The secret to securing funding

The secret to securing funding

This Fairfax Media article suggests one way of enhancing your prospects of getting a bank loan to buy a business is to buy a business which has a property attached to it. Whilst its true banks do like to lend against property we offer a cautionary note that most small business owners have a limited capacity to borrow and if you use this in part to purchase the property then you’ve got less debt capacity available to pay for the business. Plus you will have more debt which you must service and ultimately repay and then there is the the question “will there still be enough borrowing capacity to fund the working capital needs of the business particularly as it grows?” Gearing up to buy a business and a property associated with it doesn’t make sense if you can get enough finance to fund the on-going working capital needs.

Read more at http://www.theage.com.au/small-business/finance/the-secret-to-securing-funding-20150628-ghnyoi.html

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