What is a business loan annual review?

Any general questions you might have in regards to loans and finance.
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Otto Dargan
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Re: What is a business loan annual review?

Post by Otto Dargan »

Hi Quina and welcome to the forum.

Business should have their review published annually based on their past year’s performance and business loan annual review is an important factor lender checks before approving or declining a loan to the business.

The reviews for business loans are conducted yearly and they’re basically a financial health check of your business to make sure that you can qualify for a business loan.

Among other things, you need to provide up-to-date financials for your business, which can be difficult especially if you don’t have an accountant to help or you’re using a strategy to reduce your taxable income.

The bank will usually send an email (although it’s usually a legal requirement to send a letter) telling you that your annual review is coming up and will ask you to send through your latest business financials:
  • Accountant-prepared profit and loss statement (P&L) and the balance sheet showing your profits, assets, and liabilities for the past financial year.
  • They may ask for your latest Business Activity Statement (BAS).
  • Your latest personal income tax return (only needed if you’re a sole trader operating under your own name).
  • Your latest Australian Taxation Office (ATO) tax portal (this statement shows that your taxes have been paid on time. If they haven’t, it’ll show interest charged and it may be an indication that the business is in financial trouble or being mismanaged).
Along with these financials, the lender will take into consideration your current repayment history with the bank including missed payments and arrears and they may also provide general comments about the risks in the sector in which your business is operating.

However, the good news is that you may be able to skip it altogether. We can be reached on 1300 889 743 or you can fill in free assessment form to see if you qualify for a loan or not.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: What is a business loan annual review?

Post by Otto Dargan »

Hi Quina,

As a general rule, business loans under $1 million are exempt from the annual business review. Moreover, if you could adhere to the below, there are chances that you can avert the review.
  • Low Loan to Value Ratio (LVR): Business loans that are for less than 50% of the value of the property that you’re using as security (Loan to Value Ratio) may also help you to avoid annual reviews.
  • Strong cash flow and business case: If you can provide an accountant-certified business plan showing cash flow projections as well as evidence of successfully running a similar-sized venture in the past, you may be in a position to negotiate on the need for a business loan annual review.
  • Maintain a solid repayment history: If you can show evidence of a strong repayment history of any current or recent loans in your name, including personal loans and a mortgage, it can work in your favour.
Additionally, if you can dodge annual review, it’ll help you to save time and costs of an accountant and you don’t have to worry about your tax returns.

Whatever your business loan needs are, call us 300 889 743 today or complete our free assessment form to speak with one of our highly experienced mortgage brokers.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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