Unlike the majority of lenders FastBusinessLoans review, Valiant Finance is not a direct lender. You do not go to Valiant Finance for funding, rather the Fintech is a business loan marketplace that connects potential borrowers with over 80 SME lenders. With the Australian small business lending market saturated with non-bank lenders and SME fintech, giving borrowers great diversity of lending choices and products, Valiant aims to help business owners find the best loan deals with ease.
Unsecured business loans are simply loans for business purposes that do not require collateral to secure the loan.
This type of loan option is ideal if your business lacks assets such as property or vehicles to guarantee the loan and you need funds fast. This is because the lender does not need to perform a valuation on the assets you will secure. As there is no collateral, the lender will look at the financial health of the business using measures such as cash flow and credit score.
On the flip side, as you do not need to provide collateral, business loan rates and costs can be high as the lender is taking on more risk. To help the lender minimise their risk, they will look at the creditworthiness of the business and require a personal or directors guarantee, this is an agreement obligating the guarantor to pay back the business loan personally in the event the business is unable to do so.
From 9% (typically 10% to 20%)
Early repayment allowed (depending on the lender)
Application in minutes
The business bank account can have funds in 24 hours after approval
A secured business loan is a loan guaranteed with an asset of assessable value that will be repaid by a fixed period of time If your business owns assets that a lender will accept for collateral such as property, equipment or vehicles, then using these assets as part of a secured term loan can result in a lower interest rate and a longer loan term (relative to other loans). Use of security also allows your business to overcome issues such as business creditworthiness and lack of cash flow or financial health of the business such as lack of cash flow.
While the use of collateral to secure business finance has a number of benefits, the business does need to have assets to use and the business may need to prove they have ownership claim of the assets. Some lenders may require full ownership of the asset while others may accept assets that still have a partial mortgage. The main risk of using security is that the business can have their assets repossessed in the even loan obligation are not met, if the business needs these assets to maintain operations then these factors should be kept into consideration. Lastly secured loan may not be the best choice is the business needs funding fast as there may be delays (and costs) so the lender can assess the value of the assets you put up for collateral.
ABN
Have suitable assets with needed value
Proof of ownership of assets
$250,000 to $10M+
Up to 15 years
Often fortnightly or monthly
Unlike traditional loans, where borrowers are given one lump sum at the start of the loan, a line of credit works differently. A line of credit a credit or loan facility that you can draw from and pay back at any time within a pre-determined time from. The benefit of this arrangement is that you will only pay interest from the time you draw the capital from the facility, this differs from a standard loan where you pay interest from the start of the loan even if you don’t use all the funds. As you can access a credit line at any time, a line of credit is similar to a bank overdraft or a credit card, the main difference is you access a standalone facility, not a credit account.
A line of credit does give the best flexibility for funding but it is important to be aware that even though interest costs are low, this type of finance does come with fees in the form of maintenance and withdrawal. These fees can creep up on you as credit line does not always come with a regular repayment schedule so you will want to ensure you are disciplined with your repayments. Some lenders may require security but if they don’t, you may need to show you can satisfy the lender’s tough qualification criteria.
With a Merchant Cash Advance (MCA), the lender advances working capital to the business in exchange for a percentage of the daily sales by EFTPOS, credit or credit cards. This option is best for businesses that take a large portion of sales via card terminals, tieing your repayment to sales makes an MCA suitable for businesses with seasonal cash flow as you pay less when sales are low. If your business model suits this type of cash advance, then you will not need collateral and application should be simple and a low bad credit score is usually ok as your sales are your security.
While an MCA is a very convenient financial solution, they can come with high costs as the lender is taking on higher risk and they should be seen as a short term solution, as most terms require payment within 12 months.
Examples of businesses an MCA is good for include:
- Retails
- Restaurants
- Hotels
- Online businesses
An MCA usually requires no security so can be fast to get if your business meets the lender’s minimum qualification conditions.
Advantages
Fast Funding
No fixed repayment schedule
Repayment is matched to turnover
Good option if you have bad credit
No collateral
Convenience as repayment as automatically deducted from daily sales
Disadvantages
One of the most expensive types of financing
Reduces your daily profits
Lose control over sales operations (cant accept cash sales)
May required to use lenders preferred payment system
An overdraft simply allows you to continue to draw funds from the businesses bank account once your transaction account funds are exhausted. Your overdraft account is directly tied to your bank’s transaction account to give you an open line of credit that you can draw from and pay back anytime. This type of finance is a good choice for peace of mind as it means the business always has access to funds to pay expenses and maintain cash flow even though the business no longer has savings in the bank. While an overdraft does have high-interest rates, you only pay for what you borrow so this can save you in the long run.
