You don’t need all your ducks in a row to get approval for a business loan
Nick will tell you that lenders can be the good guys, you just need to know which door to knock on.
Chester White Cured Diner is an American styled small bar at Potts Point. Their specialty is cured meats, seafood, pickles and pasta, coupled with a hand selected range of vino that includes some rich organic reds. It is the sort of bar that attracts a cult following. The type of people who love of life (and live it!!) and who appreciate the honest, ‘say it how it is’ attitude and carefully prepared, delicious fare that is served up.
Until recently, Chester White was being run by its original founders. Deciding it was time to move onto other projects, they put the popular diner up for sale. For Nick Sullivan, this was an opportunity that was too good to miss. Nick had been managing the bar for two years and had been there from the very beginning. Nick loved what the bar stood for and who it attracted, and he had strong passion and vision for where he could take it in the future. However, if he was going to purchase the diner he needed fast approval for a business loan. The owners wanted to commit to another project and the pressure was on.
Nick decided to use Credit Compass’s Lender- Connect service as he knew his situation wasn’t going to meet the ideal credit profile for a lot of lenders. While he had been managing the business for two years he wasn’t the business owner, and he was anticipating some resistance from the banks which could lead to difficulty getting business loan approval.
Nick’s potential barriers to business loan approval:
- No credit history: Nick was a first time borrower, he’d never applied for a loan before and had no repayment history.
- Speed: the previous owners needed to exchange on the sale quickly and Nick needed a fast credit decision.
- Security: Nick was after an unsecured loan for the purchase of the business and had 50% of the total purchase price in savings.
A management buy out with unsecured finance does not typically meet the ideal lending profile of most banks. Fortunately though, Nick had not damaged his official credit score by submitting loan applications to banks that would most likely have been rejected. With a clean credit record, this gave our team the best change of getting Nick the business loan he needed and fast!
Predicting whether Chester White would be approved for a business loan
As Nick had not been across the financial side of the business in his role as manager, our first task was to get an understanding of how Chester White’s finances would be viewed from the perspective of a lender (i.e. knowing the potential creditworthiness of the business). Chester White Cured Diner had been operating for two years and used cloud accounting software to manage their accounts so this made the credit assessment process very quick and easy. Our team ran an online pre-qualification (PQ) credit assessment and we were able to predict the creditworthiness of the diner in less than 5 minutes.
PQ Credit Assessment results= YES!!
The PQ credit assessment report indicated that Chester White’s finances were in good shape and loan serviceability was very good. The financial ratios would be viewed favourably by the lenders and Chester White looked like a creditworthy business.
NEXT: Our Lender- Connect team matched Nick with a lender who could quickly finance the loan
John, founder of Credit Compass had spent a lot of time curating our panel of lenders. Rather than just get a lot of lenders on board and use the ‘one-might-eventually-fit-the-puzzle’ approach, John has evaluated each lender before bringing them onboard. This means he has a very clear understanding of the lending preferences for each lender. So when John is approached by a SME who doesn’t meet the ideal or typical lending profile, he already has a pretty good idea of who would be most likely to finance the loan on the best terms.
John made a few calls to potential lenders and found one top tier lender who was prepared to offer Nick an unsecured business loan with an interest rate that was 5% LESS than what he had been prepared to pay AND over a longer term of 3 years, meaning that his repayments would be lower. Nick was keen to go ahead- as long as it could happen super fast.
To speed up the business loan approval process, John advised Nick on how to prepare a successful application. This meant presenting business and finance information in a way that would make it easier for a lender to process the application more efficiently from their end. Once Nick had all the information ready and the lender had seen the credit assessment report, the formal loan application process got underway very quickly. Nick was approved and received the finance in time for his deadline.
Overall, it was a fantastic result and here’s what Nick had to say about working with us:
Credit Compass were great. They made the process easy and we gained finance with the first bank they introduced us to.
The loan product they found for me exceeded my expectations in terms of rate, term and security. That’s not the sort of surprise that I’d thought I’d find when I began looking for a loan.
We would not be in this position if it wasn’t for John and the team at Credit Compass. Thank you!Would i recommend Credit Compass? You bet!!! — Nick Sullivan, Chester White Cured Diner
UPDATE: How is Nick going now?
John Pellew, our CEO caught up with Nick. Since Nick took ownership he has guided Chester White Cured Diner to continued growth of over 60% and he paid down the business loan faster than planned. A fantastic result for this cult eatery in the streets of Potts Point!
If you would like to learn more about Nick and even pop in for their infamous ‘Truffle Cacio E Pepe’ served out of a Sardinian truffled Pecorino cheese wheel, visit them at www.chesterwhitediner.com.au
