5 tactics for getting fast approval on a trades-based business loan
As a tradesperson, opportunities often arise out of nowhere and some of them require you to stretch your business in order to meet them. It’s in times like these that you need a loan in a hurry. But how?
Most tradies get to the point at some stage where they can’t expand their small business any further without first getting access to a loan.
A loan can help you employ more staff over a busy period, purchase an additional vehicle or tools, or even help you to exhibit at a trade show or organise other key marketing tactics.
If you need a quick injection of funds, it’s important to prepare well so you give yourself the best chance of having an application approved.
Here are some strategies to follow today, to help you secure those funds tomorrow.
Have your financial paperwork in order
All lenders typically ask to see financial paperwork before even considering anyone for a loan.
To cut back the time it takes to be approved, then, have all your paperwork in order up front.
You’ll need the last five years’ worth, generally, of tax returns for your business, and often for your personal income as well.
In addition, you’ll need to provide documentation of your ABN’s or company’s trading history over recent years, plus details such as a cash flow statement, balance sheet, and profit and loss statement.
Create a business plan
It’s also wise to have completed a business plan before you approach lenders for funds.
This plan doesn’t have to be thirty pages long; it can be just two to three pages as long as it details things such as:
- The kinds of services you provide
- Who your customers are
- What your point of difference is
- Where and how you market your services
- What prices you charge
- Future sales and profit projections
If you’ve never created a business plan before, ask lenders for a template document you can fill in (most have a simple, straightforward version you can use).
Research the various lending options
To get a loan approved quickly, you also need to be sure you target the right lenders.
Different institutions have very different lending criteria and focuses, after all, so give yourself the best chance of being approved by approaching companies which are most likely to say yes, based on your current situation and needs.
These days there are lots of lending options besides traditional banks, too.
For example, check out online providers or industry-specific lenders and other boutique options.
MYOB loans powered by OnDeck* are another alternative to traditional bank loans.
Like all loan types, there are some specific requirements you need to fulfil in order to be approved for these, so read the fine print to see if this will be the right option for you.
Don’t ask for more money than you really need
Another tip is to only ask a lender for the amount of money you really need to move your business forward.
It’s tempting to put in an application for a bigger supply of funds, to cover other potential costs, but doing so may make it harder to get approved. It will also probably take longer.
Lenders always evaluate your situation and the likelihood you’ll be able to pay funds back on time and in full, so the smaller the amount you ask for, the more easily they’ll think you can pay it back.
Know what you will use the cash injection for
Similarly, be very clear on exactly what you will use the cash injection for. Make this easy for lenders to understand.
Remember, though: they don’t want to give you a loan for funds which will be used to pay off debts elsewhere, or to pay staff wages or otherwise prop up an ailing business.
Show them that the loan you receive will help you to grow your business in some strategic, well-thought-out way.
Considering a loan? MYOB Loans* are short-term loans of just six to 24 months, borrowing between $10,000 and $250,000.
*Loans are issued by On Deck Capital Australia Pty Ltd ABN 28 603 753 215. Loans subject to lender approval.
MYOB holds a 30 percent stake in OnDeck Australia and has a referral agreement under which it earns a commission on loans referred to OnDeck Australia.