The truth about getting a loan by an owner of a small business versus an employee

Small Business is reported as the back bone and employer of so many Australians in our Cities and Regional areas. Though they do not get the same benefits employees receive in the pursuit of income analysis. Good or bad, Judge Lending Professionals are experienced in this specialist field.

Small to Medium Enterprises (SME) strive to achieve in their area of specialty and passion. Therefore, we believe Entrepreneurs should be congratulated for their risk and exposure to failure. 

SME’s are providing opportunities for many locals to earn a wage in return for helping entrepreneurs achieve their personal and business objectives. Depending on the size and mechanics of the business, it will ultimately determine the level and number of employed people. The risks undertaken by entrepreneurs come at a tremendous costs. Also as disadvantage for achieving  personal objectives: usually on an unmeasured personal, family and time perspective.

Lenders actively pursuing employees rather than small business owners

Ironically, all lenders will actively pursue employees of these entrepreneurs for Home and Car loans. Even without the need to investigate the employer’s business success or growth plans- and many would argue, nor should they. The simple wages PAYG slips and ATO Notice of Assessments help with the loan application process. Along with other non-business-related information to secure loans for employee ambitions, self-gratification and family needs/objectives. There is little need for Accountants advice, plans and cashflow spreadsheets regularly required for a self-employed owner. Many times, we feel some of the SME prerequisites are an advantage for many of the PAYG borrower’s we see. We feel these are areas of concern and benefit to secure a more stable financial outcome for the endeavours of individuals/couples.

This is where we feel an entrepreneur is heavily penalised for wanting to pursue their own personal business growth, car and home loan objectives. The business is setup with owners receiving wages, like their employed staff on wages/pay advices/PAYG. Some lenders heavily scrutinise small, large and medium business structures in their ambition to grow, build, employ more staff and ultimately be of benefit to their surrounds and themselves. They really require the professional services from an Accountant and Financial expert when looking at scenarios versus lenders understanding the SME ambitions.

Business assessment based on past data

The entrepreneur’s dilemma is a costly road of advice and a specialist professional’s record keeping and analysist presentations, not over three weeks but for at least two years of past data. The business is assessed on past data not the future possibilities from their current performance.

Businesses cannot simply rely on the same pay slip or ATO Notice of Assessment from their business but rather require the last 2 years of full business financials along with many other documents to help with a loan assessment. Even though they may employ 1 to 200 employees, who all had their car or home loans approved from the same business pay slips, the business is placed through an in-depth analysis to enable plans for growth, investments, new machinery and plant. We understand the policy reasons though find the dichotomy between employee and employer quite harsh in some circumstances.

Judge Lending Professionals are here to help..

With our service, we help the entrepreneur with introductions to the lenders who understand small business. These are lenders who NOT just say they do. In addition, they DO understand and act with the advertised commitment for business to succeed. A Judge lending professional has the experience and knowledge required to link lenders to the SME.

We believe all people (self-employed and PAYG) should be linked to help achieve their dreams, needs and objectives. We actively recommend the use of good Bookkeepers and Accountants to help the business achieve all its goals. Being prepared will help your journey for personal objectives being an easier road.

Speak to us today on 02 4732 3844 or book a meeting and allow us to help you on your application for a loan.