For the majority of people purchasing a business, one of the biggest considerations and hurdles is how to fund the purchase. The default setting historically has been to call your local bank manager and gain a loan approval and this has served us very well in past decades. Like everything in business, the traditional funding model and banking system is being disrupted and as a customer many choices are now available when searching for the best interest rates and credit terms.
Given all the new options available when it comes to funding your business, specialist advice is needed to help the business owner navigate through the new funding processes to ensure you get an optimal result. The below commentary from our specialist finance partner, The Loanary, provides five key tips you should think about when investigating how to achieve a loan approval for a business purchase.
Five Key Tips from The Loanary
- Engage with a professional finance adviser who has business lending experience (NOT home loan advisors). This is a free service, as firms like The Loanary are paid directly by the bank.
- A business lending adviser will make sure you are in the right part of the bank and will establish a banking relationship for you with the correct banking specialist; this will increase the probability of getting a loan approval.
- Always provide the bank with a current CV for the incoming purchaser; the first question any bank asks is, does the new purchaser have the skills & experience to run the business?
- When applying for a new loan you should always engage with at least two banks to ensure you achieve the best interest rates and loan structures; it is very common to get two different results from different banks for the same loan application.
- Any business lending request will need a business plan to support the request including future cash flow forecasts (usually a 3-way model is required). At The Loanary, we can advise on this part of the process.
