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A small business loan can help you:
- Expand operations
- Renovate a new space
- Purchase equipment and inventory
- Develop a website
- Invest in marketing and promotions
- And much more...
A small upfront investment can become a huge advantage down the track. That leg-up can really get things moving in the right direction.
Boost your business with the right loan
Frequently asked questions about small business loans
- Traditional bank term loan
You’ll generally apply for a traditional term loan with the bank. Your lender may ask for a detailed business plan and any other personal and business documentation. A secured loan from a financial institution typically requires collateral—an offering of an asset for the loan—and has a lower interest rate than other types of loans. This is because your backing of the loan with an asset lowers your risk in the eyes of the lender.For the term of your loan, a bank will generally set up a regular monthly payment for you.
- Business credit cards
You can (and many small business owners do) use a business credit card to fund start-up costs and other business activities. The interest rate may be high, but often, if you pay back the amount you borrowed within the ‘interest-free’ period (typically about 55 days) you won’t need to pay any interest at all. This depends on the type of business credit card you buy, so ensure you check with your credit card provider as not all cards will offer this.
- Unsecured business loans
Potentially the easiest and fastest way to get a small business loan is through a fintech lender. Growing in popularity as a hassle-free option, an unsecured business loan normally doesn’t require a complicated lending process. However, the lender may still wish to analyse your finances while determining how much to allow you to borrow. It’s also worth considering that many of these companies are newer on the lending scene. Some business owners feel a deeper sense of trust with banks and prefer to take out a secured loan with one of the traditional “big four” than a digital-based fintech lender.
- Business line-of-credit
Assuming you’ve been approved, this business finance option allows you to borrow a large amount of money without having to pay interest on whatever you don’t spend. You repay the loan in your own time and you are free to use the credit whenever you need. Business lines of credit often start at $50,000, so if you’re looking for a smaller amount, this type of finance may not be the best option for you.
- Business equity loans
A business equity product typically takes the form of either a loan or line of credit, which is then secured against a residential or commercial property you own.Other business loan products that will necessitate your backing of a loan with property include low-doc and no-doc loans. These allow you to access capital without a lot of financial paperwork, but they can have higher interest rates due to the increased risk for the lender.
- And more…
The finance world is growing at an exponential rate. New lenders are cropping up all the time and there’s no doubt that getting a small business loan is easier than it has been before.But the digital and financial landscapes are ever-changing. That means you need to stay across new products and loan types if you want to have full confidence you’re on a great-value deal for you. A trip to the bank is no longer your only choice if you need capital for your business.Using a simple comparison tool like ours can help you get a thorough snapshot of some of the best small business finance options out there today, from a diverse range of lenders.
We compare over 70 lenders across Australia. ANZ, Bank of Melbourne, Lumi, Moula, AMP, Capital Finance, Liberty and ING are just some of the financial institutions and companies we’ve partnered up with, but we also look at offerings from a wide pool of other reputed lenders.
We compare offerings from the big banks as well as smaller fin-tech startups and other lenders in between. This gives you an invaluable industry snapshot, meaning you don’t need to rifle between so many different loan offerings yourself (which can be overwhelming.) Our goal is to help you save time and money in finding the best small business loan for your unique needs.
Whether a small business loan is right for you or not depends on multiple factors. Before investing in a new financial product, it’s always wise to take a moment and ask yourself some important questions, such as:
- How much is a small business loan going to affect me financially (both now, and in the future)?
- How might a small business loan help me achieve my short-term and longer-term business goals?
- Am I serious about taking my business to the next level? Can I commit to it 100% and pay off the loan comfortably?
A small business loan will likely be right for you if you have a healthy command over your personal finances, a specific business goal and strategy (that you know a loan could help to achieve) and a decent track record with creditors.
Start by deciding which type of small business loan you’d prefer. Your choice will determine what sort of documentation and paperwork you’ll need to prepare for the application. If you’re overwhelmed and unsure about where to begin, it may be wise to consult the advice of a finance expert, accountant or business strategist.
