What business lenders will lend money for?
Starting a new business is hard work at the best of times. Growing an existing business can be even harder. In each situation you need money to move forward. Some growth opportunities are finite and will be lost if you don't act quickly. This is why just waiting to build up your funds, not matter how strong your cash flow is may be the wrong move. You can get finance to make sure you get funds quickly to meet your needs.
Business lenders are versatile and diverse and will lend for a multitude of reasons. These can categorised into three main areas:
Starting Up
Growing Your Business
Niche Opportunities
Starting Up
Business lenders can be conservative and insist that you provide at least two years worth of financials before you are eligible for any kind of finance. However, more lenders are financing start-up businesses.
In terms of what can be financed in the start-up, you can basically find finance for:
Equipment
Premises
Vehicles
Inventory
The main reason that these can all be financed is that each category of asset has an intrinsic value. The means that if the business fails the finance company can reclaim a large portion of the funding by liquidating the assets.
If you need start-up funds for other items that have no asset value then you normally have to put up security to be able to acquire the loan.
Growing Your Business
Growing your business can be difficult if you try to grow too much too quickly. This is because expansion is time and money intensive. If executed incorrectly, it can be expensive. Business lenders realise this and are wary about expansion plans. However, you can normally obtain an expansion loan if you have:
A detailed marketing plan
A business plan highlighting your program
Security to offset the loan
By offering to the lender a blueprint of your plans, including figures, research and market testing then you stand a very good chance of securing a loan for growth. If you have an asset base underpinning your application then your approval is likely.
Niche Opportunities
If an opportunity arises that is too good to pass up then business lenders can give you quick access funds if necessary. A typical example of a niche opportunity would be when the Olympics came to Sydney in 2000 there was an opportunity for hoteliers to lease more hotel space as occupancies were guaranteed to be high. This was an opportunity that could generate massive income but was only available for a finite time. Business lenders like this sort of opportunity as there is little risk for them, especially if you are low credit risk.
Business lenders are in the business of lending you money. They will find reasons to lend you money, only you can find reasons to prevent them.
About the Author
180 Business Loans has assisted many businesses that were in financial difficulty by providing debt alternatives, short term loans and business advice. You can find out more at http://www.180businessloans.com.au
