Home » community » News » How to Get the Best Business Loan

How to Get the Best Business Loan

Securing a business loan is a crucial step for many Australian business owners looking to start, grow, or stabilise their operations. However, simply obtaining a loan does not guarantee that you have secured the best terms, lowest interest rates, or most suitable product for your needs. Lenders evaluate businesses based on various factors, and understanding these elements can mean the difference between an expensive loan and a cost-effective one. This guide will outline what you need to have in place to secure the best possible business loan, including how to prepare your business, what lenders look for, and why working with a finance broker can give you a competitive edge.

Write a Solid Business Plan

A well-prepared business plan is one of the most critical elements in securing a competitive business loan. Lenders want to see that you have a clear strategy for your business, a defined revenue model, and a structured approach to growth. A strong business plan includes:

• A detailed executive summary outlining the nature of your business.
• Market research supporting your industry position.
• Revenue projections, profitability estimates, and expected growth.
• Operational plans detailing how you will use the loan to achieve business objectives.

By presenting a structured and professional business plan, you give lenders confidence in your ability to repay the loan and increase your chances of receiving better terms. Consulting with a business improvement specialist (like those at McKinley Plowman) can help refine your plan to maximise its impact.

Strengthen Your Business Finances

Before applying for a business loan, it’s essential to have a clear and organised financial structure. Lenders will scrutinise your financial position, so taking the following steps can improve your chances of getting the best loan terms:

• Maintain accurate financial records: Ensure your profit and loss statements, balance sheets, and tax returns are up to date.
• Improve your credit score: Both personal and business credit scores influence your eligibility for better rates. Paying off existing debts and maintaining a good credit history will work in your favour.
• Manage cash flow effectively: Demonstrating a consistent cash flow reassures lenders that your business is financially stable.
• Reduce existing debt levels: A lower debt-to-income ratio makes you more attractive to lenders.

Lenders look at financial ratios such as liquidity, profitability, and debt-to-income levels, so ensuring your financials are in order before applying can make a significant difference.

Choose the Right Type of Business Loan

Not all business loans are the same. Understanding the types of loans available can help you choose the best one for your needs:

• Business & Business Acquisition Loans: Suitable for expansion, startup capital, and operational funding.
• Commercial Property Loans: Designed for purchasing or upgrading business premises.
• Business Overdraft: A flexible line of credit attached to your business account.
• Working Capital Loans: Ideal for covering short-term operational expenses.
• Trade Finance & Debtor Finance: Helps manage cash flow by financing unpaid invoices or funding trade transactions.
• Unsecured Business Loans & Overdrafts: Available for businesses with strong cash flow but without physical assets for security.

Selecting the right loan type ensures that you’re not overpaying on interest or securing unnecessary financing that could strain your business.

Keep the Banks Honest

Lenders are not always proactive in offering better rates to existing customers. Many businesses overpay on their loans simply because they assume their bank will offer them the best deal. There are a few ways you can identify if your current loan isn’t as good as it could be:

• Review current loan terms and identify potential savings.
• Push banks to offer more competitive rates or explore alternatives.
• Ensure loan features align with business objectives rather than accepting unnecessary extras that drive up costs.

By taking these proactive steps, you ensure that you’re getting the best deal for your business. However, navigating the complexities of loan negotiations can be time-consuming. In the next section, we’ll discuss how working with a finance broker can make this process even more efficient and effective.

Work with a Business Finance Broker

Navigating the business loan market alone can be time-consuming and costly. Working with a finance broker can provide key advantages, including:

• Access to a broad range of lenders, including niche finance providers.
• Expert advice on structuring loans to match your business goals.
• Time savings by allowing an expert to handle negotiations and paperwork.
• Better interest rates and terms through strategic negotiation and lender competition.

At McKinley Plowman, our finance specialists have years of experience securing competitive business loans for clients across various industries. We work on your behalf to find the best loan solutions tailored to your needs.

Use Competitive Tendering to Your Advantage

Many business owners accept the first loan offer they receive without exploring other options. However, competitive tendering—where multiple lenders bid for your loan—can significantly reduce your interest rates and loan costs. At McKinley Plowman, we advocate for our clients by:

• Comparing offers from multiple banks and lenders to secure the most competitive deal. Some lenders now offer to cover refinance costs, so any cost to change Banks is minimal.
• Negotiating interest rates and loan terms to ensure affordability and flexibility. some Lenders can provide a simple refinance based only on your last 12 months of loan statements.
• Reviewing existing loan structures to identify opportunities for refinancing or renegotiating with better terms. Older Commercial/Business loans were based on a 10 to 15 year term, however new loan terms can be extended out to 30 years even with Commercial security. This can have a dramatic effect on a business’ cash flow and free up funds.

Our finance team has saved businesses thousands in interest costs through competitive tendering, making it a crucial step in securing the best loan.

Get the Best Business Loan with McKinley Plowman

Securing a business loan is a major financial decision, and ensuring you receive the most competitive terms requires planning, preparation, and professional guidance. By developing a strong business plan, maintaining organised finances, understanding loan options, and engaging in competitive tendering, you position yourself to secure the best possible funding for your business.

Rather than spending valuable time shopping around for the best loan, let McKinley Plowman’s finance experts handle it for you. Contact us today for a free consultation, and let’s secure the best business loan for your needs. Call us on (08) 9301 2200 or (08) 9325 2411, or https://www.mckinleyplowman.com.au/contact-us/.

written by:

Paul Moran

Paul has over 35 years of experience in finding financial solutions for homebuyers, investors and business owners.
A licensed broker and member of the Mortgage & Finance Association of Australia (MFAA), Paul’s extensive experience includes 20 years with a major bank, seven of which were as commercial banking manager.
Paul delivers a holistic financial solutions to achieve the best possible outcome for a client’s personal or commercial lending needs. Paul also provides a comprehensive financial consultancy to business owners on commercial, equipment and invoice finance.