But before even doing this, your first step should involve preparing a detailed business plan. Once you’ve chosen a lender, you can outline your proposed business venture with specific facts and figures.
This information will help the lender advise the right kind of finance for you.
Keep in mind: you don’t have to go with this lender. You could always take the product recommendation and see how other similar products on the market stack up in terms of interest rate, ease of application and other factors important to you.
Make sure you have answers to the following questions on hand before applying with a lender:
- How much do I need to borrow?
- How much security in assets can I offer the lender? (In turn, you’ll want to know how this affects the interest rate)
- How is my business planning on repaying the loan, interest and any fees involved?
- How long do I need this loan for?
- What am I planning on using the funds for?
Make sure you’ve thought over these questions in detail before approaching the lender. That will give you the best chance of success in getting finance for your business.
Biz Loan Comparison can help you secure the right loan by taking your unique business needs into account and allowing you to compare loans from some of the best lenders currently on the market.
Seeing industry-leading loans side by side in our easy-to-use comparison tool helps you choose the best one for you: the loan that fits right into your business vision.
A small business loan is no simple affair. It’s a big commitment, and a big priority for success-driven businesses. It’s also something that can affect your personal finances, so we want to make sure the option you choose is comfortable for you.
Our team of advisers will answer any questions you may have, making sure you eventually get a great-value and competitively-priced small business loan for your needs.
There is no set minimum and maximum amount—this is case-by-case. How much you can borrow will depend on what type of business you own, the state of your financial affairs and other individual factors. Your lender will ultimately be the decider! Be honest and upfront with yourself and your lender by opting for a loan amount that will adequately cover your business expenses while also being comfortable enough to pay back in the set loan term.
Small business owners use loans to fund a wide number of costs involved in starting and running their businesses. These typically include:
- Sales, advertising and marketing spend—billboards and social media ads cost money!
- Business equipment
- Real estate and vehicles (e.g. paying office space rent)
- Paying wages to employees
- Better managing cash flow (e.g. soliciting the services of an accountant)
- Expansion of operations (e.g. moving to a new space, hiring new staff)
- Investing in inventory and supplies—starting a business in the beginning can be very costly when you’re yet to purchase everything you need or have limited resources
Every business needs investment to grow and prosper. The beauty of a small business loan is that you can use it to fulfil any lawful enterprise that helps your unique business in the most efficient way possible.
When assessing eligibility for a small business loan, different lenders will look at different aspects of your profile. The loan type you’re applying for will also play a role.
But generally speaking, it helps to keep the following factors in mind:
If you’re a small business owner requesting funding, most lenders will take a good look at your personal credit. They’ll want to know that you have a decent credit score, but they also may want to ensure that you’ve built great credit for the business itself.
Think about it…if you can back your loan with a valuable asset, you’re a much less risky customer to lend money to. The lender will ascertain that if you’re willing to put something on the line, you’ll be more likely to pay off the loan. Collateral-based loans, as a plus, can be easier to get approved for and typically have a much lower interest rate.
- Current debts
A lender may be concerned if your debt-to-income ratio is off-kilter. Too much debt can kill your chances of getting a new loan, particularly if much of your debt comes from other loans that you’re still yet to pay off. On the other hand, if your debts are not excessive or surmounting beyond what’s considered easy to manage, you may have a better chance at getting approved for your loan.
- Your business age
Is your business an old-timer or barely past its second birthday? This factor could affect whether or not you’re approved for a small business loan. Generally, new businesses often have greater difficulty getting funding due to their lack of a track record. It’s this track record that many lenders look for when determining your eligibility.
- Cash flow and income
The other side of the debt-to-income ratio is cash flow and income. A lender will look at these numbers when assessing the level of risk your business presents. Many experts agree that the more cash flow and income your business is earning, the higher the chance you’ll be approved for a small business loan.
Some industries carry greater risks than others when it comes to the likelihood of business success. For this reason, lenders may look at the type of business you operate during the loan approval process.