05 Apr How to find finance that fits.
Finding the right type of finance that fits your needs can be…… somewhat of a challenge.
Understanding loan types, client types, security types, loan purposes, rates, fees, and documentation jargon is enough to drive a regular Joe batty if you don’t know where to look or who to ask for help.
So, where do you start?
Before making the assumption that ‘all you need is finance’, it’s important to ask yourself a few questions:
What do you need finance for? Specifically.
Take some time to really understand what project/purpose you need the finance for.
How will you use the end result? How will you benefit from the end result? How will the end result impact your business?
How long do you need the finance for?
Knowing how long you need funding for influences whether you will have time to complete your project, the funding availability, and price. Be realistic, build in a contingency, and work to a plan.
Are you operating a seasonal business and need a 3 month small cash flow injection to see you through? Are you holding residual stock pending settlements and need funding for exactly 75 days? Perhaps you are a developer and require funding for 13 months – a 12 month build with a 1 month buffer?
Why do you need funding?
This question is slightly different to Q1. This question forces you to look at the ‘why’ behind your funding request. It’s a challenging question to ask yourself as it mostly exists to highlight a potential issue within your business, or an area/process that could be improved. If you require funding for a project, ask yourself why you can’t fund it yourself? It’s not a question designed to make you feel bad, or sad that you can’t fund your project, more to make you think “well, how could I have funded this myself?”
Who is borrowing the funds?
You might think the simple answer here is “Well, me. Duh.” But this is actually a question for your accountant. Your borrowing entity/structure can impact your ability to obtain future credit, and your tax-time dealings with the ATO. Ask the question of your professional advisers and understand the structure that works for you.
When do you need the funding?
How quickly you require funding will largely determine the funding partner you choose. For example, if you accidentally got excited and purchased a commercial property at an auction over the weekend, a bank isn’t going to be able to meet your timing requirements, a lender like us however………….
How are you going to repay the facility?
Again, this will direct you to traditional or alternative funding sources. Bank lending allows you to pay a loan off monthly, amortised over a (say) 20 year period. Non-traditional funding will require the use of an exit strategy. You can read more about exit strategies HERE. )
Once you have answered these questions, you are ready to start searching for the finance that best fits your needs.
But, hang on, we haven’t mentioned price!
Nope. And you know why?
Because in the grand scheme of things, what will help you achieve your goal is answering the questions above, and then finding the lending facility that best meets those actual needs.
If you base your loan research/acceptance on price, you are already not committed to your goal.
The price-based facility you select may not offer you the features, benefits or flexibility that you actually need to get your project across the line. That helps no one and costs you more in the long-term.
Business is a long game.
There will be a cost.
Focus on the outcome and what actions you need to take to get you there.
So who should I talk to to find the best loan for my needs?
Obviously our first answer will be us – of course!
We can assist with traditional bank funding all the way through to alternative and private funding sources. But our real value comes from our experienced team who can assist you with structuring your proposal in the best possible way to get the best possible facility. You can check us out here and read more about how we have helped clients with their structuring in this feature in Australian Broker Magazine.
We work closely with referral partners from all walks of life. From highly experienced commercial mortgage brokers, to accountants, solicitors, and financial planners. We even regularly receive referrals from a retired business owner on the Gold Coast who has a network the size of New Zealand and spends his days mentoring small to medium business owners.
Find someone you trust, answer the questions above, and talk through your options – then give us a call – 1300 668 551 – talk to you soon!