15 Jun Finding Finance when you’re self-employed
Whilst being self-employed provides us with lots of benefits, when it comes to applying for finance, being your own boss can make getting finance trickier and time consuming. Salaried employees are seen to have a regular, steady income and are less likely to experience the cash flow volatility of a small business operator, contractor, freelancer or tradesperson.
Self employed clients can go through a number of experiences both internal and external that can affect their cashflow and net profit and therefore the cash available for servicing a loan. By being pro-active and working with a finance expert you can make the path to accessing finance a lot smoother and hassle-free.
Here are some tips to help.
Seek Expert Advice
Trying to weave your way through the finance web solo may lead to disappointment as it can be difficult knowing what the banks are looking for and how they approach self employed clients.
The best outcome generally happens when your finance expert works with your accountant and other advisors to ensure that your finances and documentation meet the necessary standards required for finance approval.
Your finance expert can provide you with up to date overviews of which lenders are currently most comfortable with self employed clients and explain the type of loan which best suits your individual requirements.
This can prove to be an extremely valuable resource for you and your business so it’s a good idea to make the most of expert advice which is based on industry experience.
Get your affairs in order
Many lenders require two years of up to date financial statements for both you personally and for your business. If you have these documents on hand, this can provide you with more options with regards lenders and interest rates.
Being self employed for a lot of people means putting most of their time into running and growing their business and they often overlook or don’t prioritise having their finances in order. This doesn’t mean their business is not performing well and there are lenders who will lend to you on a Low Doc basis which takes this into consideration.
If you can get your accounts up to date you should try and do this, otherwise speak with your advisor to see which options are available for you.
Consider different types of loans
Low Doc loans are provided by a range of lenders and we are seeing these becoming more prolific in recent years with banks tightening their lending policies.
Most Low Doc loans require 12 months of BAS’s to be provided along with bank statements and also an accountants letter. There are a some lenders who will require only one or two of the above income sources however the interest rates on these loans can be higher.
Another downside to Low Doc loans is that the Loan to property value Ratio(LVR) will be lower, which means you will need to come up with a larger deposit.
Don’t do anything before getting advice
Whilst it can be a little more complicated obtaining finance as a self employed client it is essential though that you get your advisors involved before you do anything with regards applying for finance.
By ensuring that you have your ducks in a row before applying for finance can make all the difference in what you can achieve. Whether it’s buying your first home, an investment property, business premises or obtaining funds for business expansion, speak with us before you act so we can make sure you achieve the best outcome.
Speak with Jenesis Finance today to find out how we can help you secure your finance.