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How a Business Loan may benefit your business

Feb 23, 2022 | Insights

Whether you’re in the throes of starting up your small business or are looking to take your existing business to the next step, you’ve probably realised that in order for your business to make money, you often need money to get you there.

That’s where Business Loans may be able to help! A Business Loan can help everyday Australian businesses bridge the gap between their business aspirations and business success.

Finance One Commercial is proud to offer a range of Business Loans for small and large Australian businesses to finance the purchase of new equipment or lift your business out of financial challenges. Keep reading to uncover how Finance One Commercial could help you action your business plan.

What are Business Loans?

Business Finance refers to the range of different financing arrangements that may be available to your business to provide funds for various business needs. Usually, Business Loans are offered by banks or financial lenders to help cover the cost of a business lease, new equipment, inventory or even staff wages.

Finance One Commercial can offer Business Loans to assist with the purchase of your business’:

  • Car
  • Equipment
  • Forklift
  • Earth Moving machinery
  • Tractor
  • Truck or Food Truck
  • Trailer
  • Commercial Lawnmower
  • And more!

The loan term can vary depending on your finance requirements and how long you need the Business Loan. Finance One Commercial can offer loans for up to seven (7) years.

 

Types of Business Loans

Business Overdrafts

Overdrafts allow you to overdraw your business bank account up to a certain amount. This can help if you have irregular payments coming into your business bank account but have regular expenses that need to be paid. Newly established businesses may find overdrafts handy while they work to build up their business bank account balance.

Interest is charged on the overdrawn amount, and there are usually fees and charges that apply to having an overdraft facility – sometimes regardless of whether you use the overdraft or not.

Business Line of Credit (including credit cards)

A line of credit is different from a traditional loan format in that you can draw on funds when required, up to an agreed amount- rather than having one (1) initial lump sum payment of the borrowed amount. Also, unlike a traditional loan, you only pay interest on the amount of credit you have accessed – not the entire amount available to you.

Unsecured Business Loans

As you may have guessed, unsecured Business Loans are Business Loans that do not have an asset held as security against them. Because you do not need to offer up any collateral for these Unsecured Business Loans, your business can expect to pay a higher interest rate than what it would on a Secured Business Loan.

Secured Business Loans

Secured Business Loans can allow your business to use assets (or even another business) as security against your Business Loan amount. Typically, Secured Business Loans attract a lower interest rate than an Unsecured Business Loan. The lender can repossess the security against the Business Loan to cover the debt if you find yourself unable to repay the money. Funding new equipment is often done through Secured Business Loans as your business can use the vehicle or equipment as security on the loan.

At Finance One Commercial, any Business Loans between $75,000 – $125,000* need to be property backed.

Some Benefits of Business Loans

The obvious benefit of a Business Loan is the ability to free up cash flow and fund the purchase of business equipment, vehicles or tools that enable your business to do what it does best! However, there are other benefits to holding a Business Loan that may not be immediately apparent.

Creditworthiness
Chances are that you don’t plan on being in business temporarily — you likely have aspirations to build your business in the future. In order to continue leveraging to the next stage, you may need to rely on business lending again. Holding a Business Loan in the early stages of your business, and meeting your repayments and loan obligations, may help build your business’ creditworthiness and boost your chances of being approved for another Business Loan down the track.

 

Cash flow
Cash is a precious commodity no matter what industry your business operates within. Business Finance may be able to help you cover your cash flow shortfalls by offering money when you need it for purchases that otherwise may have left your bank balance completely empty. Regular loan repayments may also assist with budgeting the costs of your business.

By borrowing to purchase equipment rather than buying outright with cash, you should be able to keep your cash reserves for other purposes. This could be to invest in other areas of your business, fund business expenses that cannot be borrowed for, or just keep some cash up your business sleeve for a rainy day.

Finance One Commercial Business Loan Requirements

At Finance One Commercial, we have provided finance to many Australian businesses, including those with bad credit history, judgements, or prior bankruptcies — so don’t let that stop you. What we require for a Business Loan application is:

 

  • An ABN or ACN that has been operating for at least six months;
  • Regular Business Income;
  • Applicant to be at least 21 years of age;
  • A completed application form;
  • A signed privacy consent form; and
  • The most recent six months of bank statements of the business.

FAQs about Business Loans for Small Businesses

Does business finance have a fixed or variable interest rate?

This depends entirely on the lender and the loan options that are available to you.

Can I apply for a Business Loan as a sole trader if I have a bad credit history?

Yes! You can apply for a Business Loan as a sole trader even if you have a bad credit history. Finance One Commercial may be able to provide finance options to small business owners who have had previous poor credit histories, including defaults, previous bankruptcies or Part IX Debt Agreements. We can consider applicants that have been discharged from bankruptcy for a minimum of 1 day.

Do I need to be registered for GST to get a Business Loan?

You do not necessarily need to be registered for GST to get a Business Loan with Finance One Commercial. However, some loan products are only available to GST-registered applicants.

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WRITTEN BY

WRITTEN BY

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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