Guides

New Funding Guide For SME’s

Good news for small business owners who are struggling to secure finance – a new funding guide for SMEs and their advisers in Australia has launched. The guide is part of a partnership between the small business ombudsman and Scottish Pacific – who is on ebroker’s lending panel.

“Business owners operate on long hours and carry a lot of responsibility, working so hard to grow their business,” Scottish Pacific CEO Peter Langham says. “We feel very strongly that their key to success is understanding where to get assistance, including ways they can finance their enterprises, so they can find funding that fits their needs.”

In her foreword to the guide, The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell said, “The biggest barrier to small business growth is access to finance. Small businesses are particularly feeling the brunt of the credit crunch, as lenders tighten their requirements in the wake of the Banking Royal Commission.”

Carnell continues to state, “about a third of small business owners have had their applications for bank loans rejected.”

We know that small business owners have found themselves hitting a brick wall when it comes to finding finance solutions. Traditional, old-school banks require homeownership as a prerequisite to lending.

Carnell says many SME’s “have not bothered to apply as they have been told that unless they have significant equity in real estate their application will fail.”

ebroker COO Heath Fitzpatrick says, “What a fantastic tool for small business owners and advisors. At ebroker we often see SME’s that are so fantastic at doing their core business. However, they don’t understand finance and they don’t have the time to research their options. They aren’t taking the chance to get business fit to ensure they find appropriate finance for their business. This guide will no doubt be a welcome tool for all.”

The Business Funding Guide

This new guide, created in association with Scottish Pacific, outlines main funding options and includes a “Finance Fit Checklist” and uses a variety of business scenarios to explain different types of funding.

Key steps are outlined for financial advisers to help their clients prep for finance.

Bank’s traditionally use five Cs of credit to work out if the potential borrower should be approved for a loan. These are:

  • Capital – banks look at borrower’s assets and liabilities to assess net worth.
  • Capacity – will the potential borrower be able to repay over an agreed period of time?
  • Collateral – type of financial security such as property or land.
  • Character – what is the business owner’s reputation and credit history like?
  • Conditions – how will the borrower use the money, what is the state of the economy like?

New financial lenders use algorithms and tech to assess each application instead. So, it’s crucial that SME’s know to separate personal and business accounts. It’s also vital that they tidy up the books, check at least six months of bank statements, check their tax portal (a lender may check if the business is up-to-date with its tax obligations) and list their financial commitments.

The guide also explains how to write or review a business plan and the advantages and things to be aware of regarding different types of finance.

“Non-bank lenders tend to be more specialized, more flexible and have a different risk appetite,” the guide states.

Need help with your business finance? ebroker is here to help, give us a call on 1300 44 14 14.

 

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