Over the years, we’ve worked with countless small business owners to secure financing that drives growth and stability. One key lesson we’ve learned? Spreading your finance across multiple lenders can be a game changer. While keeping everything with one bank might seem convenient, diversification can offer significant advantages in borrowing capacity, flexibility, and risk management. 

 Declined by a Major Bank? You Have Options 

Many small business owners, whether startups or well-established businesses, face rejection from major banks when seeking financing. However, alternative lenders provide valuable opportunities. By leveraging our relationships with various financial institutions, we’ve helped numerous SMEs secure funding when the big banks said no. Whether it’s funding for a new venture, working capital, or asset purchases, having access to multiple lending options sets your business up for success. 

 Increased Borrowing Capacity 

One of the biggest advantages of diversifying your lending is the potential to increase your borrowing capacity. Different lenders assess risk and lending limits differently. What may be a hard cap at one institution could be just the beginning with another. Strategically allocating your loans across multiple lenders opens greater financing possibilities to fuel business growth and expansion. 

 Flexibility and Risk Management 

A diversified lending strategy ensures that you’re never overly dependent on one institution. If one lender changes its policies, tightens restrictions, or experiences technical issues, you still have other financial avenues available. 

Consider the following benefits of multiple lending relationships: 

• If one bank has a technology failure, you still have access to cash through another. 

• If you miss a payment with one lender and experience temporary restrictions, other credit lines remain open. 

• Separating trading accounts from your home lender ensures that your business finances remain independent and secure. 

 Tailored Lending Solutions 

Not all lenders specialize in the same type of financing. Some excel in equipment finance, while others provide better terms for commercial property, vehicles, or machinery. By strategically choosing lenders based on their strengths, you can access the best financial products for your specific business needs. 

For example, a manufacturing business might require both working capital and new equipment. We might recommend using an alternative lender for a fast, unsecured loan to cover immediate cash flow needs while securing equipment finance from a more traditional institution. This tailored approach optimises borrowing costs and enhances financial efficiency. 

 Enhanced Negotiating Power 

When you maintain relationships with multiple lenders, you have leverage. Lenders are aware that you have options, which can result in better interest rates and more favourable loan terms. Savvy business owners often use competing loan offers as bargaining tools to negotiate better terms with existing lenders. 

Faster Access to Funds 

In the fast-paced world of business, speed is crucial. Having pre-established relationships with multiple lenders means you can access funds quickly when opportunities arise. Instead of undergoing lengthy application processes each time, you can tap into existing credit lines or swiftly secure new financing. 

 Exploring Alternative Finance Options 

Australia’s SME lending market has evolved significantly, introducing diverse financial products that cater to various needs. Businesses can now borrow against assets like vehicles, machinery, and even intangible assets such as invoices. Some lenders even offer unsecured loans ranging from $5,000 to $250,000 with terms between 3 to 36 months. With a diversified approach, you can explore the most suitable financial solutions for your business. 

 Strengthening Your Credit Profile 

Managing multiple loans responsibly can improve your overall credit profile. Demonstrating that you can handle various financial obligations increases your credibility with lenders and may lead to better financing opportunities in the future. 

 Protection Against Policy Changes 

Lending policies can change without notice, affecting borrowing limits, interest rates, or loan structures. Relying solely on one institution makes your business vulnerable to these shifts. Diversification acts as a safeguard, ensuring that your business always has access to financing, regardless of market changes. 

 How to Structure a Diversified Lending Strategy 

Here’s a breakdown of how businesses can allocate loans across different financial institutions: 

Home Lending – Lender A 

• Protects your home from cross-collateralisation risks. 

• May offer specialised mortgage terms with better rates. 

Commercial and Business Lending – Lender B 

• Separates business finance from personal assets. 

• Provides access to business-specific financial products and services. 

Business Cash Flow – Lender C 

• Ensures smoother tracking of business transactions. 

• Simplifies tax reporting and overall financial management. 

Personal Cash Flow – Lender D 

• Helps with budgeting and personal expense management. 

• Protects personal finances from business-related risks. 

Leveraging Technology for Simplified Management 

A diversified lending approach may seem complex, but modern banking technology makes it easy to manage multiple accounts. With digital banking, you can: 

• Access all accounts 24/7 from anywhere. 

• Transfer funds instantly between different lenders. 

• Set up automated bill payments and scheduled transfers. 

• Track financial history and generate reports efficiently. 

 The Bottom Line 

While keeping all your finance with one lender may seem simple, the advantages of diversification far outweigh the convenience. Expanding your financial relationships across multiple lenders provides better borrowing capacity, flexibility, tailored financial solutions, stronger negotiating power, and greater financial security. 

As your finance broker, we’re here to guide you through the complexities of the lending landscape. Whether you need working capital, asset finance, or tailored lending strategies, we can help you build a diversified lending portfolio that supports your business growth and financial well-being.