Get The Business Loan You Need To Grow Your Business

With The Top Business Loan Broker In Melbourne

The role of a commercial finance/ business loan advisor is critical to the success of any business- more importantly, to any small- medium-sized businesses where they may have a limited budget to employ a full-time CFO (Chief Financial Officer).

A competent business finance advisor should be one of the most trusted advisors of the business in addition to their every day-to-day accountant. Aside from assisting the business with connecting to potential lenders and assisting them through the loan application process, they should also stay in touch with the business to ensure they meet their compliance obligations with the bank. With any business lending these days, especially customers with over $3m in exposure- over the Carnell threshold- the bank must complete annual reviews with the customer.

This means that the customer may have to meet certain covenants imposed by the bank when it originated the loan. Often, these are financial ratio matrices such as Interest/Cover ratio having to exceed X times or equity ratio on the balance sheet having to remain at a certain level. Suppose the business did not meet the covenants imposed by the bank. In that case, there may be significant consequences to which the business loan broker has to assist the customer in navigating through this period.

Unveiling The Mastery:

Key Responsibilities Of Business Loan Advisors

Unlock Loan Purpose: Empower Your Financial Journey

This is the most critical element in any business loan application, especially when the loan is not secured against any equipment finance, invoice finance or for the purchase of any commercial properties. Banks like yourself- if you were a lender of your funds to a 3rd party, would like to know the purpose of the funds you are lending will be used for.

Quite often, the general response of most business owners would be “working Capital, which the business finance loan broker relays to the bank. Most financiers would then ask the broker to elaborate because this is too generic. Working Capital is mostly broken down into debtors/ creditors and stock.

A more acceptable explanation could be” creditors had shortened the terms for which payments need to be made, and certain debtors may have experienced a delay in making payments which have eventually lengthened the cash conversion cycle. This means that the funds are required to bridge the gap until the business’s debtor can repay. Not being specific early in the piece could delay assessment times or the financier digging more into the crust of the finance application.

Understand The Financial Situation Of The Customer And The 1st Way And Secondary Way Out.

The business finance loan broker should ascertain whether the customer has the financial means to make the necessary monthly repayments to pay out the loan. This would involve understanding the nature and operation of the business, reviewing the cash flow that the business is currently generating, and historical financials (profit & loss and the balance sheet). The first way and secondary out is a generic term in the world of business lending (also known as the avenue of recourse)- where the financier needs comfort that for 1st way- that the businesses have sufficient cash flow generated to be able to make the necessary monthly repayments for the debt.

The 2nd way out means the amount of wealth that the applicant can liquidate into cash or ‘selling assets” if the company cannot generate cash flow to repay the debt. The financier always focuses on the first way out to ascertain whether the applicant is creditworthy or not.

Customized Financing Solutions: Find Your Perfect Match With The Right Financier For Your Unique Circumstances

Operating in a competitive landscape, banks compete for the same businesses, which means that the brokers should be aware of the appetite and lending criteria of all the banks/ lenders. There may be certain industries/ securities (i.e., warehouse, office space, retail, commercial property) that the bank may be more favorable or unfavorable towards.

In addition, depending on the borrower’s circumstances, the banks have started to play in the low doc space (or what they called a simplified policy). This means that if the applicant’s financials are not current, they may still be eligible to obtain a loan.

Loan Application Mastery: Prepare For Success In Easy Steps

Assist your clients in preparing a comprehensive loan application – a competent business finance advisor would do more than gather all the required documents, such as financial statements, tax returns and business plans. The person would put together a credit submission directly to the bank or financial institution.

This would include a detailed background of the customer, the purpose of the funds, detailing the security structure, completing the financial analysis and putting up a recommendation for approval with the bank.

This means that it would save the bank/ financial institution a lot of time not having to write up the application from the start. This translates to a much quicker time to get unconditional approval and achieve a settlement.