How To Use the Full Potential Of Your No Doc Commercial Loans

It is so easy to get no doc commercial loans but using its full potential to improve your business can be a frustratingly difficult process.

Here are a number of steps you can take that will help you get the best out of your commercial loan.

Get your budget ready

Before you even consider applying for a no doc commercial loans make sure that you know where to spend your money. No-doc lenders don’t need your most recent financials, like tax returns and bank statements. Have your budget prepared first and at your fingertips to ensure that you will use your commercial loans according to your plan.

Know your financial position

Some borrowers consider the borrower’s property and its true market value. They often use three types of property basis for valuation: comparison (the rate of your sales versus your property), capitalization (the rental income of your property). Prepare a 3-year cash flow to help you get a future view of your business assets and your view on capital expenditure as well as other financial issues that could affect your repayment capacity.

Do you have a detailed asset and liability statement? It will help you understand your financial position and hence your suitability for the commercial loan you are trying to find. You can also get your credit report to get a better view of your loan obligations.

Prepare a well-designed business strategy

In order to use the full potential of commercial loans, you must first have prepared a well-designed business strategy. Commercial loans must not be used for personal purposes. Always use the loans according to your original intention. If the amount of loan is higher than your actual business needs, that’s the time that you can use it for personal reasons. This business strategy should be clearly structured and kept in mind when creating a budget.

Simplify your corporate structure. Make it clear, accurate and strong enough to sustain financial issues. Create up to date and accurate plans, especially when they involve major assets which produce substantial income. If your business involves rental property, create a rental schedule which details the property occupied, lease terms, payment schedules and income projections.

Assess your management skills

Remember that sometimes, a financial issue is just one of the signs of poor business management. As the business owner, you are the captain of your ship. It is important to build the right leadership. Even the best employees on hand cannot save you from losing big bucks when you make destructive business decisions. Businesses are active and flourishing if the leaders is at the helm of the game.

What is your relationship with your workers? How does it affect the job performance of your employees?

Bad management decisions can hurt the ROI and push the business into the brink of bankruptcy. Take everything into account when evaluating your management style. Try to get feedback and maybe a suggestion box. You may be surprised by the results.

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Banks Shying From Commercial Lending

Throughout Australia, commercial lending from traditional financial institutions continues to shrink, despite a strong economy. According to Industry Super Australia, commercial lending has plummeted, over the past two and a half decades. Instead of being focused on capital formation and long-term economic growth, banks seem to be shifting their attention toward home purchases and refinance deals.

Navigating the Commercial Lending Market

Not surprisingly, this has created widespread frustration throughout commercial loan applicants, and businesses are wondering what they can do to get the capital they desperately need for expansion and growth. There are three C’s that the traditional commercial lenders look at Character, Collateral, and Capacity.

Commercial Lending Checking Character

In order to navigate the shrinking commercial lending market, companies must be aware of what traditional lenders are looking for in new business loan applications.

First, banks will assess a business’s character – that is, the company’s credit history. Lenders want to be sure that a business has a long-standing history of repaying debts, profitable operation, as well as healthy past relationships with other lenders and vendors. If a business has been plagued with bad credit, a traditional business loan may not be quickly available through a bank.

Commercial Lenders Evaluate Collateral

Lenders will also review a company’s ability to provide collateral for a new business loan. Business assets are used to back a loan, either in full or in part, in order to greatly reduce the risk for the bank. Pledging assets for a business loan may be a viable option for some, but it may create a situation where borrowing more capital at a later time could be a difficult task. For those companies without collateral to offer up to a bank, traditional lending may not be an option.

Ability to Payback – Capacity

The last aspect of a business loan application that banks will review is the company’s capacity, or its ability to pay back debt obligations from company earnings. Numerous financial documents are required to prove the financial stability of any business, and this creates a complicated scenario for companies that require an influx of capital in a short period of time. If these documents are not in order at the time of application, banks are much less likely to start a business relationship with the applying company.

Non-Bank Lenders to the Rescue

As the cost of capital formation continues to increase, it is important for businesses to be aware of and understand options both with the bank and with alternative lenders. For companies with bad credit, little to no collateral, or those who find it difficult to produce the financial documentation some banks require, seeking capital from a source other than a traditional bank may be the only option.

Fortunately, low doc loans exist that simplify the application process for business owners, and some alternative lenders can work with companies with bad credit or otherwise insufficient collateral to offer. In order to make the best decision for you business, it is important to understand the three C’s in lending as well as the full array of options available to your company.

Don’t meet the three C’s? Check out Australian Lending Centre’s business loans!

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Struggling Small Business Can Survive

Struggling small businesses in Australia are continually finding themselves in a questionable position with the current financial standings for Australia. Their optimism and outlook for the current year are looking bleak due to interest rates creeping up and a strong exchange rate. Additionally, the floods and cyclones have created a point of no return for many businesses around Australia.

Struggling Small Business Statistics

In a recent report among some small and medium enterprises, researchers found that optimism had dropped 41% to just 38% from the previous year. This decline in confidence has caused many small businesses to act cautiously and begin reevaluating the year ahead.

Increase in the Exchange Rate Can Help Struggling Small Business

As there has been an increase in the exchange rate for the Australian Dollar, a majority of the exporters are finding large losses in their financial statements, due to international importers finding their goods elsewhere or reducing the quantity they require from Australia to get more bang for their buck. With the forecast on the American Dollar staying low – there seems to be no hope in sight for Australian exporters. In response to these findings, Australian businesses are exploring new markets to enter or new products to provide to the Australian market.

A Struggling Small Business Might Look Into Short Term Loans

A great option to consider for recovering from the economic and environmental issues is a short term business loan. At Australian Lending Centre, we provide short term business loans which can provide the necessary funding to get small businesses through this rough period. Typically, our loan terms cover a period of as little as a couple of weeks, up to a year and we also have options available where you’re not required to make any repayments until the end of the loan term.

Short term business loans are ideal for:

  • Improving cash flow (working capital)
  • Purchasing business supplies, vehicles or office equipment
  • Paying wages
  • Paying off business debts
  • Starting up a neaw business or expanding an existing area of your current business
  • Paying your tax debts – e.g. business GST, staff PAYG obligations or superannuation payments
  • Taking business trips

A short term business loan can support struggling small business providing many benefits apart from the repayment flexibility such as a quick approval and funding turn around. If your business is finding itself in a tight spot, contact Australian Lending Centre and speak with a business loan consultant today on 1300 138 188. Alternatively, fill out the enquiry form to the right and a short term business loan consultant will contact you shortly.