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Business loans for sole traders

Aug 24, 2021 | Insights

Business equipment financing can be very helpful when you are expanding your business operations. Here’s why it can be the right choice to improve small business cash flow.

Sole traders can get loans too.

If you’re a sole trader, a business loan can sometimes feel out of reach. However, this need not be the case. In fact, there are a number of options open for business loans and car loans for business purposes for sole traders.


Why get a business loan as a sole trader?

For some sole traders, the cost of running a business may be too high to cover the purchase of business vehicles or assets from your income alone, especially if you are in the early days or in the process of expanding and taking on more clients.

Whether you need a car for your business or require specific equipment like video cameras or drones, paying outright may be impossible.

If you take out a business loan as a sole trader, this may help you to stay competitive while having flexibility when it comes to your cash flow.

By making small monthly repayments instead of having to come up with the cash upfront, you could hit the ground running as a sole trader, instead of keeping things small while you save up for a big purchase.


When to get a loan as a sole trader

Before you sign up for a sole trader business loan, you should still take the time to think about whether borrowing will affect your business.

Loans need repaying and if your venture cannot maintain these repayments it is worth rethinking your strategy of borrowing money.

Likewise, consider whether your loan will help your business to earn money. It might seem like a nice idea to update or upgrade your current business vehicle, or have the latest model of laptop, but will these assets genuinely help you become a more profitable business?

Assess your finances very carefully before you decide on taking out a business loan.


Getting a sole trader loan with a bad credit history?

You don’t have to let a bad credit history stop you from getting a business loan.

If you’re looking for a sole trader loan, a bad credit history may not actually be that huge a hurdle. Many lenders have a number of options such as business loans for a bad credit history and chattel mortgage business loans that are designed to help you if you have a bad credit history.

While you don’t want to go into a debt spiral, taking out a new loan may help you to improve your credit rating. If you make your regular repayments, your credit rating may gradually improve. By repaying your loan reliably, you are proving that you are a trustworthy customer and all lenders may see you more favourably.


Choosing a lender for a sole trader business loan

Anyone who works as a sole trader knows how time-consuming and stressful it can sometimes be.

You may need a lender who can work closely with you, work around your schedule and offer tips and advice as well as options for a business loan.

Shop around and look for the best loan that suits your needs, not necessarily just the best rates. You may consider seeking a lender who is highly recommended by other borrowers; this should give you peace of mind that you have chosen the right sole trader business or car loan.

Finance One Commercial is a non-bank lender that provides opportunities for Australian small business owners and sole traders to access business equipment finance and vehicle loans. Get in touch to find out more.

Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information.

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Makala Elliott

Makala is the Marketing Manager at Finance One. She has worked in the Finance and Lending industry for over 10 years, gathering a wealth of experience. She is passionate about helping Australians get back on track with their finances by passing on her knowledge.

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