Securing that extra bit of funding needed to hire new staff or purchase a new piece of equipment could mean the world to any small business looking to take things to the next level.
But while the benefits of a business loan may be clear, successfully navigating the application process and being approved for one can be a different matter.
According to research in the Reserve Bank’s Access to Small Business Finance paper published in 2018, around one in five Australian small businesses reported finding it ‘relatively difficult’ to access finance.
Among the biggest roadblocks inhibiting businesses were access to unsecured funding (e.g. funding that doesn’t require property as collateral) and the ‘lengthy and onerous’ application and approval process.
While collateral may be necessary to secure a bank-issued business loan, Mozo Banking Expert, Peter Marshall, encouraged businesses to assess all of their available options when looking for funding.
“Security can certainly help when applying for certain loans, but that security doesn’t have to be property. If you’re looking for a smaller loan you may be able to use a vehicle as collateral instead,” he said.
“Alternatively, it may also be worth comparing other options like an unsecured business or personal loan, invoice financing, or even a business or personal credit card depending on your needs.”
So is there anything small businesses can do to better prepare for the application process and improve their chances of getting approved for a business loan?
To provide a helping hand, online lender Moula has pulled together some handy checklist tips to assist businesses preparing for the application process.