Getting finance for a business is rarely as simple as finding the lowest advertised interest rate.
Different lenders have different requirements around turnover, time in business, security, credit history and how the funds will be used. A business loan broker helps businesses work through these differences and identify finance options suited to their circumstances.
For Melbourne business owners, this can be particularly useful when funding is needed for growth, working capital, equipment, stock or refinancing existing debt.
Whether you run a small business or an established company, understanding what a broker actually does can help you decide whether using one makes sense for your next finance application.
What Is a Business Loan Broker?
A business loan broker helps connect businesses with lenders and assists with finding, structuring and applying for commercial finance.
Rather than approaching a single bank, a broker can assess your requirements and compare options available through their lender panel.
The Australian Government’s business loan guide recommends comparing multiple lenders and notes that a business loan broker can help businesses understand their needs, consider loan options and handle much of the application paperwork.
This can be useful if your business does not fit neatly within the lending criteria of one particular bank.
What Does a Business Loan Broker Actually Help With?
A broker’s role normally starts before an application is submitted.
A business finance broker may help you:
- Determine how much finance your business needs
- Identify an appropriate type of finance
- Compare potential lenders
- Understand different loan structures, repayments and fees
- Prepare your application
- Gather the required supporting documents
- Communicate with the lender during assessment
- Coordinate the application through to settlement
The objective is not simply to find a loan. It is to find a finance structure that suits what the business is trying to achieve.
Why Use a Business Loan Broker Instead of Going Directly to a Bank?
The biggest difference is choice.
If you approach one bank directly, you are generally limited to that lender’s products and lending policies. A business finance broker can instead consider different lenders and finance structures.
Different lenders can also assess the same business differently. One may be comfortable lending to a particular industry, while another may have more restrictive requirements around trading history, security or financial performance.
The Australian Government recommends comparing both bank and non-bank lenders and considering the overall cost and conditions of finance rather than looking only at an advertised interest rate.
For businesses wanting to explore their options, LoanBrix provides a range of business loan solutions in Melbourne.
Going Direct to a Bank
- Access to that bank’s products
- Must meet that lender’s credit policy
- You manage the application directly
- Can suit straightforward applications where you already know which lender you want
Using a Business Loan Broker
- Access to options from a broader lender panel
- Different finance structures can be considered
- Broker assists with preparing the application
- Can help identify lenders suited to more complex scenarios
What Types of Business Finance Can a Broker Arrange?
There is no single type of finance that suits every business.
A business finance broker may consider several different products depending on why you need the money, how your business operates and how you want to repay the finance.
Business Loans
A standard business loan may be used for purposes such as expansion, renovations, stock purchases, marketing, working capital or other business expenses.
LoanBrix has more information about business loans for Melbourne businesses, including different lending structures that may be available.
Business Overdrafts
A revolving credit facility can provide additional flexibility when a business experiences short-term cash flow gaps or unexpected expenses.
Rather than receiving one lump sum, businesses can generally draw on the facility up to an approved limit when required.
Learn more about how a business overdraft can support cash flow.
Invoice Finance
Businesses that regularly wait for customers to pay invoices may be able to access funding against eligible outstanding invoices.
This can provide working capital without having to wait for the normal customer payment cycle.
Read more about invoice finance and debtor finance.
Equipment and Vehicle Finance
If your business is borrowing specifically to purchase machinery, vehicles or other productive assets, dedicated asset finance may be more appropriate than a general-purpose loan.
LoanBrix offers commercial equipment finance for a range of business assets, including vehicles and machinery.
Can a Small Business Use a Business Loan Broker?
Yes. A small business loan broker can be particularly useful because smaller businesses do not always have simple or predictable financial structures.
A small business might have:
- Seasonal revenue
- Irregular cash flow
- A shorter trading history
- Rapidly increasing turnover
- Significant equipment expenses
- Existing business debts
- Income being reinvested into the business
Different lenders can assess these factors differently.
Using a loan broker for a small business gives the owner an opportunity to investigate potential lenders and finance structures before deciding where to apply.
What Will a Business Finance Broker Look At?
Before considering potential lenders, a broker will usually want to understand the overall position of the business.
Trading History
How long your business has been operating can influence which lenders and products are available.
Revenue and Cash Flow
Lenders will generally want to understand whether the business generates sufficient income to support the proposed repayments.
Existing Debts
Existing loans and credit facilities can affect how a new application is assessed.
Purpose of the Finance
Funding an equipment purchase can require a different structure from borrowing to manage a temporary cash flow shortage.
