Jinnah chartered accountants
Small Business Accountant Auckland
Whether you are a new business just starting out or a well established business looking for a new accountant Jinnah Chartered Accountants can help your business with a customised accounting solution. Jinnah Chartered Accountants make the process simple for their clients with a customised service that suits your business situation.
Topics on this page:
1. Write a business plan for a new business loan
Write a good business plan before you apply for a business loan for new business. By writing a business plan you will get a clear picture of the potential your business has for success.
You can identify your strengths and weaknessess as well as your competitors strengths and weaknesses. You can also identify areas for growth and map out a vision for the future of your business.
A good business plan identifies your business strategy and helps a lender understand who you are and what your business does/will do. This in turn will help the lender assess the level of risk if they were to approve your business loan application.
2. Contribute a 30 to 50 percent deposit
Most lenders will require 30% to 50% deposit if you are applying for a loan for a new business. Having a deposit lowers your risk to the lender and shows you are responsible with your money. Your deposit also means you are borrowing less so will repay less interest and less in total over the term of the loan.
Without a deposit you will find it difficult to have a loan approved for a new business so do everything you can to save for a deposit prior to applying for funding.
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3. Security or a guarantor for a new business loan
A lender will want security for a new business loan. If the business fails in the first few months a lender will need to know that they can get their money back and that will come in the form of security that they can sell. Some lenders will only accept property as security, some will accept vehicles or business assets like stock, machinery, tools and equipment etc.
It is possible to use the business equipment you are buying with the money from the business loan as a form of security. It will depend on the type of equipment whether the lender will accept it as security. If the equipment is a specialist item that would prove too hard to sell easily enough to get their money back you might find they do not accept its use as a form of security.
Property with equity or a vehicle that is owned outright is the easiest, more common form of security used.
Another form of security for a new business loan is external income. If you or your partner have another revenue stream this will lower your risk to the lender. If your new business has a slow month or two, your additional income can be used to assist meeting your loan repayments and business running costs until the business picks up. This is common in the first few months of business as it grows and you are building your clientele.
4. Check your credit score before applying
Without any business history to assess, a lender will check your personal credit score to help them determine the level of risk if they approved a loan to you.
It is a good idea to check your personal credit score in case there are any unexpected debts outstanding. If there are you can resolve them and increase your chances or approval. Some lenders will not lend to applicants who have recent defaults (3 months to 3 years) so it is important to know which lenders to apply with if you have had past defaults.
We can assist if you are wanting to know which lenders offer business loans for new business. Contact us today and we can see how we can assist.
5. Complete a Cashflow Forecast
A cashflow forecast shows the lender your potential income and gives them a forecast to help them assess the viability of your business and the ability it will have to pay back the loan.
It is important to have a well prepared cashflow forecast completed by your accountant who can help advise what to include and give your forecast more credibility.
Your cashflow forecast should ideally cover 12 to 24 months and show your projected sales over this period as well as your projected costs.
This will give you a good idea on your monthly revenue and profit after expenses. You should also include any expected business loan repayments in your forecast. Make the forecast as realistic as possible when calculating your earning potential including any quieter or busier months you may have, so you can see exactly how each month is expected to affect your cashflow.
6. Make sure you can meet your business loan repayments
Your weekly, fortnightly or monthly business loan repayment amounts need to be manageable for your business income.
When you are just starting out, how long will it take to receive payment from products or services? Do you have the cashflow to operate successfully until you receive payment from customers?
Make sure that even in quieter months your income will exceed your repayment amounts. You need to keep in mind any unexpected expenses that may occur.
What happens if your truck breaks down and your business can’t operate until it is repaired, costing you $10,000? So not only do you have an unexpected bill to pay but you miss out on 1 weeks revenue because the truck was in the shop? Can you still meet your business loan repayment obligations?
7. Get your bank statements in good order
Because there is no financial history for a new business, a lender will assess your personal bank statements when you apply for a business loan for new business.
3 months bank statements is usually required for the application so it is a good idea to ensure your account conduct and spending habits are tidied up to give yourself the best possible chance of being approved.
A lender will look for defaults (and whether they have been rectified), whether your account has gone into overdraft, spending habits such as Afterpay and your general account conduct. If too many flags are raised during this process your loan can be declined so get your account(s) looking as good as you can for the application assessment.
Business loan lenders in New Zealand
We are partnered with multiple business loan lenders throughout NZ. Each lender provides different types of business loans and will offer different rates for small business loans depending on your business’ financial situation and financial history.
Heres a few lenders we work with and their basic lending criteria.