Most small businesses use finance when they’re starting out. Access to finance can also help you manage your cash flow, cover unexpected expenses and purchase the equipment you need to grow.
Different loans are designed for different circumstances so it’s important to find one that meets your needs in a cost-effective way.
To help you get started, we’ve taken a look at the pros and cons of some of the most popular options.
Both an overdraft and a line of credit can provide access to revolving credit, which means the money you repay is available for you to use again as you need it. An overdraft allows you to overdraw on your business bank account up to an amount approved by your financial institution. A line of credit may take the form of a business credit card or a debit card linked a separate account. Both can be useful for smoothing your cash flow or provide a useful source of short-term capital.
A term loan has an established repayment schedule over a number of years – anywhere from one to 25 – and can have a fixed or variable interest rate. This type of loan can be used for plant & equipment, core inventory acquisitions or another business purpose as well as business start-up costs.
A commercial property loan will enable you to purchase rather than lease your business premises. It’s similar to a home loan but tends to be for a shorter period and the lender will take things like the nature and location of your business into consideration.
Hire purchase can be a good choice if you can’t afford to buy an asset outright but eventually want to own it. A lender purchases the equipment on your behalf, and you hire it from them for an agreed period of time. You take ownership when the purchase price and interest have been paid in full.
Each type of loan includes products with different interest rates, fees, features and limitations. A professional mortgage broker understands all of the available options and can help you find the best solution for your business.
For more information or assistance with your finances please call us on 08 8451 1500
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