November / December every year is the best time for a self employed person to source finance, the reason for this is if you’re an organised business and have your returns done (lodged or not with the ATO) then you can work with your broker and ‘select’ which two years to submit.
You see when you’re self employed the banks want to see the last two years of financial statements and tax returns. They then average the two years out and then use these numbers to assess whether you can service the new borrowings you’re seeking.
So in November and December you can choose to use the year that just finished in June, or you can use the two previous to that. So in essence you have three years to select from and your broker will look at all three and suggest which ones you should use. Now there’s a few stop gap measures the banks have, for example if the two years have a variance of greater than 20% then they will take the lower of the two years, so you can’t cheat the system. But if your year on year growth is 20% + every year then it is always nice to use the most recent figures and the previous year to reflect really what it is you’re doing in your business.
So there are some advantages of having your financial statements prepared early. If you’d like to have a casual chat about your financial statements and how far they will stretch with a lender, call one of the Trilogy Team on 1300 657 132.