Business Loans

Since the global economic crash in 2008, lending standards have come under scrutiny as our government sought to make lenders more responsible. Until late 2013 this was making it hard for businesses (particularly small and medium sized businesses) to find a business loan. However things are much easier now and there are lenders out there that will lend money to eligible businesses.

Who will lend businesses money?

When you start your research you’ll find that there are no shortage of lending institutions out there. We strongly recommend that you do your homework and understand what good practice looks like in the world of business loans. Once you know what criteria you should be assessing a potential lender against, you’ll be on your way to finding a reputable lender whose credit terms are fairly structured and comply with government guidelines.

How much can a business borrow?

Business financing can be almost limitless for the right business with the right plan and right financial history. If you are just starting out or an established small business you’ll likely be looking for a more modest loan. The same principles will apply though and depending on how much you are asking to borrow and how established your business is, you will be asked for a fairly significant number of documents relating to your business.

What kind of documents could I be asked to produce?

If you have been in business a few years you will be asked for the following kinds of business documents:

• A copy of your lease agreement
• Complete business tax returns (for the last 3 years if available)
• Personal tax returns (for the last 2 years)
• Your business license
• Your partnership agreement (if applicable)
• Articles of incorporation
• Your operating agreement
• Interim balance sheet with a profit and loss statement
• Year end balance sheet with a profit and loss statement
• A business plan including projections for the year ahead & all expected operating expenses

What kind of loan can I get?

That will very much depend on your circumstances personally and business wise. A bank may ask you to secure your loan with collateral and that could be anything from cash to your company’s physical assets. Since the crash of 2008 there has been a significant increase in the number of business loans that are secured by collateral.

I am a small business owner are there any organisations that can help me specifically?

The government agency the Small Business Administration protects and oversees the interests of small businesses. Though it does not lend money to small businesses, it does provide some security to lenders that do. You will find lenders out there using the SBA in their marketing messaging - think of it as protection for you and protection for the lender. Any lender working with the SBA will lend to you only if you are creditworthy. The terms of the loans will be fair and the loan will be structured to meet government guidelines. If you are a small business looking to borrow up to $1 million, we definitely recommend looking for loans that are extended as part of the SBA program.