Alternative lending for small business FAQs 

Short-term Business Loans FAQs

What type of loan is right for you?

To manage day to day business expenses such as wages, ordering supplies, rent, utilities and delivery can be a challenge for many small business owners. Accessing the right working capital facility is essential for immediate cash flow and long-term growth;

  • Merchant cash advance is a one-time cash injection repaid over a 3 to 18-month term.
  • Quick access to short-term unsecured finance based on monthly turnover, low docs, high approvals also higher lending costs
    line of credit either secured or unsecured allows you to borrow and repay only the money you need.
  • unsecured business loans protect your assets while funding business growth. Quick turnaround and easy renewals.  Lending based on the business turnover.
  • Bank term loans the cheapest option if your have equity to offer, requirements are trading three years with solid turnover, full financial with good credit score.
  • invoice financing turns unpaid invoices into cash where the funder will advance up to 85% of the invoice to relieves the cash burden.
  • Creditor, Debtor and sales invoicing have various terms and charges and can be funded as a disclosed or undisclosed facility. Once approved the facility is available for future use.
How you qualify for short-term loans?

Must have trading history for 6-12 months. Businesses with high merchant retail sales typically under $1,000 per transaction qualify for merchant capital. Other businesses are best suited to short-term business loans that have a spread of customer deposits per month. Suitable for;

  • Restaurant, hotel, club and hospitality
  • Medical, dental and pharmaceutical
  • Retail shops and all fashion stores
  • Manufacturing and Auto industry
  • Hair and Beauty salons
  • Health and fitness clubs
  • Learning and vocation facilities
  • Real Estate and construction
  • Contractors and tradies
  • Professional  services
  • Import and Export
Do I need security?

For unsecured business loans;

  1. No security required and No risk to your assets
  2. Credit assessed on current turnover and future sales
  3. Funding over $70K personal guarantees will be required
  4. Highly preferable that the business is operating from leased or owned premises

Asset lending requires a property, vehicle, plant or machinery to be used as collateral to secured the short-term business loan.

Typical short-term business loan rates
  1. Unsecured lending attracts a higher risk factor as there is no collateral used to recover default loans.
  2. Interest rates charged is dependent on the type of product chosen. Through our lending partners, rates are typically between 1-3% per month. On some global funding products, we can provide 6-10% pa. Dependent on the amount borrowed and term taken.
  3. The interest rate determined by the industry sector, finance term, current sales turnover,  amount of the loan, credit score, etc. Each application assessed on its own merits.
  4. The cost of unsecured small business loans is NOT comparable with bank finance, as the bank will take charge of your assets, thus lowering their risk.
What information is required to apply?
  1. Registered Australian business trading 6 months
  2. Legal trading name for ABN and Veda
  3. Minimum monthly turnover of $10,000
  4. Amount of cash and credit card sales p/m
  5. Driver Licence ID for all business owners
  6. Business lease and landlord details
  7. Two (2) trade references with contacts
  8. Any other business loans to be declared
Documents required for approval?
  1. If business in a Trust require copy of Trust Deed
  2. If owned premises require mortgage & rates notice
  3. 6 months recent business bank statements
  4. 12 months statements loans over $75K
  5. 2 years financials loans over $100K
  6. Copy of business premises lease
  7. Copy of overdraft and/or loan agreements
  8. Credit score 500 plus proof of any paid defaults
  9. Last 2 BAS statements
  10. Directors Guarantees
What is the online offer?

Your online offer is the pre-approval based on the information you submitted regarding your business. Our automated system will present you with an indicative offer amount, term of the loan and total payback;

  • The online offer is not an approved loan to fund your business; it’s the first essential step toward getting funded
  • You will need to provide six months bank statements and other supporting documents for further assessment
  • The credit team will work with you to get financed in the quickest time possible

 

Can I pay back the loan early?

Yes, we offer flexible funding solutions with the ability to repay the loan early.

  • Different terms will apply to unsecured working capital and short-term secured loans
  • Or renew your term or loan amount as your business situation changes. Conditions apply.
  • If high probability that monies paid back early, best to take shorter term with lower rates

Creditor & Debtor Invoice Finance FAQs

What is invoice financing?

