Expanding your business? Renovating the shop? Hiring new staff? Like 75% of Australian small and medium sized businesses (SMEs), you may have decided it’s time to look for external finance to fuel your growth plans. But before you sign up with the first available lender, here are five questions to ask when it comes to small business finance.
Once upon a time, you didn’t have a whole lot of choice. You could go to one of the major banks, a building society or a credit union (known as Authorised Deposit-taking Institutions). The landscape has shifted significantly since then. Thanks to technology and innovation, you now you have more choice and alternatives than ever before as non-bank lenders successfully challenge the traditional banks on speed, technology and customer service. Small business owners now want:
The lender who can provide these is the lender for you.
In return for providing a loan, lenders need to know business owners will honour the capital and interest repayments. Before they approve your finance, they may require some form of security.
Increasingly, however, many lenders are offering low-doc, alternative doc (“alt-doc”) or no property security alternatives, depending on the nature of your business and the type of facility you require. You may need to show bank statements but no financials up to a certain amount, sometimes $100,000 or more.
Credit assessment is part of the loan process. But it doesn’t have to be complicated and new specialist lenders are taking advantage of technology to vastly improve and speed up the process. Lenders often use your business credit score (or Equifax Score, formerly known as the VedaScore) when deciding whether or not to approve finance. It’s basically a number between 1 and 1200, and it’s calculated using factors from your credit report. The higher the number, the better your credit rating. Checking your score for a loan application no longer has a negative impact on your credit rating.
As with every other product, shop around and compare prices.
Do your homework, choose a reputable lender you can trust, and there shouldn’t be any surprises. Always check for:
Shift is finance on demand for business. Enabled by streaming data, Shift provides credit and payments platforms that help businesses trade, pay and access funds. As one of Australia’s fastest-growing technology companies.
Shift is changing the way businesses access finance. Shift has been recognised by AFR’s Fast 100, Deloitte’s Technology Fast50, Smart Company’s Smart50 and Deloitte’s Asia Pacific Technology Fast 500.