Story in partnership with Savvy.
One of the keys to business success is that even in good times, you never stop investing in your business and planning for the future.
With heightened optimism in many parts of Australia at the moment, many small businesses are recognizing that now is the perfect time to put this strategy into practice and prepare for growth.
The agricultural sector in particular is benefiting from a strong season and low interest rates with a sharp increase in spending to strengthen their long-term businesses, with lenders reporting an increase in loan applications for investment in business assets.
“Many different companies are looking to an optimistic future and want to prepare for that future,” said financial expert Bill Tsouvalas, CEO of Savvy.
“That could mean changing direction a bit or preparing for growth by investing in the business by getting a funding injection to fund the things you need to take to the next level.”
Using finance rather than savings for that new storefront or equipment means you’re also keeping cash reserves to provide much-needed cash to your business, Tsouvalas said.
How much can you borrow?
Financial industry research shows that many small businesses are hesitant to seek financing from lenders and only turn to them as a last resort.
But in many cases, it is a necessary step for the business to grow. This may include covering a cash flow problem, investing in new technology and vital equipment, hiring more staff, or accessing more inventory to meet customer demand.
Whatever the need, the first step is to determine how much you could borrow and likely repayments using a commercial loan repayment calculator to provide a clear picture of the final cost of a loan. long-term.
Choose a business loan
There are many types of business loans, each with their own advantages and benefits. Which one to choose depends on how quickly you need to access the money, how much you want to borrow and for how long, and whether you want it secured or unsecured.
An unsecured business loan – which requires no collateral – is most common for small businesses who are less likely to have the assets to secure their loan.
It’s a good option if you’re looking for speed – they can be approved faster, sometimes within 48 hours.
Unsecured loans can be as little as $5,000 up to a maximum of $500,000 in some cases, and come with potential loan terms of between three months and five years.
These days, there is a lot of competition in this market due to the number of new online lenders now operating in the industry.
Mr. Tsouvalas said that as long as companies could demonstrate a solid business structure and had a good credit rating, they were likely to be approved for an unsecured business loan.
If you have the assets to use as collateral, you can opt for a secured business loan which has several key benefits including lower interest rates and increased borrowing power.
The amount you can borrow depends on the value of the asset you are using as collateral, as it will be used to repay the funds if your business is unable to repay the loan.
With a secured loan, you could borrow well over $1 million with potential loan terms of ten years or more.
A secured loan such as a chattel mortgage – a type of financing designed for businesses and used primarily for the purchase of a car or equipment – can also offer a range of tax advantages that you can take advantage of immediately. You can claim the GST paid on the vehicle or equipment, the interest paid and the depreciation.
Because they’re designed for businesses, chattel mortgages offer greater flexibility in how repayments are set so they can be tailored to each business’s needs.
Take advantage of Savvy’s services and find out how much financing might be available to help you grow your business.
Story in partnership with Savvy.