Available Security
Depending on the loan, property, equipment or another business asset may be used as security. Unsecured options may also be available.
Credit History
Business and personal credit history can influence the lenders and products available.
What Documents Do You Need for a Business Loan?
Documentation requirements vary depending on the lender, loan size and type of finance.
You may be asked to provide:
- Identification
- ABN and business details
- Business bank statements
- Business Activity Statements (BAS)
- Financial statements
- Tax returns
- Details of existing debts
- Information about how the funds will be used
- An invoice or purchase contract where an asset is being financed
More complex or larger lending applications can require additional financial information.
Business.gov.au provides a useful business loan application checklist covering financial information and documentation businesses should consider preparing.
How Can a Melbourne Business Loan Broker Help?
Using a business loan broker in Melbourne can be useful for businesses that want to investigate finance without approaching individual lenders one by one.
Melbourne businesses operate across a broad range of industries, including:
- Construction and trades
- Transport and logistics
- Manufacturing
- Professional services
- Retail
- Hospitality
- Property-related businesses
- Wholesale
The appropriate finance structure can vary considerably between businesses and industries.
LoanBrix assists Melbourne businesses across business lending, asset finance and other commercial funding needs. You can view our broader range of business finance solutions to see some of the different options available.
Meet a LoanBrix Business Finance Broker
Business lending can become more complex when you’re self-employed, growing a business or dealing with circumstances that don’t fit standard bank criteria.
LoanBrix broker Trevor Giacometti works with self-employed clients and businesses across commercial lending and business finance. In this short video, you can learn a little more about Trevor and the types of clients he works with.
If you’re considering a business loan, equipment finance or another commercial funding option, speaking with an experienced broker can help you understand which lenders and finance structures may suit your situation.
Business Finance Broker vs Business Loan Broker: Is There a Difference?
The terms business loan broker and business finance broker are often used interchangeably.
A business loan broker generally refers to a broker helping businesses obtain loans.
Business finance can be a broader term because the funding solutions available to a business can include:
- Business term loans
- Lines of credit
- Business overdrafts
- Invoice finance
- Equipment finance
- Trade finance
- Commercial property finance
The Australian Government’s guide to choosing business funding also outlines a range of debt finance options available to Australian businesses.
If you are unsure which product fits your situation, it may make more sense to discuss the purpose of the finance first rather than starting with a specific loan product.
When Should You Speak to a Business Loan Broker?
You do not necessarily need to wait until your business urgently requires funding.
It may be worth speaking with a broker when you are:
- Planning to expand the business
- Purchasing new equipment or vehicles
- Buying another business
- Managing temporary cash flow pressure
- Refinancing existing business debt
- Preparing for a large contract
- Increasing inventory
- Considering a commercial property purchase
Starting the conversation earlier can give you more time to understand what lenders may require and which type of finance could suit the planned expense.
Frequently Asked Questions About Business Loan Brokers
Is It Worth Using a Business Loan Broker?
A broker can be useful if you want to compare lenders, are unsure which finance structure is appropriate or want assistance preparing and managing an application.
Can a Business Loan Broker Compare Different Lenders?
Yes. One of the main purposes of using a broker is being able to consider options from different lenders rather than being limited to one financial institution.
Can a Small Business Get a Business Loan?
Potentially. Eligibility will depend on factors such as revenue, cash flow, trading history, existing debts, credit history, loan purpose and the lender’s individual criteria.
Are There Business Loan Brokers in Melbourne?
Yes. LoanBrix provides business finance broking services for businesses across Melbourne and can also assist businesses elsewhere in Australia.
Can a Broker Help if My Bank Has Declined My Business Loan?
Potentially. Different lenders use different credit policies, so a decline from one lender does not necessarily mean another lender will reach the same decision. It is important, however, to understand why the original application was declined before submitting another application.
What Is the Difference Between Secured and Unsecured Business Finance?
Secured finance uses an eligible asset as security for the loan. Unsecured finance does not rely on specific asset security, although lender requirements and guarantees may still apply.
The type that is more suitable will depend on the business, loan purpose, amount required and available security.
Looking for Business Finance in Melbourne?
If you are considering borrowing for your business, LoanBrix can help you assess different funding structures and consider options available through our lender panel.
Whether you need funding for cash flow, expansion, equipment or another commercial purpose, the first step is understanding what type of finance suits the business.
Explore our Melbourne business loan options or contact LoanBrix to discuss your requirements with a business finance broker.
