What If I Just Registered a Business, Can I Get Business Finance?

Both large and small companies may need financial help to meet some objectives, but what about startups or those businesses that have just been registered?

There’s good news! The loan market is quite broad and has options suitable for an existing business or a company that has recently started operations.

However, to increase your chances of obtaining a business loan in this category, it’s essential to know the available options, their main requirements, and conditions. Find all those details below!

Types of Business Loans

A business loan is generally available in two forms: a term loan (you get a lump sum all at once) and a line of credit (a pool of funds with flexible interest and repayment amounts).

Term Loan

Depending on the interest rates charged, security requirements, and repayment terms, these loans can be categorised into:

Fixed Interest Rates and Repayments

The business loan you receive has a fixed interest rate throughout the term, helping you budget your payments and better control your finances. However, it’s subject to early repayment fees if you want to pay off the debt before the period ends.

Variable Interest Rates and Repayments

Interest rates can fluctuate, causing your repayments to go up or down. However, these options are more flexible, and you can pay a lump sum whenever you need.

Secured Business Loans

When you obtain a secured business loan, you must provide a valuable good as “security” or collateral. In these cases, getting the amount you need may be easier. However, the lender can claim the asset as their own if you don’t make the repayments.

Unsecured Business Loans

If you apply for unsecured loans, you shouldn’t give any asset as security. However, interest rates and fees may be higher.

Also, if you have a poor credit history or your business was just registered, it may be hard to get, or you could receive a lower amount.

Line of Credit

These options are often used as short-term financing since they give access to extra cash with interest charged only on the money you use. With this alternative, you can cover unexpected costs or make purchases that you cannot afford with personal credit cards but are too small for a business loan.

What Do I Need to Apply for a Business Loan?

If you plan to request financing for your company, you need to comply with the main business loan requirements. Although each lender or financial entity is different, these are the documents that you may be asked to provide:

• Financial statements
• Proof of individual income
• Identification
• Bank statement

With this documentation, the lender or bank can check your financial position and help you define terms that fit your cash flow.

Financial Statements

Through financial statements, you show the lender your positions in terms of assets, liability, and net worth. In addition, with these documents, the financier can have a better picture of your income and expenses to determine if you can really make your existing and proposed repayments.

Generally, when a lender or institution asks you for financial statements, you must provide a balance sheet, income statement, and cash flow statement. In some cases, you may also need your latest tax returns, Australian Taxation Office (ATO)’s statements, and business activity statements (BAS).

Bank Statements

Other documents that can allow the lender to know your financial situation are bank statements. In addition to these copies, which may be electronic or on paper, you may be asked to provide details of your savings, income, credit cards, and other liabilities.

Identification

Are you a new client? You may need to provide an identification document, such as your passport or driver’s license. However, these requirements may vary based on your business structure.

If applicable, especially if you run a startup, you should bring a company registration, a trust deed, or a partnership agreement.

Proof of Individual Income

Some lenders may also require details about your personal income if you are a company’s director or shareholder. Do you have an investment property? You can bring the rental statement!

What If I Just Registered a Business?

As you can see, the requirements to ask for a business loan are easy to collect. However, you may still have one question in mind: What if you have a startup or your company was recently registered?

If you don’t have a year of trading history, you can also request financing for your business. However, you must meet some additional conditions.

Cash Flow Projections and Other Things You May Need

In addition to the documents already mentioned, you must bring a cash flow projection or forecast. It’s an estimate of your expenses and income in the coming year based on your business plan.

Some lenders ask for this document to be sure that the borrower has made informed decisions, enjoys financial health, and will be able to repay the business loan. In addition, you must also provide:

• Business plan
• Lease agreement
• Business contract of sale

Final Thoughts

If you have a startup or your company was registered just a few days ago, you shouldn’t worry! There are many business lending options for you!

However, if you want to have a competitive interest rate and protect your finances in the long term, you should analyse the small business loans available to determine which ones fit your financial objectives and goals.

If you have any doubts about how to find the best loan according to your financial situation, don’t hesitate to seek professional advice!

How Westend Finance Can Help

At Westend Finance, we can lend you a hand! Our team has over a decade of experience helping our clients spot the best financing opportunities to boost their operations or buy their business assets without putting their wealth at risk.

We are prepared to help you find the best alternatives, a loan with the right interest rate, and the financing option that really benefits your business! If you need assistance, call us today!

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