4 Things You Can Do With Small Business Loans to Get Ahead This New Financial Year
You have survived e EOFY! Now it’s time to plan for the new financial year.
How are your business finances?
How is the cash flow of your business looking?
If you haven’t yet planned for the new year, don’t worry. You can still set up business objectives and plan cash flow for this fiscal year.
Are you thinking about expanding your business, marketing or hiring additional staff during your busiest months?
Or how about just saving for unexpected expenses?
If you need additional funding for the start of the financial year, there are things you need to keep in mind as you apply for a small business loan.
1. Prepare to offset your tax debt this year.
If you borrowed money to take advantage of the EOFY sales and tax deductions, you must offset that loaned money within the year.
If not, remember – you need to make sure that you are making appropriate purchases in the new financial year to be eligible for tax deductions.
Do your research and comparison shop for the products and services you need for your business. Make sure that the things you are purchasing will be tax-deductible. Create a table that will give you a better comparison of potential lenders that can provide the cash flow assistance you need.
Don’t wait until up to the end of the financial year to make your decisions, because tax debt can negatively impact loan eligibility.
2. Prioritise your loan application before tax returns.
Planning for your expected tax debt helps you be ready for the next EOFY.
Remember that a tax debt on the books will mean lending options for the businesses to become limited, and many banks will turn you away.
If you want to support your business this year financially, the trick is you need to get a loan before your taxes are due.
Or you can utilise short-term, small business loans to cover your tax debt. This way, you get an extension to pay the bill through the investment and enables you to keep a good credit standing.
Do settle your past debt, and obtain the right loan amount you need, submit your tax return if that is possible.
Don’t worry, if you’ve already submitted your return and incurred a tax debt, or have a tax debt balance. You still have some options.
Speak to us to find out how a small business loan is going to help
3. Understanding small business loans
The common misconception is that banks are the only institution that can give loans to businesses.
Yes, banks may offer competitive rates, but they have requirements that can be difficult for start-ups, sole proprietors and small business owners to meet, such as:
Years in business: In most cases, your company must be trading for at least two years.
Extensive documentation: You’ll need to provide financial statements, tax returns, balance sheets etc.
Collateral: You may even be asked to secure the loan with high-value items such as machinery, a car or a house.
Credit: Your credit rating may dictate how much you can borrow and how stingy they’ll be with your payment. You’ll
If bank requirements are too much for you; there could be some options from reputable online and short-term lenders. Contact us to find out what’s going to work for you.
Do get yourself organised, research your options and seek professional advice from lenders or brokers. Take stock of your business status and documentation you can pull together, including any equity you may bring to the table. Identify your particular needs.
Don’t get overwhelmed by the process or some of the bank requirements. A small number of alternative lenders that can provide solutions for small businesses with outstanding tax debt. These lenders offer a solution even when a business owner cannot give a home or commercial property as collateral.
4. Find a lender that understands you
Look for an experienced lender that specialises in small businesses and has loan options that solve the problems that small business owners regularly face.
You might also need a lender that accepts fewer documents and doesn’t require collateral.
Online application forms are great, especially with the pandemic, and you can even get a quick turnaround on the approval decision and access to your fund instantly.
But if the online form is backed by an algorithm that says “No” much more often than it says “Yes”, you may not get the outcome you’re looking for, and it may lessen your chances of getting approved in the future.
If you have a lower credit score, need an unsecured loan and have outstanding tax debt, our top tip is to find a lender that will listen. We can help with that.
Do work with a lender that lets you talk to a human loan officer who will take the time to assess your situation and your capability to pay back the loan in good time.
Don’t believe the naysayers. Yes, it can be tough for small businesses to find funding, but there are lenders out there that offer personalised service, assess each application on a case by case basis and help small businesses realise their goals.
Need help with that?