When choosing an overdraft, you need to make sure you watch out for hidden costs such as application fees and maintenance fees and overdraft do have come with higher interest than many other loan types. You should also be aware of all terms and condition as lenders can require you to repay the loan on demand which can leave the business in a difficult situation.
If your business is in need of equipment such as motor vehicles, machinery, business supplies and technology then equipment finance can be a good option.
Valiant Finance can help with equipment finance through a range of lending arrangements. These arrangements can include:
- Equipment loans (chattel mortgage) – With this arrangement, the business purchases the asset upfront and owns the equipment. The asset acts as the security
- Hire-Purchase agreements – This agreement sees the lender loan the business the equipment and the business own the asset when the loan obligations are paid
- Lease agreement – Similar to hire-purchase but business does not own the asset but in some instances can purchase the asset at its depreciated value when the loan is paid off
Each method has benefits so it is worth exploring each option.
Payments are daily for business days only.
Debtor finance allows your business to unlock the value of outstanding invoices without needing to wait for clients to honour their debt obligations. Valiant finance can help your business get immediate cash by allowing the business to use its accounts receivable ledger as security. This arrangement ensures your business can maintain cash flow rather than wait 30 to 90 days for clients to pay the invoice. Debtor finance is best for a business that invoice for payment such as services, manufacturing, trade and transport.
Valiant Finance can help with two types of debtor finance, these are:
- Invoice discounting – with this type of finance, your business is responsible for collecting the invoice payment from the clients
- Invoice factoring – With this type of finance, the lender will manage the payment collection from the businesses clients.
A business credit card allows you to access funds on credit anytime for business purposes. Possibly the easiest form of a credit to apply for and most convenient as you can use the card to pay for purchases in-store or online, credit cards are best for making small to medium purchases.
While credit cards are safer than carrying cash and a better option than cheque books, a credit card can be misused by untrustworthy employees and come with high-interest rates and other fees. These issues can affect not only the businesses credit score but also personal credit as business credit cards require a personal guarantee.
With Capify you can apply for short-term loans or merchant cash advance of $5,000 to $300,000 for 3 to 12 months. Capify does not offer other loans such as long term or lines of credit.
Commercial property finance gives you the capital you will need to purchase or invest in real estate that is used for commercial purposes.
Loan conditions will vary according to the type of property you intend to buy, the location of the property and how you intend to use the property.
Type of property
Tier-1 or standard property examples of commercial property include:
- Offices Space
- Warehouses / Storage
- Factories
- Shop fronts
- Shopping Centres
These type of properties are in high demand and can be used by a range of businesses so are come with more friendly financial conditions than tier-2 property. Lenders require a minimum deposit of 20-30% of the estate value meaning you can borrow 70 to 80% of the estate’s value.
Tier-2 or specialised property examples include:
- Accommodation (hotels, resorts)
- Hospitality (restaurants, cafe pubs)
- Gyms and recreation facilities
- Childcare centres
- Service stations
As these properties are designed for more specialised purposes, they can be difficult to finance due to a smaller potential pool of tenants. As a rule, expect lenders to only be willing to lend 50-65% of the property value. This means you may need to fund 35-50% of the estate yourself.
Location of the property
In addition to tier-1 and tier-2 types of property, the location of the property can also influence the lending conditions. Property in high demand areas such as a business district with high customer traffic will command better loan terms than rural property. Some lenders may not even consider lending to property in low demand areas.
Use of property
Property is purchased for one of two purposes. If you are looking to invest in property and lease it out then the loan process is simpler with better repayment. This is because lenders regard borrowers that invest in property as low risk so can offer better lending terms.
If you purchase property with the purpose of being an owner-occupier then lenders will have stricter eligibility and charge higher interest rates. This is because lenders consider these borrowers to come with a higher level of risk.
Types of loans
Valiant Finance offers 3 loans options, these are:
Full-doc – If you or your business is willing to undergo a complete assessment of your finances and guarantors then the lender will offer you better rates and lending conditions
Low-doc -Requires less paperwork than a full doc. This arrangement only requires you to declare you (or the business) total income and show your ability to satisfy repayments.
No-doc – If you do not wish to use documentation then you (or the business) will need enough security to cover the loan. A no-doc loan has the fastest funding but comes with the highest rates
About Valiant Finance
Valiant Finance is an SME Fintech lending specialist that was founded in Sydney, Australia in 2015. The lender aims to help Australian small businesses in Australia that traditionally struggle to get funding from major banks such as Westpac, NAB and ANZ. The current CEO (co-founder) is Alex Molloy
Valiant finance operated with the following licence
CREDIT LICENCE
Valiant Finance Pty. Ltd. (ABN 95 606 560 150) holds Australian Credit Licence 500 888.
The lender is an accredited member of the Finance Broker Associated of Australia (FBAA)
