There’s a gap that many traditional lenders fail to bridge when it comes to business loans. For owners who face specifically unique challenges, they often find themselves excluded from getting access to loans through conventional means. Enter private lending – a flexible alternative that can fill the void.
Understanding the traditional loan conundrum
The Big Four banks and other traditional financial institutions have to adhere to strict lending criteria. This usually means they focus on your credit scores and whether you have an established trading history. They will also take a more cautious approach to businesses operating in high-risk sectors. While the purpose of all this is to mitigate risks, at the same time it leaves many Australian businesses out in the cold.
Challenges:
- Bad credit history: A less-than-stellar credit history can be a major roadblock when seeking a business loan.
- Minimal trading history: Startups or businesses with limited trading history will most likely struggle to meet the harsh criteria set by traditional lenders.
- High-risk sectors: Certain industries, like construction and hospitality, are considered risky – making it challenging to secure financing.
Secured lending is a strong foundation
Secured lending through private lenders is one way you can overcome the struggles of getting a business loan. This is a type of lending backed by collateral, which may include your business assets, real estate, equipment or other valuable items.
Benefits:
- Reduced risk: Because collateral serves as security for the lender, it reduces their risk, which can mean more favourable loan terms for you.
- Flexible terms: Private lenders assess loan applications based on a broader range of factors, allowing them to offer more flexible terms tailored to your business’s specific needs.
- Custom solutions: Private lenders understand that every business is unique. They can structure the loan, repayment schedules and the interest rate to align with your cash flow and financing requirements.
3 ways private lending fills the gap
1. Bad credit is not a barrier
Private lenders focus on the potential of your business – not just your credit score. If you have valuable collateral to offer, you can secure financing even with a less-than-stellar record.
2. Minimal trading history is okay
For new businesses or those with limited to no trading history, private lenders take a more holistic approach to underwriting. They consider things like your business plan, the potential for growth and the value of your collateral.
3. High-risk sectors are supported
Private lenders often specialise in working with businesses in riskier sectors. They understand the unique challenges these industries face and can provide financing solutions that traditional lenders might turn their noses up at.
Beyond the loan
What sets private lending apart is the relationship-based approach. Private lenders are more than just providers of a loan – they are partners in your business’s long-term growth. When you work with a private lender, the relationship doesn’t end with the loan. They will get to know your business, your team, the company’s growth trajectory and your future financing needs.
Having this ongoing relationship also makes it easier to access capital in the future. Because your lender already understands your business’s financial health and potential, it’s easier to secure financing when new opportunities arise. Plus, private lenders are flexible by nature, which means they can continue to offer tailored financing as your business evolves.
“Private lending can be a major lifeline for Australian businesses because it fills the void left by traditional lenders,” says Gary Rawlings, Managing Director at Ezi Private Lending. “By focusing on collateral, flexibility and forging a real, long-term partnership, you can have the support of someone who truly understands your aspirations – and can help you finance them.”
If your business has faced hurdles in securing a traditional loan, start exploring the possibilities of private lending today. Contact Ezi Private Lending online or call 1300 854 033 to unlock your business’s potential.