When applying for a business loan, many entrepreneurs may not be fully aware of the vast amount of personal and financial information banks can access during the approval process. Leading lending expert and founder of Finch Financial, Julian Finch, highlights the importance of understanding what banks can see and how it may impact your application.
“Banks have access to a lot of information when assessing your business loan application. They are not only able to see the information you provide to them, they are able to access a lot of other information as well. This can impact your application in many ways, often in a negative way,” explains Finch.
In his experience, Finch strongly recommends business owners consult with an experienced finance professional, such as a broker, to navigate this complex process. “This is one of the key reasons why I recommend to people wanting to refinance or apply for a completely new business loan, to speak to an experienced finance professional such as a mortgage broker. We know what type of information the banks can and can’t see and we also know how to ensure you provide information to the bank that is going to support your loan application not hinder it,” he adds.
Finch Financial has achieved remarkable success in securing business loans for clients, boasting some of the highest approval rates in the country. However, Finch cautions that business owners must be prepared for banks to scrutinise far more than just their loan application forms.
What Information Can Banks See?
When applying for a business loan, especially if you use the same bank for personal accounts, the lender can access much of your financial history. “When applying for a business loan with the bank that you already have your credit card or personal loan with, the business loan application team is able to access all of this information. They can see whether you make your repayments on time,” Finch explains.
Moreover, if your business banking and personal banking are under the same roof, the bank will be able to monitor your day-to-day financial activities. “Even worse, if you have your salary credit account and day-to-day banking with the same bank, they can also see this information as well,” Finch adds. This means banks have a much broader view of your financial situation, which they will consider when assessing your business loan application.
Can Banks See Your Spending Habits?
A significant concern for many business owners is whether their spending habits are transparent to the bank. If your business and personal banking are consolidated with the same institution, the bank can examine your financial transactions in detail. “If the bank you are applying for a business loan with is the same bank you do your day-to-day banking with then it will be able to look through your accounts to determine your spending habits,” Finch says.
Finch also points out that different lenders have varying policies when it comes to business loan assessment. Some lenders may not request personal banking details if your personal banking is with a different institution, but others may want evidence of your savings and financial contributions.
How to Minimise Visibility of Your Financial Information
For those concerned about the impact of their personal finances on their business loan application, Finch suggests working with a finance professional. “When applying for a business loan, the best approach is to be honest and to provide the bank with the necessary information it requires to assess your application,” he advises. “The best way to navigate this process is to work with a finance professional. More than 70 percent of home loans are written by brokers. We know the finance landscape better than anyone and as a result, we make it much easier to navigate the business loan application process.”
In his years of experience, Finch has helped thousands of clients secure the most suitable loan for their needs. “We understand the market and we have access to loan products that are not commonly known to the general public,” he says. “This is because banks promote and sell their most popular products, and generally those products are the ones that achieve the best return for them, not the borrower.”
The Importance of Professional Guidance
If you are declined for a business loan at one bank, it’s important to understand that you don’t have to declare this to another bank. “Unfortunately, business loan decline rates are high, but if you work with the right finance professional who understands your circumstances and connects you with the most appropriate lender, you should achieve a good outcome,” Finch says.
For business owners, the key to a successful loan application lies in partnering with a knowledgeable broker who can help navigate the complex process and find a lender that best suits your individual business needs. As Finch puts it, “Not only do we work hard to achieve the best outcome for our clients, we also work hard to retain our clients.”
With the right support, business owners can feel more confident in securing the financial backing needed to grow and succeed.
