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Mar 03 , 2023
Business owners understand that their ability to manage cash flow effectively and secure finance when needed are some of the most important elements for ensuring their business’ long-term viability.
If you’re looking to purchase business equipment, vehicles or just looking to better manage your short-term cash requirements, asset finance can be a big advantage.
However, there are a number of common mistakes business owners make when looking to apply for finance that can hurt their chances.
Like any sound money management plan, you should always be thinking in advance and working towards your goals. When looking at using finance to acquire assets, you shouldn’t be making unplanned purchase decisions and then hoping to secure funding.
By planning ahead and only purchasing the right equipment for your business, you will give yourself the appropriate amount of time to ensure your financials are in order and to secure a pre-approval. That will give you more clarity around your exact budget and ensure you’re purchasing assets that will ultimately drive your business forward.
Poor credit history
Your credit history always plays an important role in any type of conversation around lending and finance. While a poor credit history is something that can be overcome, a bigger issue is oftentimes failing to disclose it in the first place. Always be sure to talk to your finance broker about your credit history so they can help compare your options with all the information at hand. It is also important to note that most lenders will take both your business’ and personal credit history into account.
Not comparing options
Many small businesses will build up relationships with certain lenders over the years and many times they will not look to see what other options they may have. By working with a finance broker, you’ll have access to various options that could potentially benefit your business and its cash flow situation.
Not applying for enough funds
When applying for asset finance for something like equipment, it can be tempting for business owners to apply for the minimum amount to cover the basics. Then, they can try and go back to the lender for more funds for any upgrades or variations to the equipment.
Often, it can be easier to apply for financing everything that you might need down the track – including upgrades and alterations. Working with a finance broker is usually a good option so you know where you stand before applying for finance.