Invoice financing, also known as assets based lending allows the business to access up to 80% of the value of an unpaid or outstanding trade invoice. . Typically used by businesses to manage cash flow while they wait for invoices to be paid or receive other sources of revenue. Types of invoice finance;

  • Trade or Credit invoicing
  • Debtor invoicing
  • Sales or Customer invoicing
  • Disclosed or Undisclosed invoicing
  • Discounted invoicing

How does it Work

  • Credit facility is approved then online system is available to access account
  • Business lodges an invoice to pay via online portal
  • Funder confirms details of who to pay via Payment Gateway
  • Payment is made directly to the creditor by the Funder on behalf of the business
  • Business repays the loan in equal monthly instalments via Direct Debit
  • Indicative interest rates 1% to 2% p/m
  • Repayment terms up to 6 months available
  • 12 months trading history
  • Last 2 BAS and 6 months bank statements
  • Directors Guarantees and clean credit file
  • Over $50K require 2 years financials
Types of Invoice Finance Products?

Invoice finance can be used for any purpose, including purchasing new stock, paying suppliers, marketing, renovations or offering your customers a payment plan. Different type of invoice finance such as;

  1. Sales Finance
    • customer installment plan to increase your sales
    • point of sale terms invoice
  2. Working Capital Finance
    • Creditor finance to pay existing supplier invoices
    • Debtor finance to raise funds against existing customers invoices
Features of Debtor finance
  1. Improved cash flow to save time and money.
  2. The most flexible forms of finance available to businesses.
  3. Factors / lenders usually charge a service fee plus interest on funds utilised.
  4. The Factor / Lender can collect debt more effectively than a small business owner.
  5. Better credit management of sales and payments ledger
  6. Credit checks are carried out on business debtors allowing better credit management.
What is professional fee funding?

It is a payment plan designed for professional services such as consultants, solicitors, accountants, recruiters

Cost saving of debtor finance?

Potential cost saving of a debtor finance facility;

  1. no bank overdraft fees
  2. fewer bad debts
  3. lower or no costs for account management, administration & credit control
  4. no need to offer discounts to debtors for early payment
  5. management can spend time and resources on strategic growth plans
  6. get discounts from suppliers for early or prompt payment

 

How to qualify for invoice finance?
  1. Registered Australian business trading 12 months
  2. Clean credit file above 700 score
  3. Minimum monthly turnover of $10,000
  4. Last 2 QTR’s BAS statements
  5. Driver Licence ID for all business owners
  6. 6-12 months business bank statements
  7. Two (2) trade references with contacts
  8. Two (2) years financials over $50K
  9. Accounts receivable for debtor finance
Documents required for approval
  1. If business in a Trust require copy of Trust Deed
  2. If owned premises require mortgage & rates notice
  3. 6 months recent business bank statements
  4. 12 months statements loans over $75K
  5. 2 years financials loans over $100K
  6. Copy of business premises lease
  7. Copy of overdraft and/or loan agreements
  8. Credit score 500 plus proof of any paid defaults
  9. Last 2 BAS statements
  10. Directors Guarantees
What is the rates, fees and terms?
  1. Application fee of $255 on submission
  2. Documentation fee of $220 if approved & offer issued
  3. Funding costs of 2.55% to 4.95% at draw-down and payment of invoices
  4. Sales invoice rate 1% per month
  5. Working capital finance 2% per month.
  6. Terms are 4 to 6 months for B2B invoice facility
  7. Terms are 6 to 10 months for B2C sales invoice facility
  8. Standard bank and credit card charges apply for DDR

 

Merchant Cash Advance FAQs

How does Merchant Advance work?

Repayments are deducted daily or weekly from merchant settlements via a ‘pass through’ account

  • A pass-through account is a separate deposit account where daily electronic sales are directed
  • An agreed withholding percentage is taken daily from the merchant’s electronic sales example 10%, then the balance of the funds 90% credited to the merchant’s business account
  • There is no cost to open the ‘pass through’ account, and the settlement team manages this process for you

 

How to qualify for Merchant Cash?
  1. For Merchants with high credit card and EFTPOS sales typical value under $1,000
  2. Owner of business and trading min of 6 months, provide banking and merchant statements to verify turnover
  3. Minimum business turnover of $10,000 per month with 8 to 10 customer deposits spread
  4. Merchant must show positive bank balance with minimal dishonours, overdrafts OK
  5. Low credit score of 400 plus with paid defaults. Will not accept open bankruptcies, outstanding tax liens, recent foreclosures, collection accounts or open judgments
  6. One year remaining on leased business premises, or confirmation of renewing, no sub-letting. Landlord references are required
  7. If buildings owned need current mortgage statement and rates notice
  8. Merchant cash advances over $75K we require two years signed financials
What is EFTPOS finance?
  1. Electronic Funds Transfer at Point of Sale. EFTPOS simply means cash is not physically exchanged to settle the sale transaction
  2. Rather payment is made electronically directly from customer’s bank account into the merchants  business account
  3. EFTPOS funding is also referred to as Merchant Cash Advance
How much can I borrow?
  • You can access 50% to 80% of your monthly turnover.
  • The final amount offered assessed on your business proven ability to repay the advance or loan
  • Other assessment factors include credit score, term, industry and other current loans.

