As loans become hard to get, some rules to follow

ALTHOUGH there have not yet been any legislation changes post the Royal Commission, there has been a clear shift in the increased scrutiny of business bank loan applications.

Commentary following the Royal Commission suggests they are likely to recommend a much higher level of due diligence for bank lending. This will likely result in fewer loan applications being approved and possibly additional time obtaining the funding.

So if your business needs to apply for funding: GET your house in order. Ensure all your statutory obligations (ATO, SRO etc) are paid up in full before loan applications are made. EQUITY alone is not enough. Banks are looking at the ability for businesses to repay back the debt; relying solely on a strong equity position to back your funding application will likely not be acceptable. BE PREPARED. Ensure you have your budgets, cashflow statements, break-even calculations completed before any application. BE PATIENT. The likely result of the Royal Commission will be increased scrutiny in applications, so make sure you allow yourself sufficient time to obtain the funding.

If you are struggling to obtain bank finance there are options you have including: ENGAGE a business loan broker or business adviser who has experience in the area. REVIEW your current application to date. Does it tick all the boxes from the bank’s point of view? If it doesn’t look at what can be done to improve this.

Overall when we are working with clients we are ensuring sufficient time is allowed from start of the loan process to settlement, even for good banking clients. Matthew Le Maitre is a business adviser at Advisory Partners.