ANZ outlines lending options for SMEs
Supporting your client’s business lifecycles through lending
Lending doesn’t just help businesses in the tough times, it can also be instrumental in transitioning from one business life stage to the next.
In this article, we outline the stages a client’s business may go through, from start-up to maturity and growth, and how it can benefit and be supported by lending.
Stage 1: Starting their business
So, they’ve done all the groundwork, have an awesome business idea and need to get it up and running. Step one is figuring out their key sources of funding. Sometimes these sources can be from those who believe in them and their business, such as family and friends or even through crowdfunding. Or maybe they’ve been very careful and/or lucky with their finances and can utilise personal savings or self-financing options.
Although these funding sources are often helpful, sometimes they just aren’t enough to really get a business going. This is when more traditional lending could come into play.
As a broker, you know there is a large range of different types of loans available, with different terms, structures, and interest rates. Make sure you take the time to work with your client to help them find out what’s best for their business, so they start their business off on the right foot.
Getting prepared for business lending always includes having a solid business plan. Here’s a link to the ANZ Business Plan template your clients can use.
Stage 2: Managing their cash flow
As your client’s business begins to grow and expand, they may face some unexpected expenses, such as needing to pay a supplier at a point in time with money they won’t receive until later. Or perhaps they’ve looked to the month ahead and realised they’ll need more money to cover upcoming expenditures than they had originally planned.
Needing these unplanned short bursts of cash can often leave clients in a bit of a sticky situation. A business credit card or business overdraft may be viable options for them to consider to tide them over temporarily until their revenue increases.
Proactively managing their cashflow is a great way to ensure they can be prepared for the next phase of business growth, especially if they need to secure lending.
The ANZ Balance Sheet Forecasting template is a great tool for your clients to get a handle on their cashflow.
Stage 3: Investing in their operations
After laying a solid foundation for their business, they may need to start building out their operational expenses, such as hiring more staff, paying salaries and leasing workspaces. Or perhaps they want to expand their reach to customers through new marketing, to define their messaging and ensure they’re spending money directing their content to the right people.
As such, you might find they’re looking to access more working capital. Depending on what operational costs they have, lending could help them fund the next steps they’re looking to take with their business. For example, if they need to upgrade their work vehicles, machinery or equipment, vehicle and equipment financing may help them get the items they need.
Stage 4: Funding for growth
They’ve created a successful business, and they’re wanting to move to the next level … but how? Although their profits may be enough to cover some upgrades, they might just need an extra push to help set up a new store location or grow through diversification or acquiring another business.
Similar to when they first set up their business, they could consider personal financing, crowdfunding, bank loans or money from friends or family to help them. However, they may also use revenue-based loans, where an investor will lend the money in exchange for a promised share of future revenue. If their business has already had a successful journey and continues to be profitable, this option could be one they consider for both the business and their investors.
The ANZ scenario planning template is a great tool to help your client plan for future events and prepare the business for the longer term.
Regardless of what stage, business journey or industry your client is in, there are a number of lending options available to consider to support their needs and their business. You can be a source of useful information and guidance for your clients, in addition to recommending they obtain their own legal, tax and financial advice before making key decisions about their business and its funding.
ANZ is here to help by providing relevant information so you can support your clients as they look to build and develop their businesses.
This article is brought to you by ANZ
This is general information and ANZ is not providing advice or recommendations. Carefully consider what’s right for your business and your clients.