commercial loan

Unlocking Growth: A Guide to Securing Your Commercial Loan Successfully

February 2, 2024

Starting or expanding a New Zealand business often requires financial support, and understanding the various types of commercial loans available is essential for success. With the right funds and help from an experienced lending specialist, you can watch as your business grows and thrives.

In this comprehensive guide, we’ll delve into the world of financing to help you understand the different kinds of loans offered and how you can significantly better your chances of acquiring the funding you need.

The Many Different Types of Business Loans

Commercial loans are loans that are granted to businesses, rather than individuals – but did you know that there are different types of business loans? To maximise your chances of success, it’s vital that you choose the right type of loan for your business.

The types of business loans that you could consider are:

Working Capital Loan. This type of loan is a lump sum of money that helps to keep your cash flow moving. The amount of money can actually change within the month to bridge the gap between outgoing and incoming payments. We recommend keeping a loan of this type to no more than 5-10% of your turnover for optimal payment. Any more, and you could have trouble repaying it.

Asset Finance. This type of loan involves funds allocated for business assets, such as vehicles and equipment. This can help you acquire the right equipment and assets you need to grow your business and improve your profits.

Secured And Unsecured Business Loans. While all loans require a personal guarantee from the business or individual to the lender, these loans can be secured or unsecured. Secured loans involve the loan being secured against a property or business asset. However, with an unsecured loan, you are only offering a personal guarantee, and the loan is not secured against your property or assets.

Bridging Loans. These commercial loans assist with closing financial gaps in transactions, similar to home purchases. For example, you could use this type of loan to complete a transaction while another one concludes.

Term Loan. For this type of loan, you can borrow a sum of money upfront and then incrementally repay the loan over a set duration. This is a very versatile commercial loan option that can be tailored to different business needs.

Tips For A Successful Business Loan Application

It’s vital that you take the right steps to improve your chances of securing a commercial loan. Keep these tips in mind as you apply for your loan:

Understand Your Needs And Create A Plan. First and foremost, make sure you understand exactly why you’re applying for a loan. Think about what you’ll use the money for and how much money you’ll need. Consider how you’ll use the money to contribute to your business’s growth in the future.

This will help your lender know what they’re funding and will show that you’re a proactive business person who plans for success. Understanding your exact needs will also help you choose the right type of loan so that your funding aligns with your plans.

Assess Your Credit Profile. Before submitting an application, review your personal and business credit scores. Good credit will show your potential lenders that you’re a reliable business person, and they’ll be more likely to trust you with a loan.

Gather The Right Documents. Compile any essential financial statements, tax returns and other important documents that you’ll need to present a good picture of your company’s financial health. Having the right documents will show your potential lenders that you’re organised and responsible.

Get Professional Help From An Experienced Business Loan Broker. Even if you’ve been running your business for a while, understanding the intricacies of commercial loans can be a challenge. One mistake can result in a denied application.

So, the best thing you can do to ensure your success is to work with a business loan broker with plenty of training, experience and drive. 

A professional lending specialist will help you create a good plan, gather the right documents, address any issues that could prevent you from being granted a loan and help you find the right lender for your situation.

Growing Your New Zealand Business With The Right Commercial Loan

Securing a commercial loan doesn’t have to be an overwhelming challenge. With a clear understanding of your business needs, the right type of loan and careful preparation, you can navigate the financial world with ease and confidence.

Consider seeking guidance from professionals like us at Spinach, who specialise in unravelling the intricacies of business loans. Remember, a successful commercial loan application is not just about obtaining funds – it’s about unlocking the growth potential of your business.

If you’re ready to explore your business’s financing options, please don’t hesitate to message our Spinach team through our contact page or by calling us on 0800 774 622.

Get the right funding and move towards success with Spinach.