A business loan or overdraft could help you make your next purchase, manage your cash flow or expand your business.
When applying for business finance, you (and any directors, partners or guarantors) may be asked to provide:
- Financial statements, preferably prepared by an accountant
- Proof of individual income
- Bank statements
- A few extra things if you’re a start-up business
These documents can help your financial provider understand your business's financial situation.
Your financial statements will show your asset, liability and net worth positions, as well as your income and expenses that will be used to determine if you can meet your existing and proposed repayments.
Your financial statements will generally consist of a balance sheet and income statement. They may also include a statement of cash flow.
You may also be asked for your latest tax returns, business activity statements (BAS) or printouts of statements from your Australian Taxation Office (ATO) portal. If there are any trusts or self-managed super funds (SMSFs) related to your business, you may also need to provide additional documents.
Proof of individual income
Lenders will also want to know your personal income if you are a director and/or shareholder of a company. You’re likely to be asked for your two most recent individual tax returns and an ATO Notice of Assessment.
If you earn other income unrelated to your business, you may want to provide this information as well. For example, you could bring a rental statement if you own an investment property.
So that the lender can obtain a complete picture of your financial position, they often ask that you provide details of your personal and business income, savings and liabilities such as loans and credit cards that you might have with other financial institutions.
You’ll also need to bring your latest bank statements – either paper or electronic copies are fine. If anyone is guaranteeing the loan, they will also need to provide this information.
If you are applying for a loan with a lender where you are an existing customer, you most likely won’t need to complete this step.
If you are a new customer, you’ll need to provide identification such as your driver's licence or passport. The documents needed will vary depending on your business structure – you may also need to bring in your trust deed or partnership agreement or company registration, if applicable.
A few extra things for start-ups
If you are yet to start your business or you have recently started trading and you don’t have 12 months of trading history, there are a few extra things you may need to provide, including:
- Cash flow projections
- A business plan
- A business contract of sale
- Lease agreement