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Small Business Loans

A popular option for small business owners is to use brokers to help them reach their financial needs.

Figures released from East & Partners late last year show that over a third of microbusinesses with turnovers of between $1million and $5million used brokers to aid their debt. Additionally, nearly one third of small-to-medium sized businesses that have a turnover between $5 and $20million are also using brokers.

"Businesses are going to brokers primarily to secure better and more flexible terms and collateral than they perceive they will get from their banks," says principal analyst at East & Partners Paul Dowling.

"Businesses, particularly smaller ones, can find the experience of applying for a loan from their bank cumbersome and generally quite negative, so if they can hand the hassle factor over to someone else and get the funding they require to grow their business, it's not surprising more are choosing to use brokers."

Benefits of a Broker

The appealing aspect of a broker to help businesses with their loans is because brokers offer more flexible terms, collateral and security reductions, pricing benefits and keeping additional debt away from the main banker.

But one of the main reasons small businesses choose a broker is because they can use him/her to source the best financial facility.

"The growth in the broker channel is because it provides an alternative and saves people from having to look around," says Suncorp National Manager John Learmonth. "A broker has the ability to explain things far better."

Types of Small Business Loans

Start-up financing

To help you start up your business you can apply for a start-up financing loan for your small business. Several Australian banks offer this business loan. You can use your loan to buy equipment, materials and tools needed to operate your business.

Business growth financing

This business financing is for those that are growing at a steady pace and that need to buy equipment for a bigger production process to meet their customers' needs.

Inventory financing

Inventory finance is in place to ensure that your business has enough products to sell to customers. This type of loan helps manage your supplies to meet your target market demands. Inventory loans are commonly used to buy materials that are needed to service your clients.

Motor vehicle financing

For businesses that need to transport equipment and goods you can get a motor vehicle loan to meet your business' transportation requirements. Many Australian banks provide purchase options and vehicle leases to clients.

Equipment and plant tools financing

Businesses that need industrial equipment such as those that are used in production places can utilise a leasing option for small business owners.

Business property financing

Australian business owners can access many financial institutions that handle mortgage of commercial spaces, giving businesses an area to conduct their commercial transactions. These financial institutions offer high flexibility when it comes to the terms of payment and the loan period.

Trade financing

Because the Australian government provides partnership with commercial banks, Australian small businesses can easily import, export or partake in domestic trading.

The trade financing loan process requires more than typical business loans, however it can certainly give your small business a head start.

Once you have a solid grasp of what loans are available and how they work, you will better be able to determine what loans will be best to begin your small business. Remember to talk to people who have used different types of financing to gain a more thorough insight into what best small business loan is for you and your business.