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The day we have all been waiting for is finally here. But with Freedom Day comes a lot of anxiety and stress to reopen businesses that have been in hibernation for the past 3.5 months.
The businesses that could not operate properly, or not at all, during lockdown face great challenges in affording staff, stock and rental costs associated with reopening their business. With limited cash flow and a lack of access to funding being the main problems.
But all is not lost. There are few ways a business can look into securing additional funding during this very critical period. If you are in this situation, below are four tips to help you research different options for COVID recovery loans and apply for funding.
Research COVID recovery loan options
Now, it’s not going to be easy to find a lender that lends to a business that hasn’t generated much revenue during lockdown because of the increased risk for the lender. But there are forward thinking fintechs, such as alternative business lender lumi.com.au that just launched a specific COVID recovery loan called Lumi Kickstarter. This loan is specifically designed to help COVID impacted businesses kickstart their activity after lockdown.
How is it different from a traditional business loan? Lumi.com.au assesses your affordability based on your business’s pre-lockdown revenue meaning that even if you haven’t been operating during lockdown you might still qualify for a Lumi Kickstarter loan. They even offer a Payment Holiday so that you won’t need to worry about your loan repayments until mid November. It’s a great booster loan option to help strong businesses that are struggling to afford the reopening to hit the ground running and set themselves up for success.
As you can see there are options out there, so make sure you do your research and find a lender that suits your business’s unique needs.
Calculate how much you can afford to borrow
Make sure that you fully understand how much you can afford to borrow based on your current situation to avoid any disappointment when applying for COVID recovery loans. Applying for an unrealistic amount will only end in a rejection of your business loan application.
Many business lenders offer sophisticated online business loan calculators that can help you understand:
- How much money you can potentially borrow
- How much your repayments would be
- How long the loan would last and how much interest you would need to pay
Bear in mind that what you could technically afford might not always be the same amount that you would eventually get approved for. Especially if your revenue has been impacted by the recent lockdown, then your affordability will have to be adjusted accordingly.
Prepare as much as you can and don’t hesitate to reach out to a business lender’s customer service team to discuss all the details. They will be able to assist with calculating your affordability and preparing your online business loan application.
Prepare your loan application
Once you have found a suitable lender that’s able to cater for your needs and you know how much you can realistically afford to borrow, it’s time to prepare your online business loan application.
Get your financial documents ready and make sure that your credit history is clean as this can really help to secure better lending conditions, including loan terms and interest rates.
Find out if you have any available assets you can use as collateral to secure your loan against or if you prefer for the loan to be unsecured. If you prefer an unsecured loan, then find a personal guarantor to strengthen your application.
Make sure you have your business details and your identity documents ready to upload when you apply for a COVID recovery loan online.
Use funds to kickstart your business
Provided that you checked your affordability, followed the business loan application process correctly and provided all supporting documents, you should receive an outcome within a few business hours.
If your application was successful, you should even receive the funds on the same business day, depending on the type of lender you chose of course. Traditional banks might take a bit longer to process your application and funds, while many online lenders can usually turn around an application and funding within one business day.
This can be especially useful in a situation where you need urgent cash to afford staff or stock for the reopening of your business. Don’t hesitate to get in touch with specialist business lender lumi.com.au to discuss their Kickstarter loan.
Lumi.com.au is a leading online business lender dedicated to helping the best Aussie small businesses get back on their feet with Lumi Kickstarter – Australia’s #1 loan for COVID impacted businesses. Want to kickstart your business after lockdown? Head to lumi.com.au/kickstarter-loan to find out more.