Good credit history with no payment defaults
An easy business loan can be achieved if the health of your business is strong and a lenders assessment criteria is comfortably met to minimise the risk of lending your business funds. If your business has a good credit history record with no payment defaults this will increase your chances of approval. A lender who sees 1 or more payment defaults on existing loans will see this as an instant red flag and will be concerned you may default on your monthly/fortnightly payments to them should your loan be approved.
Business bank account conduct
General account conduct will also determine how easy it is for your business to secure a loan. You’ll need a seperate business account that demonstrates good cashflow in and out of your account, preferably from more than one income source. It is a also a good idea to not mix in your personal expenses with your business account to keep your transactions tidy and business-related only.
Strong business income history
Your business can also secure an easy business loan by making sure you apply when your business is in a good position financially. If your last 2-3 months has seen a decline in revenue a lender may see this as a warning that your business is in trouble and not making enough income to successfully repay a business loan. Don’t apply in quieter months or in the off-season, instead try to pre-empt slower months and apply for your loan before your income declines so your monthly financial history is stronger.
Access to business financials
Having the right information for a lender to assess will also contribute to an easy business loan application process so make sure you have access to your online accounting software or accountant and can produce financial reports, latest profit and loss reports or a balance sheet.
If your business has been struggling for regular work and you have secured a new contract that will increase your revenue, make sure you have the contract information to include in your application as proof of a revenue increase moving forward. A 12-24 month cashflow forecast produced by your accountant can also increase your chances of an easy business loan approval.
Not over-exposed with existing business loans
Applying for a business loan when your business already has 2 or more loans can also affect your chance of an easy business loan. If your monthly repayments mean your business is running at a loss each month and/or some of your recent loan repayments have defaulted, a lender will likely see your business as high risk and won’t approve your application. The best idea is to wait until you have completed repaying a loan so pressure on your cashflow decreases and you’re in a better position to service a new loan.
In summary, an easy business loan approval is possible with good preparation and good business management. Speak with your accountant or financial advisor when considering a loan and take a good look at the numbers to make sure your company can afford a loan. If cashflow is an issue see what you can do you minimise your expenses and increase your revenue before applying so your business can comfortably meet repayments and operate effectively every day.