Loans — Information for Business Owners

Small Business Loans

A business loan provides financial aid to business of all sizes (i.e. smaller businesses, medium-sized businesses or start-up businesses). It is well suited for business people who need funding to boost or expand their business. When you really need a loan for your business, you have to adopt a strategic approach. Cautious planning is essential for ensuring success in obtaining loans.

Strategic business plan

When you are considering applying for a company loan, it is important that you should take lots of time to produce a convincing and detailed strategic business plan. Your business plan will include information, that will assist your loan broker along with the lender/credit provider in providing you with the best type of finance and advice. Here is a listing of information you should use in your company plan:

>> Your company structure

>> The purpose and goals of the business

>> Your past and future plans for the business

>> The net income and loss projections and cash flow forecasts of the business

>> Your marketing strategy (i.e. these products or services your company provides)

It’s also vital that you state in your strategic business plan the particular purpose for which you want to use a company loan.

Decisions to create

After you have assessed your needs for a business loan, you need to investigate which finance products meet your requirements for any business loan as each loan has varying features that you should choose. To help with this process, here is a list of points to consider and which you can consult with your finance broker:

>> The loan amount required

>> The loan term (i.e. the time in which the loan will have to be repaid)

>> Interest rate type and repayments (i.e. fixed or variable)

>> Loan fees, and

>> Loan security (i.e. the kind of security provided by you)

Finance Products

Businesses of business loans available to select from. This is a summary of common business loan products created specifically by lenders/credit providers for business people, which can assist your own personal situation as a business owner:

Commercial Bill Facility

An industrial bill (also known as a bank bill or bill of exchange) is really a flexible credit facility that can give your business a short-term or long-term injection of money. The finance provided by the commercial bill might help your business when you may need to solve an unexpected or urgent problem, and you do not have the necessary cash flow. You accept repay the face worth of the commercial bill plus interest to the lender/credit provider on the specific maturity date.

Overdraft Facility

The objective of establishing an overdraft facility would be to provide capital for your business within the short-term, before receiving income. An overdraft facility shouldn’t be used for capital purchase or long-term financing needs. The overdraft is a normal trading account facility for the business, whereby the lender/credit provider lets you use or withdraw greater than you’ve within the trading account. But, only as much as an agreed amount and then any negative balances typically need to be repaid inside a month.

Small Business Loans

Credit line

A line of credit (also known as an equity loan) can provide use of funds by permitting you to definitely draw an equilibrium up to an authorized limit. The loans are made like a long-term debt facility and are usually secured by a registered mortgage over a property.

Fully Drawn Advance

This is a term loan with a scheduled principal and interest repayment program. The borrowed funds provides access to funds upfront, which can be used for funding long-term investments that will expand the capacity of the business, for example investing in a start up business or perhaps purchasing equipment. Fully drawn advance loans are usually secured by a registered mortgage on the residential or commercial property or a business asset.

Short-Term Loan

A short-term loan can provide short-term funding needs for your business. You are able to remove a short-term loan if you want to take advantage of a really quick financial opportunity or to help you to get out of a financial income crisis. The loan offers a fixed sum advance and needs a periodical interest charge to become paid on your part. Short-term loans typically require a security to become provided.

Business Equipment Finance

If you decide to expand your company operations and take advantages of potential tax advantages, you should think about taking out business equipment finance, because the finance arrangement enables you to buy, lease or employ a new vehicle or specialised equipment (e.g. cars, trucks, forklifts, printing, computing, medical and equipment for your office as well as plant equipment and machinery). Typical finance arrangements to think about for business equipment finance are asset lease, commercial hire purchase, chattel mortgage or equipment rental.

Truly, there are several finance products available for sale to assist business owners. When you seek out finance for the business, you shouldn’t be in a rush. Consider all the alternatives at length and then choose the one that’s right for you as well as your business.