Securing funding is often one of the biggest challenges for small business owners. Getting approved requires preparation, strategy, and an understanding of what lenders are looking for. Utilising a small business accountant who understands the process, like Nobel Thomas, can often be the difference between securing a loan and not. Here’s a step-by-step guide.
1. Understand Your Funding Needs
Before approaching a lender, be clear about:
- How much you need – don’t over- or under-estimate (a small business accountant can help determine the amount with you).
- What the funds will be used for – e.g. equipment, stock, renovations, working capital.
- How quickly you’ll repay – lenders want to know your loan is manageable.
Having a clear funding purpose makes your application more compelling.
2. Check Your Eligibility
Most lenders in Australia will consider:
- Time in business – start-ups can find it harder than established businesses. Normally lenders looks for an ABN that is at least 2 years old.
- Annual turnover – some banks set minimum revenue requirements.
- Credit history – both personal and business credit scores are reviewed.
- Collateral – some loans require security (e.g. property or equipment).
If your business is new, alternative lenders may be more accessible. Though, sometimes, allowing equity investors into the business maybe the easiest way to secure funding.
3. Prepare Your Financial Documents
Lenders want to see evidence that you can repay the loan. Be ready to provide:
- Business Activity Statements (BAS) or tax returns
- Profit and loss statements
- Balance sheet
- Cash flow forecasts
- Bank statements
Accurate bookkeeping and up-to-date accounts from a small business accountant is a wise move at this stage of the process.
4. Explore Loan Options
In Australia, you can apply through:
- Major banks (e.g. Commonwealth Bank, NAB, ANZ, Westpac) – usually offer lower rates but stricter criteria.
- Alternative lenders (online fintech lenders) – quicker approvals but often higher interest rates.
It’s worth comparing fees, interest rates, and repayment terms across providers. Working with a mortgage broker maybe a wise move.
5. Strengthen Your Application
To improve your chances of approval:
- Write a business plan – outline your strategy, target market, and growth projections. Again, a small business accountant, such as Nobel Thomas, can help with the plan.
- Show stability – consistent cash flow and well-managed debt make lenders more confident.
- Reduce personal debt – lenders often look at your overall financial position. For example, they may prefer a lower credit card limit to assist with your business loan application.
6. Apply and Follow Up
Once you’ve chosen a lender:
- Submit the application with all required documents.
- Be prepared to answer questions about your business and repayment capacity.
- Follow up promptly if the lender requests more information.
We do normally recommend using the guidance of a mortgage broker who is more likely to ensure that the loan is obtained.
7. Consider Professional Advice
Applying for a business loan can be complex. A small business accountant or business advisor can:
- Help you prepare financials
- Review loan terms
- Recommend the best funding structure for your needs
