Written by Lucas McCormick
When your business gets to a financial cliff, the best way to save it is getting a loan. There is so much you need to know before taking a business loans in Australia. Ultimately, you need the best loan deal. Your guess is right; a good business loan is one you can pay back comfortably, and returns your business to the path of growth.
Finding the best Business loans in Australia
First things first, what is a business loan? Well, it is a specific amount of money lent to a registered business. The keyword here is ‘registered.’ If your business is not registered, you do not qualify for a business loan.
In Australia and the world at large, there are tons of business loan types. Each has a dedication to serving a specific business. Before settling for any loan, it is essential to understand the immediate need and if that loan will solve it completely. Above all, it is paramount that you use the loan to serve the specific need. Failure to understand all this, your business is likely to default on the loan and end up in a more profound financial crisis.
Types of Business Loans
Generally, loans are more like cereals. They show up in an array of shapes, sizes, and with varying benefits. To take a loan that will work best for your business, you have to analyze each type and go for the one that not only solves the apparent problem but also stabilizes your business for the future.
Overall, there are two main types of business loans;
- Unsecured business loan
To get this loan, you do not need any collateral such as property. It is the reason why many small and medium businesses go for these loans since they do not have a bulk of assets to secure the loan. For your heads up, this type of loan comes with higher interest rates. The loan amounts also tend to be on a low scale. The amount is usually pegged on your business’ revenue, debts at the Australian Tax Office, and your credit score.
- Secured business loan
To acquire this loan, you need asset security. It is usually a loan option for the bigger businesses which have accumulated lots of assets. Since you have collateral for the loan, you can get larger amounts. Notably, these loans have low-interest rates. Your safety net is your asset, and when you default on the loan, the lender can legally claim it.
What loan should you go for?
It is your business that dictates the kind of loan you can get. Established companies will do well with secured business loans. On the flip side, small start-ups and medium-size businesses have no option but to go for unsecured loans. Whatever credit you go for, make sure it is the best choice for your business. When used carefully, loans can help your business grow in heaps, but a misstep will land you in a deeper financial ditch. Finally, never take a loan that you cannot pay back. It is a trap that you should avoid at all cost.