 

Terms of a Merchant Cash Advance
  1. Merchant cash advances designed for short-term cash flow funding
  2. Business must be operating as a retailer with high merchant transactions
  3. Typically increases are calculated from 50% to 90% of your monthly turnover
  4. The advance term is between 3 to 18 months which based on your daily sales and the negotiated percentage of payback set over that period
  5. Payback adjusts with your revenue, the higher the daily sales, the faster the advance is repaid.
Costs of a Merchant Cash Advance?
  1. As this is not a loan, there is a risk factor rate applied to the merchant cash advance
  2. A payback % is negotiated and deducted daily from the merchants future sales
  3. Maximum take out would not exceed 10% of daily sales.
  4. There are establishment fees and DDR fees dependent on the lender
Am I entering into a loan contract?

No, the merchant cash advance is not a loan as they are 100% connected to your daily future sales

  • Traditional loan repayments are always fixed and not based on your actual sales
  • Fixed term bank loans restrict the business when sales are flat and cash flow is needed to keep the business operating

 

Unsecured Working Capital FAQs

Is there a redraw facility available?
  1. Redraw depends on the unsecured loan product selected
  2. Typically there is an option to renew or extend the short-term loan facility or renew the cash advance against your future sales
  3. Redraw assessed on your payback history and management of the advance or loan
  4. An Invoice finance facility can be used multiple times within the approved limits
  5. Unsecured Line of Credit is an evergreen loan with withdrawals within the agreed limit.
Can I apply with bad credit?
  1. Each application and industry risk assessed on its own merits. A complete evaluation of your business revenue, type of industry, the loan term and amount with credit ratings.
  2. If your credit score is less than 300, we can provide a 55-day trial loan or advance.
  3. We can provide equipment finance to $25,000 with defaults up to $5,000.
  4. Construction or trade industry must have a credit score of 600 plus.
  5. No bankruptcies, judgments or court liens are accepted. No repeated dishonours.
  6. Merchant cash advance has a high approval rate compared to bank lending.
  7. Bad credit not considered for short-term collateral loans.
  8. Discuss your finance scenario with us to find the best solution.
When can I expect to receive funds?

How it Works

  • After the online submission, you may receive an online indicative pre-approval, next request is to upload bank statements and other documents to verify your business details for a quick assessment.
  • Based on the amount required, your dedicated account manager will contact you within 2-4 hours to advise the necessary documents for approval and discuss your repayment options.
  • The onus is on you to provide all details in the quickest manner; typically we can fund within 5 to 10 business days.
Do home businesses qualify?
  1. Yes, we can fund appropriate home businesses that established with solid regular turnover
  2. Unsecured business loans assessed on your monthly sales and the business ability to pay back the loan
  3. The online or home business registered in Australia with ABN and at least one director or owner resides in Australia
  4. Will require 12 months trading history
Do you finance contractors?

Yes under the following qualifying criteria;

  • 3 years in business
  • min 5 employees
  • must have commercial or business premises
  • credit score of 600+ with no dishonours, no unpaid defaults, no judgements
  • Short-term 5-9 months
  • Unsecured from $10K to $70K
  • must show min 8 monthly deposits
Type of working capital loans?
  1. Unsecured Business Loan is a simple business loan that does not require a credit card and EFTPOS processing. Bank deposits from all methods. Payments made daily or weekly which allows better management of your cash flow
  2.  Merchant cash advance is an advance against your future credit card and EFTPOS sales. Repayment terms are flexible and calculated based on monthly turnover and draw down amount and industry sector
  3. Working Capital using property, vehicles, plant and machinery as collateral. Terms 3 months to 2 years. Bad credit accepted and no financials necessary for asset lending. Must show viable exit strategy to repay the loan.
  4. Alternative Capital through debt and equity finance. Also, refer to our capital raising services
    Invoice Financing allow the business to access up to 80-100% of the value of an outstanding invoice.

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