Published on 16/07/2020 by Any Business.Com.Au

Business Funding in a COVID Credit Environment

Even with the novel coronavirus pandemic adversely affecting many aspects of the economy, business funding is still available in today's credit environment.

However, a purchaser must be very well prepared and able to convince the lender that they are a good risk and will be able to meet repayments solely from the business they are purchasing, or together with other sources of revenue.

Even this is a simplistic look of what is needed.

In our experience, we have found that to get the loan approved in a timely manner, the applicant or the broker representing the applicant must prepare a strong business case. This should provide all the relevant information, including the Purchaser's management and industry experience.

Another key requirement is to be able to demonstrate the ability to repay the debt that is being sought, often with the provision of a three way cash flow projection, with a keen understanding of the numbers you provided and how you derived them.

Lenders also require the borrower to provide equity or adequate cash contribution to the project, along with an understanding of where the cash contributed has come from.

It is also important to work out where to take your application on the first instance as going to multiple lenders can negatively impact your credit. Certain Frontline Bankers will have a personal preference for the type of business you are trying to fund, and one of the great benefits of having a Commercial Finance Broker prepare an application and submitting it to the most appropriate lender is that they will be able to help you minimise your credit footprint.

When a purchaser of a business is seeking a portion of funding on an unsecured basis, then it is imperative that a well-prepared finance application and risk mitigation is clearly detailed, supported, and lodged with Bankers that are comfortable with the type of business being purchased.

At an early stage, it is best to decide whether you want to handle the process of securing a loan yourself, or to engage a responsible Commercial Finance Broker who should not only have the experience in securing commercial loan facilities in a timely manner, but also have good working relationships with Lenders and are able to establish an early indication of whether the Lender will support the application. This knowledge can help prevent a lot of unnecessary frustration.

Whether you are looking at financing a large business transaction or a smaller acquisition, you will find working with a competent commercial broker invaluable.

* Article Supplied by Winquote SME Finance

About Winquote

Winquote SME Finance helps business buyers secure financing. We manage the entire funding process, making sure that you put your best foot forward forward with loan applications.

A proven team of trusted finance relationship managers, you can rely on our 20+ years of specialised experience in finance and proven track record of securing loans.

Need help with your loan application? Call 1300 971 308 or email info@winquote.com.au with your enquiry.

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AnyBusiness.com.au

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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