How to Make Sure You Qualify for a Commercial Loan

Starting a business doesn’t come cheap. On average, Australians spend between $3,000 and $5,000 on starting a small business, and this number can be considerably higher depending on the industry and other factors.

Funding your business on your own can be tough, especially in the early days before the money starts flowing. This is where a commercial loan can be a great help, allowing you to shore up the money for big expenses and pay it back over time.

In this article, we’ll look at some of the reasons to consider a commercial loan, and walk you through some of the steps you can take to give yourself the best chance of qualifying.


Why Get a Commercial Loan?

There are many reasons to consider taking out a commercial loan:

  • Starting a business. As mentioned, starting a business costs money, and a loan can be an excellent way to meet upfront costs, although you’ll have to prove to your lender that you have a realistic chance of success.
  • Expanding your existing business. Expanding your business to a new area, larger premises, more services, or a new market can be a great way to spur new growth and reach the next level. A loan can help you find the money to fund this expansion.
  • Large purchases. Things like new premises and expensive specialist equipment can cost a lot of money, but they can also generate money over time. It often makes sense to take out a commercial loan to fund these purchases, an investment which in time can pay for itself.
  • Basic needs. Although not as common as the above reasons, sometimes a commercial loan can be used to cover everyday expenses like paying staff and purchasing essential supplies.


How to Get a Commercial Loan

Getting a commercial loan is not always easy. You’ll need to prove to your lender that you’re capable of paying back the money and meeting the conditions of the loan, including interest. Fortunately, there are many steps you can take to strengthen your chances.

Have Savings

If you can prove that you have a good amount of money saved in the bank, you’ll improve your chances of qualifying for a commercial loan. This reassures your lender that you have enough reserves and won’t immediately start defaulting on payments if you have a bad financial month.

Provide Evidence of Your Income

If you can prove that you earn enough money to pay the instalments of your loan, you’ll be much more likely to get approved. Your income doesn’t just have to be from your business — it can also be a job, rental income, investments, or something else.

Have a Strong Credit Score

Your credit score plays a role in every loan you apply for, and commercial loans are no exception. Applicants with a good credit score are viewed much more favourably by lenders. Being responsible with your borrowing and repaying all your loans on time is crucial if you want to stand a good chance of getting a commercial loan.

Have All The Right Documentation Ready

When applying for a commercial loan you’ll typically be required to present certain documentation. This is used to determine how valid your business plan is, how likely you will be to repay (or default), and other factors. Usually your lender will ask for documents like balance sheets, income reports, tax records, and anything else that helps establish your financial situation and prove your business has a consistent cash flow.

Work With a Broker

When it comes to applying for a loan, you stand a much better chance of success if you work with an experienced broker. A broker can help you navigate the complex process of finding the right lender, getting all the information together, and agreeing on the most favourable lending terms.


At Lynam Home loans, we have years of experience helping business owners in and around Mackay, Queensland access the perfect commercial loan to start and grow their businesses. Contact us to find out more.

Barry Lynam Mortgage Broker

Barry Lynam