If it's time to grow your company, you'll need recourse for working capital to cover the cost of new hires and many other expenses. Not every would-be entrepreneur has the resources to launch a business all by themselves. Business loans/ business finance can help in this situation.

Unlike most good things, business loans are challenging to come by. Because they carry a higher level of risk for the investor than personal loans, they have more strict eligibility conditions.

Even though many business owners wish to apply for a business loan, they need clarification on whether they qualify. The enormous quantity of data on small-business loan regulations that is available online doesn't help.

Documents you Need to Apply for Business Finance

Here is a list of documents you need to apply for business finance (in Australia). So, without any further ado, let us dive right in.

Documents you will be needing:

1. Credit report documents.
2. Financial statements.
3. Proof of individual income.
4. Bank Statements.
5. Business documents.

Credit report documents

Your company must preferably be able to establish a history of repaying loans in whole and on time to be granted access to more cash.

Even though getting authorised for a loan is only sometimes challenging, bad credit will probably force internet lenders to offer you loans with higher interest rates or lower amounts. They could need collateral in specific circumstances to protect the loan.

The discrepancies between your personal and corporate credit ratings will rely on how your company is set up expressly. Typically, it is advised that you attempt to establish a distinct legal company for your firm. In this way, your chances of getting business finance as a company owner won't be impacted by things like past-due payments on old-school loans.

Financial statements

Financial statements are documents that describe a company's operations and financial performance. Government organisations, accounting companies, etc., frequently audit financial statements to guarantee their integrity and for taxation, funding, or investment purposes.

When it comes to business finance in Australia, your lenders will want to look at some of the critical data for your company that can only be found through the company's financial statements.

You will need four primary financial documents to apply for business finances. They are,

• Cash flow statement.
• Income statement.
• Statement of retention.
• Balance sheet.

Proof of individual income

Paperwork detailing your earnings over a specific period, typically a year, is considered proof of income. These records attest to your ability to earn the amount you claim.

Banks and investment firms need these documents to assess your ability to make recurring payments on your business finances.

Throughout the year, you may access your year-to-date income, tax, and super information via the ATO app or any other ATO services via your myGov account in Australia.

Most businesses have until July 14 to review and complete their employees' annual income statements. The income statement will also be designated as "tax ready" in your myGov account after it has been finalised.

By the end of July, further data is typically pre-populated into your tax return. This contains data from banks, government organisations, and health funds.

When applying for business finance, you can use these tax papers as proof of individual income.

Bank statements

Your bank statement is another vital document you might need when applying for a loan.

The banks understand the individual's financial stability by carefully examining the statements. The banks attempt to gain insight into the applicant's monthly bills and saving practices from these statements. These are required to confirm the applicant's creditworthiness and ability to repay the loan instalments on schedule.

Additionally, it aids the banks in calculating the amount of monthly net income deposited to the individual's account, which is used to establish loan eligibility.

Additionally, they attempt to check your bank statements for Cheque Bounces. If your checks bounce frequently, it could be difficult for you to acquire loan approvals since it shows that your finances are unstable and that you might not be able to pay back the loan payments on time.

They also verify if each credit card payment was made on time.

Identification

This one is a no-brainer. You must have proper identification documents to get your business finances approved.

Plenty of documents can be used for identification purposes regarding banking. Here are the primary identification documents that you can use.

1. Australian passport.
2. Australian birth certificate.
3. Australian citizenship certificate.
4. Australia driver's license.
5. Australian document of identity. 
6. Australia Post Digital ID.

Even though other documents like Medicare cards, Seniors cards, marriage certificates, or utility bill papers can be used as proof of identification, we highly advise you to stick to the primary list above.

Business documents

The last thing you need to show your business (especially if you do not have a trading background of over 12 months) is some extra paperwork regarding your business.

These documents allow the banks to understand your business better and determine whether it's eligible for business finances. Some of the extra copies you might need for your startup finance are,

1. Solid business plan.
2. Lease agreements.
3. Cashflow forecast.

Remember that your cash flow forecast should estimate how much money you anticipate making and spending over the upcoming 12 months.

Final Thoughts

These are the Documents you need to apply for business finance (in Australia). You might be asked for more documentation because the list of documents in this article needs to be more inclusive. 

You may also be asked for other documents depending on your company's specifics, including its industry, organisational structure, and financial requirements.

Stay tuned for more updates.