Savings in a pile from business loan

5 Business Loan Secrets That Will Save You Money

Taking out a business loan can be daunting, with thousands of loan products available at hundreds of lenders. However, obtaining commercial finance can be a big step toward growing your business and expanding into new markets. From our many years of experience, we have compiled these 5 simple tips to help you save money.

1. Get the right business loan product

Business loans are not regulated by the Australian Consumer Credit Code, which means lenders have a lot of flexibility as to how they structure loans and charge fees and interest. Getting the right product for your needs is one of the best ways to save money on your business loan.

For example, asset finance agreements are specifically structured to fund income generating assets, at the same time providing tax advantages for your business. Similarly, debtor finance is a better product than a straight loan if you are looking to cover cash flow shortages, or other specific products exist for commercial construction, franchising and self-managed super funds.

2. Avoid unnecessary fees

Depending on the lender, there are a range of fees associated with taking out a business loan. These include application fees, registration and discharge of mortgage, late payments fees, fixed rate fees and even early termination fees. Read the product documentation and your contract carefully to ensure that you fully understand all fees and charges mentioned. You can also question your financier and in some cases negotiate to have the fees removed completely.

3. Shop around

As with any other product, it pays to shop around for your business loan. At Lendfin, we have access to a wide range of lenders including the big 4 banks, smaller credit unions and private finance institutions. This means we can do the shopping on your behalf to ensure that you are getting the best deal for your situation.

When comparing loans, don’t just look at the interest rate. A Lendfin specialist will ensure that the loan product and structure is the most appropriate for your business, saving you money on fees and interest.

4. Automate repayments

Being an unregulated financial product, lenders are free to charge huge penalties on late payments for commercial loans. To avoid this, simply set up automatic repayments from a linked bank account. Aside from preventing late fees, this will also reduce the workload of financial admin.

5. Maintain your credit rating

For some business loan products, the credit rating of the business owner or company Director may directly affect the rates that are offered. By maintaining a strong credit rating, you may be eligible to receive lower rates for certain products and will have a stronger negotiating power (see our related article on how to improve your credit rating).

The commercial lending specialists at Lendfin are always available to help you obtain business finance that’s appropriate for your situation. Whether it’s your first business loan or a refinance of existing products, we can help you reduce rates and fees and improve your overall financial situation.