Biggest Business Loan Mistakes
1. Not getting the right loan
If you’re not sure what loan is right for you, that’s where your mortgage broker can help.
2. Not having a business plan and thorough, up-to-date financials
Before a particular lender will give you a business loan, they want to understand how your business operates and makes money. They need to be assured that your cash flow will be sufficient to cover the loan repayments.
A carefully considered business plan and accurate financial records establishes your goals and how you plan to reach them. Your application may be rejected if you don’t provide enough required information.
Before you apply for a business loan, make sure your books are up to date and prepare reports such as balance sheets, profit and loss statements and cash flow projections. You may also need to provide information about your personal financial situation.
3. Ignoring, fees, charges and other expenses
Make sure that you understand the full cost of a loan before committing to it. Keep in mind that on top of interest repayments there are likely to be other costs including:
• Application fees
• Administration fees
• Contract or appraisal costs.
These hidden fees need to be paid no matter the size of the loan. Therefore it’s a good idea to discuss increasing your borrowing amount with your mortgage broker to cover these extra costs.
4. Not checking your credit report
You need to make sure your credit report is in good standing because lenders will check it when assessing your loan application. This can have a huge impact on the interest rate that they are willing to offer you.
Ask for a copy of your credit file from a reputable credit reporting body and go through it carefully to make sure all the information is accurate. If it’s not, you’ll need to correct it before applying for a business loan.
5. Not shopping around
Having the necessary funds to run and grow your business is important, but you want to make sure that getting a loan won’t become a pain in the long run.
At Specialised Mortgage Solutions, we take the difficult and time-consuming task of shopping around off your hands. We have access to hundreds of different loan products from over 25 different lenders.
With 25 years of industry experience, you can be assured that we will find the right loan for you and your business. To find out how we can help you with commercial and business finance, give us a call anytime on (02) 5317 5114.