Finding Finance
It's not as easy as you might expect
EVERY week we hear of another story about how someone has been unable to secure finance. Whether it is purchasing a home, looking at a new building premises, purchasing a piece of equipment or just having working capital, finding finance is just not as easy as you might expect.
The problem is, that by the time you speak to someone about securing finance, it is normally once you have your heart set on whatever it is you would like to purchase. This means that when you get knocked back, it hurts a whole lot more!
Knowing what to expect from a finance application is half the battle. Being prepared with your information, such as financial documents and tax returns, having a clear ATO Portal. Being aware of your minimum deposit and trading history requirements can also assist you in your decision making. Finance cannot be an afterthought ‐ you need to be finance ready BEFORE you start making purchase decisions (aka shopping).
There are a number of avenues you can pursue to secure finance. Each has its good and bad points and normally it comes down to what is the easiest, which isn't always the best choice!
Most people go to their bank. In theory you would think this would just make sense, after all they "know" you. You have probably been banking with them for years. Well, unless you are relationship managed ‐ your banking is predominantly handled by a computer system, requiring very little local input. Gone are the days when you would have a meeting with the Bank Manager to discuss your plans, review your financial position and leave with your mortgage that same meeting. The "Big Banks" have a huge market share and access to many products, but don't believe that because you have banked somewhere for 10 years, that it means they will give you finance. Shopping between the big banks is a great option.
And don't just stick to the big banks either ‐ there are a huge number of Credit Unions that offer fantastic products and friendly staff. They also have access to many specialised products that are unique to their business.
Another new and exciting option is known as Fintech, short for Finance Technology. Australia is at the cutting edge of disrupting the finance market with common sense, easy to use online products. What these companies have created are Enterprise Level products that are accessible for all business sizes. Short-Term Working Capital in the form of a Revolving Credit Loan, Invoice Factoring and even Invoice Financing (borrowing against the value of your Accounts Receivable) are all available at the click of a button. You can even have a direct link into your accounting package (ie QuickBooks Online/Xero) all from the comfort from your home or office!
It is an exciting time in the business arena. Technology is rapidly changing how we run our businesses and challenging the old way of doing things. Finding finance isn't easy, but you can make it easier on yourself by knowing what is available to you.
(Originally published DUO Magazine February 2017)