Well, there are many different things to consider when looking for business finance and this list is just as long, if not longer, for construction and technical service tradesmen. Tradies that are self-employed or running their own small to medium business need to pick a flexible funding option that suits their profession. Here are a few key points to consider when looking for tradie finance:
How Fast is the Approval Process?
While a traditional bank may be the first option for many tradies looking for a business loan, they aren’t always the fastest. You may just need stock or tools to finish up your latest job and with a bank, you could be waiting weeks or months for the loan to come through. That’s a long time to be waiting to finish up a job and could end up costing more in time wasted. Alternative lenders are slightly more expensive than traditional banks but turn over loans much faster. It could be worth considering a non-bank lender, as they might end up saving you a lot of time (and money) on short-term loans.
This one can be a bit tough for self-employed tradies. Unfortunately, a lot of lenders will require the borrower to put up some sort of security as collateral for a loan. While secured loans do end up being a bit cheaper than unsecured loans, many self-employed and sole contractor tradies (and even some running their own SME) often can’t or won’t want to put up their house as collateral for a business loan. It’s worth looking into the security conditions in a loan agreement – especially if the loan is for something like equipment or working capital. You may not end up saving all that much on a secured finance option.https://moula.com.au/finance/understanding-working-capital
How Long are the Terms?
This is another one that’s a bit particular to tradies. For some, it won’t really matter, but there will be a lot of self-employed tradies out there who won’t need a two-year loan for something like a new set of tools. Some lenders do offer shorter terms, from six to 12 months, making the loan cheaper and lot more manageable. For a lot of tradies, the speed of the loan will be one of the main selling points so it’s a good idea to look at the different repayment schedules when looking for a tradie business loan.
What is the Loan For?
Finally, what’s the purpose of the loan? Some of the most common reasons for tradie business loans are vehicle or equipment finance. A tradie will know better than most the value of a good set of tools and a reliable workhorse, so these will be by no means cheap. However, that also doesn’t mean you will need a huge, drawn out loan. Shorter terms with a flexible repayment schedule could be better suited to a loan like this. Being able to make repayments early, without penalty, is invaluable.
For a self-employed tradie, choosing the right finance option is important. If you have any questions or want to chat about tradie business loans in general, feel free to give us a call on 1300 88 58 93.