Business Lending Tips

These business lending tips are a great tool to overcome what can be an intimidating procedure for many Australian small businesses.  Cash flow is one of businesses biggest challenges in our current economic climate.  The Banking Royal Commission followed by COVID-19 has created strict lending criteria.  Lenders have had stringent requirements enforced by the regulator APRA to ensure Australia maintains its Triple AAA credit ratings.

Most businesses have traditionally dealt with the major banks.  In recent times there has been an increasing number of reputable competitive non-bank providers.  These institutions have lower overheads including rent, fewer staff along with modern technology and application procedures that are faster.  Thus, they can provide competitive affordable lending.

Business Lending Tips – Ensure the lending will improve your business financial performance!

Business lending should always have the outcome of improving the overall financial performance of that business.  For example, equipment lending to purchase a new excavator that has improved technology and capabilities. A new machine performing with higher precision and workload will provide higher profits & returns along with lower maintenance expense. It will also provide opportunity for a higher volume of work.   Or perhaps cashflow funding is required for a business that is receiving late payment invoices.  This can affect the business ability to conduct or complete other projects.  The cost of a short-term loan will give the business the ability to continue operations and grow faster.

Providing lenders with the right information is imperative for an approved loan. Lending institutions refer to the 3 C’s when assessing loan applications.  These are based on a client’s character, capacity, and collateral.  The 3 C’s are the fundamental rule of approving credit within Australia.

Business Lending Tips – the 3 C’s Character, Capacity and Collateral Character


Character is known in credit assessment as the customers willingness to repay the debt.

  • Industry Experience & Skills: Lenders want borrowers that have integrity with a willingness to repay the debt.  The borrower should demonstrate their industry experience and skills.  They also want to know that you understand the financial performance and direction of your business. The length of time the business has been operating can be looked upon favourably in their eyes of ‘character’.
  • Purpose of Loan: Have clear goals and visions of the purpose for the loan.  The lender will want a clear understanding of the purpose for lending.


Capacity is the business ability to repay the proposed debt. Tips on how you can display your capacity to repay your future business loan.  Current up to date accounting & financial documentation will clearly define in black and white your ability to be able to repay proposed debt.  This could include:

  • Financial Statements (accountant prepared)
  • Tax Returns
  • Quarterly Business Activity Statement
  • 3 months bank statements (displaying income)
  • 12month Cashflow forecast (for start-ups without financial performance history)


Collateral is the bank’s security position.  The lender will want security if repayments cannot be met.  The asset is often accepted as security, but some lenders require property. Display a clear understanding of the value of the asset the lending is for.  If you were to run into trouble, like going bankrupt and unable to repay the debt, could the lender retrieve the debt by selling the asset? 

A statement of assets and liabilities gives an overview of the business and its key owners financial position.   Submitting an accurate up to date asset & liability statement will be favourable for a loan approval.  

Also favourable will be knowing your exit strategy if the business is unable to make repayments.

For example

Primary exist: Cashflow from business

Secondary exist: Sale of asset securing loan

Third exist: Sale of ASX list shares or other assets owned by borrower

Approvals can be as quick as 24 hours and up to 1 month for more complex applications.    

Credit rating:  A documented history can be revealed from a credit rating. Good credit ratings will be favourable but impaired ratings can affect the success of an application.  A finance broker can help clarify options available if a credit rating is impaired. A good broker can clarify your credit score if required.

These business lending tips are a great tool to overcome what can be a complex and confusing process.  Follow these tips to provide a favourable consideration for your application.

Our business lending tips aims to assist when applying for business lending. Providing lenders with the right information can mean the difference between success and failure. The lending process is often overwhelming and intimidating for many Australian businesses. For further information or guidance surrounding the business lending application process call Will Finance today!

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