What To Ask Your Accountant About Business Loans
Accountants are a great source of lending advice for small business owners. For many business owners, it’s a frustrating process to search for and make applications for loans. It can take many hours, and for most business owners, those are hours that you can’t spare! Meanwhile, it’s estimated that as many as one in five business owners do not even apply for a loan, because they are so discouraged about how time-consuming or frustrating the process is – or both!
Because business owners often have a great relationship with their accountant, they’re good people to ask about loans. Actually, not just good; they’re the expert in your finances, so they’ll be able to offer better advice than anyone else. If you don’t have an accountant, why not find an accountant here? It’s also a good idea to ask recommendations from colleagues you trust who work in the same sector or have a similar type of business.
So, what to ask them? It’s well worth asking your accountant if they can help you with the following:
1. Preparing your finances
Applying for a business loan means you need numbers. And maybe these aren’t your forté. Or maybe you’re good with numbers but are pressed for time. Your accountant is a good person to ask (though you’ll need to pay them for their time!).
These are the types of documents that you’ll need to apply for a business loan and that your accountant could help you gather or prepare:
- Tax returns (two years’ business returns if available, one year personal)
- Business bank statements
- A profit and loss statement
- A business plan (if applying for a bank loan)
Each lender might ask you for different documents. Also, some might want other documents than what is on the list above. But to start with, if you have this basic info prepared and ready, it will mean that things are much simpler for you when you begin to look for that loan.
Perhaps the most important thing is that before you get to loan, you need to know what you’re going to do with it, how you’re going to use it, and where you’re going to place those funds. Your accountant can help advise you about all of these issues.
2. Answering your questions
We know from lenders that when they ask the question to business owners of how much they want or need in terms of loan, the answer is usually ‘the most you’ll give me’. Hmm. Not really something the lender wants to hear.
So, what’s your answer to that question? Before you go looking for a loan, you need to be able to answer some basic questions. How much money do you need? How are you going to use it? How are you going to repay it?
Don’t know the answers? Talk it through with your accountant, who should be as familiar with your finances as you are, to work out the answers.
3. Avoiding unsuitable loans
Your accountant might be able to help you figure out not only what kind of loan you want, but what kind of loan you want to avoid. Together, you could compare business finance options. Are they sustainable for your business? Affordable? It’s not necessarily an easy task to figure out the real costs of a loan. There is not a standard and accepted formula in terms of business loans for disclosing the costs. Some lenders get, shall we say, a little bit creative in terms of the information they disclose…
You might want to consider checking out our business loan calculators. These can support you to figure out the repayment amounts involved with a business loan. If you don’t put in the work you may find yourself saddled with a loan with high costs that will cut into your cash flow and may even harm your business overall.
Talk to your accountant about how they can help you to avoid unsuitable loans, and if they can help you research business loan options if you don’t have the inclination, expertise or time!