there are heaps of reasons small business owners take the plunge.
Manage cashflow
Cashflow is vital for a healthy business, and it’s something that can cause sleepless nights for business owners.
When money is tight, having a buffer can make all the difference. If you’re dealing with temporary cashflow shortages, consider an unsecured business overdraft.
An unsecured business overdraft is linked to your business bank account, giving you access to money up to an approved limit. You can use this money to buy stock, pay wages or any other business purpose. There are no formal repayments to make and no set term to pay the money back. This flexibility makes it a fantastic option for small businesses owners.
Grow your business
Big dreams sometimes need a big investment.
If you’d like to open a new premises, buy some new equipment or diversify your offer, an unsecured business loan can help you without you needing to put up any of your own money.
With regular, fixed repayments, an unsecured business loan gives you certainty. And, like an unsecured business overdraft, there’s no security to put up.
Upgrade your business vehicle
As corny as it sounds, a reliable vehicle really does keep your business moving.
Whether it’s a new delivery van or a car for client visits, consider a business vehicle loan. This type of business finance is usually secured against the vehicle itself, which means you’ll benefit from a lower interest rate. To improve the flexibility, some vehicle loans have the option of a balloon payment, a lump sum due at the end of the loan term which helps keep the regular repayments lower.
Buy a commercial space
Buying new office space, a workshop or a retail shopfront may call for you to take out a secured business loan.
A secured business loan is backed by collateral, such as your property or equipment, which usually means lower interest rates, higher borrowing amounts and more favourable terms.
If you're looking to buy, refinance, or expand your commercial property, a secured business loan offers the stability and affordability that large-scale projects often need.
How much do you need to borrow?
Now that you’ve got a better idea of what type of loan might work for you, the next step is figuring out how much you need to borrow.
If you’re buying an asset like a vehicle or equipment, this part is straightforward - just borrow what you need to cover the cost.
But if you’re addressing cashflow problems or looking for a financial cushion, deciding on a loan amount can be more complex. You’ll want to review your business's financials to estimate how much you’ll need to cover your current and future expenses. It might be worth chatting with your accountant to help you see the full picture.
What can you afford to repay?
Knowing how much you want to borrow is one thing. Knowing how much you can afford to repay is another. It’s crucial to make sure that the loan fits comfortably within your business’s budget, so you don’t end up overstretched.
Start by reviewing your financials from the past few months and forecasting your cashflow. Again, your accountant can help. Keep in mind that longer loan terms reduce your monthly repayments but increase the total interest paid.
Use a business loan calculator to play around with different amounts, interest rates, and repayment terms. This will give you a realistic idea of what your monthly repayments will look like and help you choose a loan that works for you.
Time to apply
Now comes the nitty-gritty. Here are a few documents you’ll likely need to gather before you apply:
- Financial statements (profit and loss, balance sheet)
- Tax returns
- Vehicle details (for a vehicle loan)
- Identification documents for all directors or business owners
These documents give lenders insight into your business’s financial health and show that you’re a responsible borrower. Having these documents ready helps fast-track your application and improve your chances of getting the finance you need.
Finance in a flash with Business+
If you don’t have time to visit a branch or wait on hold for a call centre, Great Southern Bank’s Business+ makes business finance easy.
Being a 100% digital business banking platform, the application process takes around 20 minutes. Best of all, you won’t need to print, sign and return any paperwork, it’s all done through Business+ online or in the Business+ app.
Here are your business finance options with Business+:
- Business+ Unsecured Loan – borrow up to $50,000 with no security and flexible loan terms.
- Business+ Unsecured Overdraft – borrow up to $50,000 with no security and worldwide access to your money with a Debit Mastercard.
- Business+ Vehicle Loan – buy a passenger or light commercial vehicle up to $250,000.
If your sights are set on something bigger, consider a secured business loan. Talk with one of our knowledgeable business bankers and they’ll guide through every step of the process.
Now that the idea of borrowing to achieve your business dreams is planted, take that leap of faith with no regrets.
Remember to check out our Business Hub. You’ll find heaps of free resources and plenty of helpful information to keep your business humming.
