It’s no secret that business owners are going through some challenging times. And recent economic predictions suggest that things are only going to get harder before they get better.
That’s why I recently shared some of the steps that business owners can take to recession-proof their business. Today I wanted to talk in a bit more detail about one particular aspect of that – Business Financing.
Now is the time to start thinking hard about your loan facilities. Whether you’re seeking finance or you’ve already got it, making smart decisions now could potentially save you a lot of time and money down the track.
First – what is actually going on with the economy?
You’ve probably heard some mixed things over the last week about recessions. According to new data from the Australian Bureau of Statistics (ABS), we’ve narrowly missed an expected technical recession, with the economy managing to grow by a slim 0.7% in the June quarter.
Yet a lot has happened since June. Our two biggest cities are still suffering through long lockdowns, and signs of fatigue are starting to show. Despite our recent near-miss, the Treasury has signalled that a massive contraction for the September quarter is still around the corner.
It might not ‘technically’ have happened yet, but the recession is here. Like it or not, we all need to start preparing for the squeeze.
Lending conditions will only get tighter. Don’t let yourself be caught out.
Recessions can have a big impact on credit. Soon, the landscape of business financing may start changing to reflect the harsher economic reality we’re now living in.
As businesses and consumers start to be more cautious about their spending, it’s inevitable that commercial lenders will tighten their belts as well. Lines of credit that you previously relied on might disappear or become more difficult to access, and interest rates can start to rise. Historically, this rise has usually come suddenly and unexpectedly.
In general, lending requirements are likely to become much stricter, which is bad news. Getting stuck with unfavourable loan conditions can impose unnecessary financial stress on you and your business. It has the potential to really slow long-term growth.
There are still lots of great options available. Now is the time to take advantage of them.
Thankfully, there’s a bit of good news to be had as well. Right now, lending conditions for small businesses are still surprisingly favourable. Those who act fast and take advantage of that are much more likely to avoid financing woes down the track.
While the last couple of months have been difficult, there were a lot of positive developments in the first half of 2021. A lot of different factors came together to provide business owners with lots of financing opportunities, many of which are still available today.
Read More: Financing your business? 5 things to know before you look for a lender.
For example, a resurgent property market means that financing for commercial property or new facilities is currently fairly easy to secure. Another big factor is government assistance. There are a number of programs available – like the SME loan guarantee scheme – that make financing cheaper and more accessible to small businesses.
These conditions won’t be around forever, so it’d be smart to act fast. If the bank is dragging their feet and putting up too many roadblocks, you should consider trying a reputable online lending platform like Prospa. They’re Australias #1 online lender, and they specialise in providing flexible and affordable small business loans in under 24hrs.
Already got financing in place? You still need to act. Talk to your lender and secure your terms
Even if you already have business financing in place, it’s still time to act. Talk to your broker and your lender to make sure that you still have a clear understanding of your loan conditions. If your loan isn’t fixed-rate or your conditions aren’t secured, you should do everything in your power to start locking things in now.
Knowing what your interest rates are going to be is essential to proper planning and forecasting. Ask yourself honestly – if your rates were to suddenly spike, would your business still be okay?
This recession means that we need to start having these conversations. And the sooner you have them, the better off you’ll be.
Has the looming recession got you thinking about your business financing situation? Get in touch with our advisors today to start the conversation rolling. We’re experts at helping businesses devise financing solutions that suit their needs.
Our advisors will make securing the perfect loan a simple process. Need a broker? We’ll put you in touch with the talented team at Compare Financial Services. As our preferred partners, we have a long history of working together to help business owners fund their dreams.
Disclaimer: This advice is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether this advice is suitable for you and your personal circumstances before acting on it.
