Before you start the formal application process, you should take 30 mins to evaluate whether you are ready to take out a loan. Understanding your current position will also help you to put together a more compelling loan application once you’re ready to go.
It is about your goals for the business and how having access to business finance options will help to advance these goals.
Key things to consider:
- What is the purpose of the loan? – The purpose of the loan is not simply about how the funds will be applied. It is about your goals for the business and how having access to finance will help to advance these goals. Lenders will expect you to have a transparent and measurable answer to this question.
- How will the funds be applied? – You need to know how you will be using the funds from the loan. This may include cash flow to meet day to day expenses, refinancing existing debt or purchasing assets such as property or equipment. You will need to provide a potential lender with specific details about how you will be using the funds.
- What are the asset particulars? – If you’re looking to purchase a vehicle, property or equipment for your business, you will need to outline who you will be purchasing from, how much the asset will cost, when you will be making the purchase etc.
- What impact will the loan have on your business? – The finance you’re looking to secure should provide operational and/or financial benefits to your business. You will need to outline to a potential lender exactly what these benefits will be.
- Can I repay the loan? – By taking a detailed look at your business’ current financial position, you’ll get a good idea as to whether you can service the loan.
- What type of loan is most appropriate for me? – There are a range of different loan products, each with different benefits. Having a good understanding of your loan purpose, timeframes and available security will help you to choose the product that is right for you.
Woooohhhhooooo I’ve passed!
Easy there tiger! This is just the initial evaluation. If you have clear answers to all of the above, and its all positive, then you’re ready to get serious and invest some time in putting together the complete lending case!