To write this article we talked to Siobhan at the Australian Lending Centre to get some tips on how short term loans can be used to help fill crucial cash flow gaps in a business and help to keep them afloat…

Running a business is more than a full time job, often it’s like working two or three jobs end to end and sometimes even concurrently. As a result it’s easy to get bogged down in some details and miss others entirely. One of the biggest challenges to successfully running a business is cash flow, without sufficient cash flow a business can quickly run into trouble and many see this as the main reason why businesses in Australia fail.

Hopefully it can help some struggling businesses easily understand their options when it comes to plugging those gaps, and of course if you need more detailed information you can always give Australian Lending Centre a call.

First of all short term loans come in many different shapes and sizes, ‘short term’ can refer from a week up to three years, it’s not usually specified and is dependent upon the customer and their needs.

Australian Lending Centre

Australian Lending Centre helps small business owners.

Pay day loans are typically week long loans to cover sudden expenses outside of your budget, people generally try to pay off a five thousand dollar loan in six to twelve months and larger loans are generally arranged over a longer time period.

Usually you’ll find though that business loans tend to be for a maximum of twelve months, with no early exit fees. Mostly existing just to help tick along inventory or help out with a renovation.

It’s important to remember that business loans are for business only, there needs to be an established use for the money that is clearly set out, generally at least 51% of any business loan needs to be used to support a business’ workings. If this is not the case the Australian Securities and Investments Commission (ASIC) can step in and potentially lead to million dollar repercussions so it is important business loans are used for their proper purpose. To help prove this you’ll find most communication with you will be recorded to prove to ASIC that everything is above board.

One interesting thing about business is that no two businesses are the same, and they all come with unique challenges, which is why flexibility is so important. You might have a tradie one week who needs to cover a tax debt or a restaurant needing a renovation to attract more customers. We need to assess everyone on a case by case basis, but there are a few things you can provide which really help speed up the process.

Firstly, you must be self-employed, as there need to be ABN checks, so you must have an up to date ABN. If you’re looking to cover cash flow there are fast turn around times for these kind of loans, usually being completed within a week. Cafes and restaurants have no upfront fees so it can be really useful to that industry.

Then you have people who need loans for business debt consolidation, to get a car for the business, an office renovation, café refurbishment and even liquor licenses.

We found there is also another type of loan which really helps people out who are operating small businesses and really are scrambling to get everything covered off. They’re known as Alternative Document loans, you can bring them into operation if your tax records are not up to date and as a result banks won’t take the loans. With an alternative doc loan you can sometimes get loans even if there is a key document missing.

Usually you will need to provide pay slips, a PAYG summary for the year or personal bank account statements. Alternative documents are usually for the self-employed, for example if the latest two tax returns have been lodged, if the business has up to date BAS statements or sometimes a look through a bank account statement to establish there’s money coming in to the account as taxable income can be very different from the amount being made.

Hopefully this tips from Australian Lending Centre provides you with a much better idea of the breadth, complexity but most of all flexibility available to your business when dealing with short term business loans, there really is something for everyone so don’t worry about checking out your options if you need to keep the heart rate monitor ticking over on your pride and joy.