Small businesses form the skeleton of the commercial market in Australia. Almost one-third of all businesses in the country are small businesses that have employees in the range of five to nineteen. With the rise in sole traders, micro and small businesses, the various funding requirements of such businesses have also risen in the market.
Small business loans and financing have gained extreme importance amongst small enterprises. These are simple business loans that serve various needs of such organizations. Acquiring capital for such small businesses can be an extremely difficult and complicated task.
Banks and traditional lenders have strict and rigid lending criteria and a complicated approval process that often requires collateral and extensive documentation. This problem has been greatly simplified with the advent of various alternative financing agencies in the Australian market.
Alternative financing agencies are independent lenders who provide easy business loans to small and medium-sized organizations, along with independent entrepreneurs and micro-businesses. These alternative lenders provide a wide range of small business finance options to suit the different needs and requirements of different enterprises.
Ranging from merchant cash advance, business line of credit, equipment finance, development finance, invoice finance and other unsecured loans, these alternative lenders provide a wide range of easy business loans suitable for various needs and requirements. These are certainly different from traditional loans from banks and similar institutions as they are easier to borrow with lesser documentation and an easier approval process. Thus, a faster disbursal of the loan amount is a mandate.
Choosing the best loans and lenders
When it comes to choosing the most suitable lender for business loans, there are several things that one must take into account. Along with fundamental market knowledge, research and a clear idea are among the requirements. The lowest rate of interest is not the only thing that should be considered while choosing small business loans.
Choosing the best deal is a matter of considering several factors. Identifying the most ideal and optimal options that are complementing your business is important. The most vital part is a suitable loan deal that is sustainable for your business needs and helps in achieving long term goals.
1. The purpose of the loan
The purpose of financing is very important. What you need the funding for will decide what kind of loan you should choose. Choosing trade finance, business credit cards or business overdraft would completely depend upon your requirements.
2. The rate of interest
This is another factor to consider while comparing small business loans in the market. The lower the interest, the lower the amount you have to pay for premiums as well as the total. Some lenders provide loans at fixed rates while others charge a factor rate based on the principal amount. The rate also varies on the kind of loan you choose.
3. The terms of repayment
The repayment method is a very important detail to take note of as you would have to opt for a loan that is sustainable for your business and the repayment terms must not burden or overload the cash flow of your organization. Various lenders offer varied fixed and variable repayment methods.
4. Loan fees and processing fees
Keep a track of the additional charges while comparing small business finance options. Various charges, like loan fees, processing fees, early termination fees, legal and documentation fees must be considered as they affect the total amount to be paid.
5. Customer services provided by lenders
Several lending agencies provide various convenient customer care services to build a relationship and attract more clients. Along with that, they assign an advisory to guide you through the best loan suited for you and also offer tools to compare the various offers in the market. Sincere customer service would reflect the efficiency of the firm.
Once you’ve considered the fundamental parts, talk with the expert you trust and bring a change to the funding alternatives you have. This would definitely help you with the best financing deal across the market.