Key take-outs: 

  • Short-term funding is a key part of businesses’ cash management strategies 
  • Getting a business loan approved by a bank or traditional lender can be tough
  • By understanding the things lenders look at when assessing your application, you can maximise the chances of your loan being approved quickly
  • With Bizcap, money can be in your account within three hours of your application

Keeping a small business running without consistent cash flow or working capital is a challenge, especially with the impact that COVID-19 has had on Australian small businesses, and accessing short-term funding is a key part in a number of businesses’ cash management strategies.

However, many banks and traditional lenders have eligibility requirements that make it almost impossible to secure a business loan with ease and speed, so we’ve compiled a list of eight things that lenders look at in your application, as well as the areas you can improve in to increase your chances of finance.

1. Your Credit Score 

Banks and traditional financial institutions heavily rely on the company and individual credit score reports to determine the approval or rejection of your business loan application. Generally speaking, a lot of other non-bank lenders will only consider your application if you have a credit score of 500 or more. For many small business owners, this is too high an expectation, especially during the current pandemic and the ongoing changes to businesses. 

The double-edged sword is the more credit enquiries you have, the lower your credit score falls. The majority of private lenders and banks make a credit score enquiry each time you submit an application, meaning shopping around for a business loan could be doing your credit score a fair bit of damage. It’s worth noting Bizcap can assess your file without running a credit enquiry and have no minimum credit score requirements. You can read more about our bad credit business Loans here and check your credit score via Equifax.

2. Relevant Documents 

When applying for a business loan, you need to ensure you’re providing the requested paperwork and that it is accurate. For instance, for our team to assess your file for an offer, we need to see your bank statements. 

Regardless of how impressive your credit score may be, how long you’ve been in business, and how strong your revenue is, if you submit documents that are inaccurate or incomplete, it’s impossible for lenders to confirm your cash flow position and therefore they cannot make you an offer.

3. Your Cash Flow

Bizcap is a cash flow lender, meaning that we approve and reject loans based on consistent cash flow. Lenders want to see multiple substantial deposits, originating from multiple sources, each month. This demonstrates you have a variety of customer channels and your reliance on them is well spread. Businesses that cannot show proof of steady cash flow often have their applications rejected due to being too heavily reliant on a small amount of payers. To be eligible for a Bizcap Small Business Loan you will need to have at least an average of $12,000 of monthly revenue.

4. Any Existing Loans and Debt

Banks are usually reluctant to approve businesses that have existing loans or debts. The vast majority of the time, many lenders will reject loan applications for businesses that have existing loans of a similar product style irrespective of if the use of the funds is wildly different. Bizcap is always open to funding customers who have existing loans, even if they are the same product type and for the same use. We also don’t expect you to pay out an existing loan prior to taking on a loan with us.

5. The Collateral You Can Offer

Businesses that already have significant debts can struggle to access additional borrowings as there may not be enough cash flow to cover the increased repayments. Banks also usually require small-medium businesses to pledge real estate as security against their loans and may not be willing to take the risk without it. Invoice finance can be a useful tool in this situation as the invoices themselves are used as security and the finance is repaid when the customer pays their invoices.

6. Your Trading History

Many lenders give preferential treatment to small-medium businesses with longer trading histories over those who have only been trading for a short period of time. The majority of private lenders are open to lending to customers who have been trading for at least six months.

7. Any Wider Economic Concerns

The current economic climate is also a concern for banks, traditional lenders and many private lenders. They will avoid lending money to businesses when the current economy is not favourable for them. Bizcap has maintained funding throughout the pandemic with minimal adjustments to our lending criteria.

8. The Industry You’re In – Is It Classified As ‘Risky’?

Some industries are simply considered ‘risky’ by lenders. For example, many private lenders will consider construction, panel beaters, towing services, agriculture and marketing industries totally off-limits. If you have had feedback from a lender that this is the reason your application was rejected, speak to lenders such as Bizcap, who are open to industries that are often restricted elsewhere.

How Can Bizcap Help?

Bizcap is Australia’s most open-minded lender and has helped thousands of happy customers get access to the funds they’re after. We fund loans of $5,000 to $4 million to SMEs Australiawide in as little as three hours. 

With Bizcap, securing access to the funds you need is simple and applying is easy. It takes less than 5 minutes and doesn't require a credit check for an initial assessment. 

Submit an enquiry form now and one of our Loan Specialists will give you a call, or email if you prefer, to take you through the application.