According to the Reserve Bank of Australia, the business loan margin is 2.4% as of July 2021, 4.3% for small businesses, 2.70% for medium businesses and 2.0% for large companies.
"Business loan is a financial instrument given by banks and other financial institutions to business owners to finance their businesses. A bank may offer a business loan to a company if they believe it has a good chance of repaying the loan,"says small business loan provider Shane Perry of Max Funding.
If you have been looking for a way to finance your business, you should consider applying for a business loan. Check out these six simple steps.
Step 1: Determine Your Needs
The first step to getting any loan is determining what you need. You should know precisely how much money you need and what you plan to use it for. If you don't have a clear idea of what you want to do with the money, then you won't be able to get a good loan.
Step 2: Find Out How Much Money You Can Afford To Borrow
Once you've determined what you need, you'll need to find out how much money you can afford to borrow. There's no point in borrowing more than you can afford.
Step 3: Get Pre-Approved
If you apply for a business loan, you'll need pre-approved. Getting pre-approved means telling the lender how much money you can borrow, and they give you a number based on that information.
Step 4: Apply Online
Now that you're approved, you'll need to fill out an application online. Don't worry about making mistakes; the lender will review your application before giving you approval.
Step 5: Get Funding Approval
After you submit your application, the lender will check to ensure everything is okay. Once they approve your funding, you'll receive your funds via direct deposit.
Step 6: Make Payments On Time
Make sure you pay back your loan on time. Lenders may charge late fees if you miss payments.
Advantages Of Getting A Business Loan
There are many advantages to getting a business loan. Here are some of them.
1. Easy Access To Funds
Getting a business loan is not difficult at all. You do not need collateral to get a business loan. Banks and other financial institutions make money by charging interest rates. Therefore, they are willing to lend money to people who are likely to repay the loans.
2. Flexibility
A business loan gives you the flexibility to make changes to your business plan. If you keep making payments on time, you can change your mind and decide to return to school or take a break from running your business. You can easily borrow additional funds if you plan to expand your business.
3. No Hassle
When you apply for a business line of credit, you only need to provide information about your business. Your lender will review your application and approve or deny it within 24 hours.
4. Tax Benefits
If you are self-employed, you can deduct certain expenses related to starting a business. These deductions include advertising costs, rent, supplies, and legal fees.
5. Better Credit Score
Your credit score affects your ability to obtain loans. If you have bad credit, you will find it hard to get a personal loan. However, you will have no problem obtaining a business loan if you have a good credit score.
Disadvantages Of Getting A Business Loan in Australia
Aside from the advantages, there are also some disadvantages of business loans. Check it out below.
1. Higher Interest Rate
Lenders charge higher interest rates compared to personal loans.
2. High Cost
Repayment of the loan requires high monthly instalments.
3. Limited Options
Only certain types of businesses qualify for business loans.
4. Long-term commitment
You cannot withdraw your funds at any point in time.
Grow And Expand With Australian Business For Sale
Before applying for any type of business loan, it is essential to seek out expert advice. A financial advisor can help determine whether a business loan is right for you. If you decide to utilise an agent or broker, Australian Business For Sale's connections can assist you in locating a suitable business broker anywhere in Australia.
They can also advise you on how much money you should borrow and what types of loans would work best for your situation.