Thinking of a new business? Then you must be looking for short-term options to manage cash flow. Or rummaging through Google to land at a long-term alternative to grow your enterprise.
If you’ve reached here, it proves your research is on. And luckily, this is a great space to start. I will cover all viable options for commercial lending. The primary alternative is, of course, a business loan -- a credit amount offered to exclusively fund businesses.
But first, let’s get a glimpse of the recent lending finance scenario in Australia. Here are key insights revealed by the latest trend analysis from Australian Bureau of Statistics (ABS):
As you can see, the value of total commercial finance commitments fell by 0.8% from April 2017 to May 2017.
Now when you seek this financial option, you will want answers -- prompt, reliable, and versatile enough to meet all your enterprise requirements. Before even going there, you need to have a few heads-up about commercial financing.
And why is that so?
You would know that there are various structures of business entities -- such as partnerships, trusts, and companies. But credit approval for finance applications for each of these differs from that of a regular consumer loan application.
Now, how are these structures different from each other? Let’s have a closer look.
Various Types Of Structures & How It Affects Your Business Loan Approval Criteria
You need to know and analyse your business structure. It is a separate legal entity, except for those classified as sole-traders. With any business loan application, the business is responsible for making loan repayments. Or else accumulated debts will eventually bring you to your knees.
Your business loan application has to be guaranteed by directors, trustees, or partners. This means that if you business entity fails or ceases trading, then the guarantor would repay the loan. Lenders do it to cover the risk on money lent.
According to research, here is a percentage break up of the major business types in Australia:
