What Is A Low-Doc Loan & Who Can Benefit From One?

Most business owners will have to approach a lender for capital at least once during their lifetime. Two common loan types you may encounter during your search are business loans and commercial loans. While they may seem interchangeable, these loan types serve different purposes and can impact how you finance your company’s growth and operations. In this blog post, we’ll define business and commercial loans and their uses so you can select the right solution for your borrowing needs. What is a business loan? A business loan is a broad term that includes various types of financing specifically designed for small to medium-sized enterprises (SMEs). These loans cover everyday business expenses, such as purchasing inventory, managing cash flow, investing in new equipment or expanding operations. Business loans are available in two types: secured and unsecured. A secured business loan asks for collateral, typically the property or equipment you are purchasing. On the other hand, an unsecured loan does not require collateral, though some lenders might request a personal guarantee to safeguard their repayments. In Australia, there are generally three types of business loans: Lines of credit - Similar to a credit card, lines of credit are flexible loans that allow businesses to draw funds up to a set limit as needed. Many businesses are profitable but sometimes struggle with cash flow. A line of credit can help business owners relieve cash flow pressures that arise in any business Invoice financing - One of the biggest issues small businesses encounter is delayed or unpaid invoices from merchants. Invoice financing refers to loans based on outstanding invoices, improving cash flow by bridging gaps caused by payment delays. Equipment loans - As the name suggests, equipment loans refer to financing for purchasing or leasing equipment. Many businesses opt for this type of financing when they need to upgrade equipment or expand their existing suite of tools. Universal Finance Corporation has decades of experience providing financing solutions for small, medium and large-scale businesses. We can also offer tailored financing solutions for acquiring a business to ensure you receive the right financial support. Our team of brokers thoroughly understands the complexities and financial demands involved in acquiring a business and can help you navigate the process with ease. How do commercial loans work? Commercial loans are larger-scale financing options that established businesses, corporations or developers typically use. They provide the necessary capital for various purposes that help businesses grow, expand and manage cash flow effectively. The length of a commercial loan has a range of up to 30 years. It's also common for commercial loans to include an initial interest-only period for the first few years before transitioning to standard principal and interest repayments. Commercial loans usually require collateral, typically the asset you want to purchase. If the borrower defaults, the lender has the right to seize the collateral to recover the outstanding loan amount. Some of the most common reasons business owners take out a commercial loan include: Purchase a commercial property - Many businesses secure commercial loans to acquire office buildings, retail spaces, warehouses or other property types to expand their operations. Owning a property is a stable asset for business owners and potentially reduces long-term costs compared to leasing. Remember that lenders typically assess the property’s value and your business’s overall financial health when determining your borrowing capacity, which could impact the amount you need to borrow. Expand business operations - Whether you’re planning on opening your doors at a new location, entering new markets or expanding your production line, a commercial loan can make it happen. Commercial loans can be used in this context to cover expenses related to hiring staff, marketing initiatives and infrastructure development or expansion. Fund large-scale construction projects - Commercial loans tend to fall within the same category as construction loans, enabling developers to fund large-scale projects such as building commercial spaces, multi-unit residential buildings or industrial facilities. Aside from land acquisition, a commercial loan can also cover costs associated with material purchases, labour and other development expenses. It's important to note that commercial loans vary in terms of lending criteria and structure, so comparing your options is essential to ensure you’re getting the most competitive deal. That said, not every business owner has the knowledge or time to sift through the business and commercial loans available. That’s why many are turning to the expertise and network of experienced brokers like the team at Universal Finance Corporation. We can provide insights into the most suitable financing options and guide you through the loan application process. Select the right lending solution for your business with Universal Finance Corporation Give your business the best chance at success by accessing the best commercial and business loans in Australia based on your financial needs. At Universal Finance Corporation , we understand choosing the right loan type is crucial - whether you’re looking to manage cash flow, invest in new equipment or embark on a significant commercial project. That’s why we do all the heavy lifting to find the right loan for you. Our brokers have access to a wide pool of lenders, from the Big Four banks to credit unions, various tested and trusted private lenders and online lenders, to ensure you receive the most competitive lending solution for your business’s needs. We’ll sit down with you to understand your business and its goals before determining your borrowing capacity and the type of loan you may qualify for. To learn more about how we can find the right business or commercial loan, get in touch with us today and schedule an appointment.

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