Business Loan Checklist: 5 Things Every Small Business Owner Should Do

Nathalie Jones

Friday, 21 September 2018

Careful preparation is the key to finding the right financial product for your small business. Whether you're looking to grow your business, improve your services, maintain existing customers or diversify your product offering, you're probably going to find that you need a cash injection somewhere along the line.

Getting the right business loan can give you the resources you need to achieve your business goals. The wrong business loan can cause extreme stress to you, as the business owner, and the business in general. The business lending landscape in Australia can be difficult to navigate, given the complexity of loan products and the variety of lenders. How do you know which lender is right for you?

Doing plenty of research and asking the right questions are absolutely essential. From the outset, you want to be sure you're working with a business loan expert who understands your business and your personal ambitions for the business. Make the most of this person's expertise by having your documentation organised and ready-to-go so that you can take advantage of opportunities as they arise and be on the front foot when you find the financial product that best suits you.

There are a few key things that every business owner should do before they apply for a business loan.

Check your credit score

Your credit score is an assessment of your credit worthiness and is often used by business lenders to assess your eligibility for finance. This can sound intimidating, but it's actually really quick, easy and free to check your score with services like GetCreditScore and CreditSavvy.

Your credit score is calculated based on your management of your finances. You can improve your credit score by paying your bills on time, understanding and abiding by your credit contracts, and ensuring your details are up-to-date. If you realise you won't be able to meet a repayment on an existing contract, be proactive. Call the lender and explain the situation, and tell them when you think you'll be able to make the repayment. Some lenders have procedures for these events, and they'll be able to explain the best way to go about resolving the issue.

Be selective

Finding finance can be exciting; after all, it represents a massive growth opportunity for your business! However, don't forget to be selective when you're deciding which lenders to submit applications to.

Making a number of credit applications within a short period of time can have a negative impact on your credit score. This is known as 'shopping around', and indicates that you're applying for a number of different products.

This may seem counterintuitive on first glance. Many of us are accustomed to doing plenty of research before making significant financial decisions. We're not saying that you should curtail your research, but rather, you should be strategic in how you approach it.

The key thing to remember is: do plenty of research, ask plenty of questions, but only submit one application at a time. It isn't always possible to submit one application in total, but protect your credit score by minimising the number of times you apply. It pays to be prepared and to only submit applications to your preferred lenders.

Know your business

Okay, of course you know your business! What we're talking about here is knowing your business in a way that helps you pre-empt the lender's questions about your business.

Lenders want to understand your business and your loan requirements. By providing clear and accurate information upfront, you'll be equipping them with the right information to make a decision.

Be prepared to answer such questions as:

  • How much do you intend to borrow?
  • What's your preferred repayment term for the loan?
  • How has your business performed over the last month, quarter, and financial year?
  • Do you have any existing loans or liabilities?

There are also a range of documents a lender will ask for in order to answer some of these questions (which we'll talk about in the next section).

Have your paperwork ready

Every lender has different requirements. Every application form will have some similar questions, and some unique questions that are specific to that particular lender. At the very least, you can expect to provide:

  • Business registration details
  • Financial statements
  • Tax statements
  • Cash Flow Statement
  • Balance Sheet

Some lenders may require you to provide an up-to-date business plan, whereas others may not. Most lenders will want to see your most recent business financials. Book an appointment with your accountant or business specialist and prepare these documents ahead of time. If you are asked for a document you don't already have, you'll be able to use the organised data to create it quickly. It can be time consuming to collate these documents if your records aren't in order.

Avoid hidden fees

There are a few different fees and charges that lenders apply, and the fee structure can vary significantly between lenders. Some of the fees and charges to watch out for include early repayment fees, origination, and maintenance fees. Ask the lender for an upfront calculation of all the fees in a dollar ($) amount so that you can reference this sheet if there's any confusion down the track.

In summary

Reviewing your business' financials and funding requirements on a regular basis is essential for making sure your business is in the best shape it can be. If you're heading into a downturn or you've got a cashflow crunch on the way, the sooner you see it coming, the more prepared you're able to be.

Check your credit score, have your paperwork ready and be selective when it comes to submitting your application. If you need assistance making sure you're applying for the right loans, Valiant's team of lending experts can help. With the help of a specialist, you'll be able to reduce your research time and get back to running your business sooner. Give us a call on 1300 780 568 and help us learn more about your business.


Nat is the Communications Manager at Valiant Finance. She has a double degree in Journalism and Law, and a background in the fintech space, hailing from Asia's largest fintech hub, Stone & Chalk.

Related Posts

Business Loan Checklist: 5 Things Every Small Business Owner Should Do

Don't get caught out. Here's your Business Loan Checklist to put you in the best position to find funding for your business.

How To Apply For An Unsecured Business Loan

Your guide to applying for an unsecured business loan and helping your business grow.

Applying For A Business Loan? Be Ready To Answer These 4 Questions

Put your best foot forward by preparing strong answers to these 4 questions.

How To Find A Great Loan For Your Small Business

A little preparation goes a long way. Get ahead on the finance front with our quick tips to help you with the 3 key areas of your loan application.

How To Get Your Business Set-up on Social Media

Want to reach your customers online? Are you ready to digitise your small business? First up: get smart about social.

How To Find The Right Loan For Your Small Business

Every business is unique. Every business loan is different. What features are most important to you? Consider these 4 things before applying for finance.

5 Hidden Business Loan Fees To Watch Out For

Don't get caught out. Here are 5 hidden fees and charges that could apply to your small business loan.

How To Compare Business Loans Across The Market

You've explored your business finance options. What do you do next? How can you be sure you're comparing loans effectively and getting the best deal?

How To Unlock The Cash In Your Unpaid Invoices

Are unpaid invoices causing cashflow problems for your small business? Invoice financing may be the answer.

What is a director’s guarantee and why is everyone asking me for one?

You're applying for loans, you start getting positive responses, and suddenly you're asked for a guarantee. Don't sign until you read this!

Could Debtor Finance Solve Your Cash Flow Concerns?

Are you invoicing your B2B customers with longer payment terms? Is it hurting your cash flow? Debtor finance could be a lifesaver between payments.

Here's What Working Capital Can Do For Your Business

With so many business finance options to choose from, how do you know whether working capital is right for your business? Start by reading this.

Time To Refinance? Here's What You Need To Know

Are you ready to refinance? Reviewing your business loan every 2 - 3 years can save your SME a lot of money. Here's what you need to know.

7 Tips For Managing Business Debt

2018 is your year. Here are 7 quick tips and tricks to get back in the driver's seat when it comes to battling business debt.

19 Business Funding Mistakes To Avoid

Improve your chances of locking down the perfect business loan. Here are 19 business funding mistakes to avoid when you're applying for commercial finance.

5 Must-Ask Questions When Applying For A Small Business Loan

Getting the best rate is all about asking the right questions. Have you done your research? Here's where to start and why.

Debt or Equity: What's best for your business?

Need to raise cash for your business? We explore the use of debt versus equity, and how to decide which one is best for your business.