If you’re a small or medium-sized enterprise (SME) on a retail platform, current market conditions could be limiting your ability to compete for the scarcer customer dollar.

The inflationary environment with resulting higher costs, and the tight labour market mean you could be facing cashflow pressures.  An obvious strategy is to invest in your business to promote growth, yet you may find it difficult to get a loan from traditional banks if you lack sufficient assets or credit history.

Despite the market conditions, there are tactics retail business owners can use to source finance that can help facilitate growth.

Look within

Before seeking finance, ask yourself these questions:

  • What are my business’s current investment priorities? Equipment, staffing, technology, or something else?
  • What’s the likelihood my business will be able to access the funds I need to drive my growth ambitions?
  • Are my finances in order?
  • If I need further capital, how much will I need to borrow? How long will I need the loan for?

Use your answers to guide your decisions and priorities.  You may also want to discuss with your trusted adviser, such as accountant or broker, whether to seek funding to drive growth or not.

Get your documents in order

It’s worth putting some time into ensuring you’re well prepared for any future application.  Lenders will need to see accurate and up to date financial documentation to support your application for business funding.  This includes:

  • latest audited financial accounts
  • at least six months of bank statements
  • profit & loss sheet from previous years
  • and possibly items like cash flow forecast, and proof of payments to ATO and BAS.

Your business credit score plays an important role in the decision process, as it demonstrates credit history and repayments. You can review yours by visiting Get Credit Score.

Broaden your search

Your business’ requirements change over time, and a loan option that worked for you once, may not be the best solution for your current needs.  One of the many things the pandemic did was accelerate bringing alternative finance sources to the fore, many of whom are better equipped to meet the immediate needs of small businesses.

Invest a little time in researching the available borrowing options, as the newer institutions are not stuck in legacy processes and can have more realistic lending criteria.   

Get expert advice

Don’t forget that the real ‘cost’ of external finance can be the time spent chasing it. SME owners understandably want to prioritise running their business over jumping administrative hurdles and filling out exhaustive paperwork for prospective lenders.

You can also cut down the time spent searching by reaching out to a trusted or recommended finance broker or accountant, who’ll use their market knowledge to match you with the best lender for your needs.

Borrow smarter when interest rates and inflation are rising

If, like many business owners, you’d prefer not to secure your property or other assets against the loan, unsecured funding is more widely available from alternative lenders.   Similarly, the timeframe between loan application and lender decision is much shorter – days, not weeks.    

Building a relationship with a lender who thinks outside the box, and who makes the effort to understand you and your business is critical throughout your whole journey – not just during the good times.  

Finding the right financial solution for your business doesn’t have to be daunting and time-consuming. With more choice of loan providers than ever before, as long you’re prepared to explore a few options, you can source the funding that could determine the long-term health and success of your business.

Guy Callaghan is CEO of Banjo Loans.