Features that can make or break your business loan

Published on November 19th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Know your options

Lenders understand that small businesses play an important role in the Australian economy as they account for 93% of all Australian businesses by turnover. Small businesses account for 33% of the country’s GDP, but when it comes to financing needs these businesses differ. Therefore, there are an array of financing options that you can choose to finance your business according to your businesses needs. There are loans such as vehicle finance, equipment finance, business overdraft, a business line of credit and more to finance each segment of your business. Choosing the right type of loan is the first step to getting your business to move and grow.

Secured or unsecured

One of the things you will have to compare is whether you want your loan to be secured or unsecured. Secured business loans mean that you will have to provide an asset that can be used a security against the loan which can also help reduce the interest rate that you pay on the loan. An unsecured business loan doesn’t require security, but they tend to come with high interest rates. You need to be careful in terms of what you choose to offer as security as this could be repossessed to pay off the loan if you are no longer able to meet payments.

Interest rates

Choosing between a fixed or variable interest rate can affect your business loan repayments. Therefore, you need to choose something that blends well with the budget and cash flow requirements of your business. However, to know the true costs of a loan it is important that you look at the comparison rate which is expressed as a percentage that takes into account the loans ongoing costs, fees and charges.

Flexible repayment structure

It is vital that you find something that works with your businesses cash flow. If you are a seasonal business, you will need to check if your loan allows for flexible repayment structures that consider the fluctuation of your cash flow. Repayment structures generally work on a weekly or monthly basis with most lenders which is something that you need to consider before taking out a business loan. Keep in mind that you want a repayment structure that will give you enough room to breathe, such as spacing out your $20,000 business loan repayments over every month if that cycle is more manageable for you.

Seeking professional help

Choosing the right financing solution can be confusing and at times intimidating when the progress of your business relies heavily on the decision you make. Seeking professional help from consultants or brokers can make the process less daunting, and the beauty of this is that most lenders offer their services at no cost to you. Such people can help you throughout the loan process of finding financing that is designed to meet your needs.

Before you sign the dotted line always keep in mind that your business is not the same as the next. Although one financing solution might work for one type of business it might not work for you.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for commercial loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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