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Business Loan Types

Business Loans

Applying for a business loan is not as simple as applying for a home or car loan. Borrowers need to understand this at the very start. Lenders demand a great deal of information about the borrower and their business.

In reality there is a higher percentage of Business Loan applications declined than other loans and the prime reason is simple - lack of preparation by the borrower prior to the loan application leaving the lender feeling uneasy with the proposition. The outcome of your application is strongly influenced by how well your proposal is researched and how well it is presented.

That’s where our team come in. We have the experience to assist the borrower prepare the necessary documents to justify the business loan application and show, if applicable, that the business is capable or repaying the debt.

Decisions to Make

There are a number of considerations and decision to make prior to approaching any lender, such as

  • how much do you need to borrow;
  • what type of loan will you need, Term Loan or Line of Credit;
  • how much can the business reasonably afford to repay
  • do you want fixed or variable rates
  • how long will you need the loan for; and
  • what security can you offer the lender.

Preparation

It's essential ahead of time to prepare a number of documents about the business or the proposed venture not only to determine yourself if there is a capacity to pay but to convince the lender as well.

Please go to What's Involved - Business Loans for more infrmation on preparing for a Busienss Loan.

Loan security

Loans can be secured or unsecured by various types of assets, including property or business assets. As a rule, the less security you provide or non-property security will result in a higher the interest rate for the loan.

Seek advice

It is absolutely vital to seek advice from your accountant or business adviser as well as chatting with your mortgage broker before approaching a lender for a loan.

Risk assessment

Lenders will look at the businesses risk profile when considering a loan application. Our team understand what lenders are looking for and what they will consider risky which will assist the presentation of a business in a favourable manner. Generally lenders look for;

  • the level and nature of your security (what you're offering to give them if you can't repay the loan);
  • the business ability to make regular loan repayments (cash flow risk); and
  • your ability to ultimately repay the debt (business risk), including any other debts you might already have.

Perception of risk

The following will influence a lender's perception of the risk of a loan application

  • start-up businesses, new ventures;
  • lack of security;
  • lack of business history;
  • lack of experience in the industry;
  • levels of competition in the industry;
  • current economic conditions;
  • highly seasonal businesses;
  • lack of planning, market knowledge and finance skills; and
  • poor credit history.

More information.

What's involved.

Contact us.

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