When you start a business, it is wise to take into consideration working capital loans. Why? Because most of the lending institutions out there are starting to have more and more restrictions when it comes to lending money. In this blog we discuss the working capital loans requirements.
In other words, if you want to get some working capital loans, you will need to be always updated with the list of requirements and try your best to maintain a healthy financial situation. So, what are the requirements for this type of loan for the self-employed? Let’s find out.
Working Capital Loans – What Are They?
If you own a business, be it big or small, you probably found out that when it comes to investments, you cannot deny that working capital loans are vital. The loans can be either small, for light investments or significant, which are usually suitable for large enterprises.
Why Should I Use Working Capital Loans?
- These are excellent for some investments. For example: if you have to pay your team but the profit for the last couple of months wasn’t too big, then you can ask for this kind of loan. That way, you will keep your team motivated, and you can get your company back on its feet.
- You can use this loan to buy office equipment and other appliances. Office equipment can cost a lot, especially the high-quality devices. If your company needs to do an upgrade, but you don’t have enough funds, you can ask your lender for some financial help.
- What if you run a store and you are running low of a certain product that is extremely popular? Well, you can use working capital loans to buy a high quantity of that product and make the profit you always wanted.
- Need money to renovate or repair something? Well, you can always request working capital loans. You can renovate your workplace, extend it or change the way it looks.
- Need money to finance an advertisement for your company? Then look no further. This type of loan can be invested in an ad. It pays itself and then some.
- Having trouble with business debts? Then you can solve this financial problem by requesting working capital loans. You will pay your debts and get back to business in no time.
Am I Eligible for Working Capital Loans?
You have to do some research on this. It really depends on the lender, on the type of loan you want, on your company’s financial history as well as on your financial status plus credit history.
There are many factors that can make working capital loans too hard to get. Some even come with too many restrictions and are not available for everyone to get. However, if you want to keep track of what you need, the basic stuff, here are a couple of things you can start putting away.
The first thing a lender will need is your ABN details. ABN means Australian Business Number, and it presents information regarding your business.
The second thing your lender will need is your personal identification. It doesn’t matter if you are the owner of the smallest or the largest company in Australia, you still need to identify yourself.
The next thing a lending service will require from you is your last six months’ business bank statements. This is where you either make it or break it. If your business did well in the last six months, then your request for working capital loans will be accepted.
If not, then you will either get a lower loan with a certain number of restrictions or get your request refused. In either case, try to remain calm, be respectful and talk with your lender. You might solve this situation in a friendly way that can benefit both parties.
And last, but not least, you will have to present your mortgage or rental statements, that is if you are running a home-based business.
What We Recommend
We recommend that you get your credit file to a top-notch level. Try your best to rectify any errors, reduce the amount of negative credit score and if asked about your defaults or late payments, just tell the truth. Remember that the lender is also a human, just like you, and communication can solve most of your problems.
Also, try your best to have your documents organized and always be on time. A lender will also look at the person representing the company. So, if he/she sees that the client has a questionable financial situation and he/she isn’t organized, the lender will think twice about accepting the request.
These are the basic requirements for working capital loans.
