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Learn about different types of business loans and finance
Running or starting a business usually requires large amounts of capital and businesses often use various forms of finance to help either start things up, expand or keep things ticking along smoothly. Business loans are popular finance options offered by both banks and non-bank lenders. Businesses can either be lent a lump-sum payment or a revolving line of credit, which is repaid, with interest, over an agreed term (generally anywhere from three months to five years).
Business loans come as either secured or unsecured loans and allow businesses to borrow from $5,000 to $1,000,000, though some lenders do not have limits on their borrowing amounts. Most business loans come with a fixed interest rate and you will need to make repayments on a daily, weekly or monthly basis.
Two types of business loans
Secured business loan You will need to use an asset, generally a residential or commercial property, as security against the loan. In return, you will generally receive a lower interest rate, have the ability to borrow a larger amount and are more likely to be approved by the lender. Some lenders do not have a limit on the funds that you can borrow with a secured business loan. The amount that you qualify for will instead be determined by your asset value.
Unsecured business loan You do not need to use an asset as security on an unsecured loan. As an unsecured loan represents more of a risk to the lender, you will generally be offered a higher interest rate and may be less likely to be approved for a loan, depending on the strength of your application. Unsecured loans can be beneficial for business owners who do not own an asset of value, or would prefer not to risk their personal or company property.
Compare the following business lenders
Quick guide to business loans
Am I eligible for a business loan? What's the best loan for my business? How do I compare business loans? How do business loan applications get approved? We take you through your business loan application to help you get it across the line.
Is your business eligible for a loan?
Age of the business
You'll usually need to have been operating for at least six months to a year for most unsecured business loans offered by alternative lenders and banks, but some do offer unsecured start-up finance. Invoice factoring and equipment loans have less stringent criteria on business age, but you'll need to have been operating for at least one year for business overdrafts or lines of credit.
Turnover
Your business may need to be making a certain amount of turnover in order to be eligible for a loan. This revenue may be monthly or yearly and can range from $50,000 to $200,000+ p.a. Other lenders simply require you to connect your business's accounting software or financials as part of the application process so they can calculate a loan your business can afford.
Credit profile
The lender may check the personal credit histories along with the company's credit (unless you're a start-up). If the business has unpaid defaults or tax debt, you may need to find a bad credit business loan. However, most invoice financing companies also do not require perfect credit histories.
ABN/ACN
You'll need to have an Australian Business Number (ABN) or Australian Company Number (ACN) to qualify for any form of business finance.
What's the best loan for your business?
The best loan for your business will vary depending on a number of factors, such as:
How much money the business needs
The nature and structure of your company
Whether you need one large lump sum or a series of smaller cash injections
What your business is buying/spending the money on
Your personal circumstances/the circumstances of any other owners or directors
Your business's revenue
Every business is different and will therefore have different needs and requirements. Luckily, nobody understands your business better than you do – all you need is to understand your options. That's what we're here for.
How can you compare business loans?
Do you meet the eligibility criteria?
You can find details of the eligibility criteria involved with each loan product by clicking the "More info" buttons on the comparison table. Checking whether you meet the minimum eligibility criteria before you apply is the first step in your comparison process. This will help you to narrow down choices that are the most suitable for you. If you do not meet the minimum eligibility criteria for a loan, do not apply for that loan.
How much will the business loan cost?
If you know what loan you need, the next step is deciding what your business can afford. Look at your incomings and outgoings to see what you could comfortably repay without putting too much strain on the business. If it's a loan for a start-up, you'll need to rely on cash flow projections.
Compare business loan interest rates and fees
Once you've determined what you can afford to borrow, you should compare the rate and any fees or charges for a variety of business loans to find the one that represents the best value for your business.
Do the repayment terms meet your business's needs?
Lenders offer repayment terms of varying flexibility. Some will allow you to repay daily, others weekly and some will require you to repay your loan monthly. Work out which will best meet your business's needs in terms of your cash flow.
How do lenders judge your business loan application?
Lenders use a variety of criteria to see if you fit their risk profile and ensure your business can repay the loan.
Age and turnover of the business
Start-up finance is usually harder to find and be approved for, so if your business is established, you will find it easier to get a loan. The business turnover is also considered and lenders usually have a minimum requirement for monthly or annual turnover. They may also use your turnover to determine what the business can afford to repay.
Credit profile
The lender will assess the company directors' personal credit scores as part of the application process, and if the business is established, the lender will also check the company's credit score. Assessing credit scores allows lenders to determine how risky your business is to lend to.
Credit card volume
If you receive credit card payments in your business, lenders may use the volume of these payments to judge your ability to repay the loan. The assumption among some new lenders is that you will use this volume to repay the loan.
Accounts receivable
Similar to credit card volume, lenders may factor your accounts receivable value into their asset ratios to help them make a decision.
Company structure
Lenders will check what company structure you have and how long you have been in the existing structure. If you have recently undertaken a restructure or are applying for finance in the middle of restructuring, lenders may not want to finance you at this time.
Existing debt
Does your business have an existing debt with another lender? This will be considered as part of your application.
Profitability
For various business loans, including for example a revolving line of credit, your business will usually need to be profitable to be approved.
No matter where in Australia you're looking for business finance, there are loan options available. Take a look at the map below to see what some of your options could be.
What should I avoid when applying for a business loan?
There are a number of mistakes that applicants make when applying for a business loan, from choosing the wrong loan option to submitting an incomplete application.
In terms of the type of loan, it's always a good idea to try to think realistically about what would best suit the business in terms of finance volume, flexibility and repayments.
When it comes to submitting the documents, you should always understand what you'll need to provide to the lender before beginning your application. Omitting or forgetting to submit vital information or documents may lead to an application being delayed or rejected altogether.
There are a number of reasons why a lender may reject a business loan application. It is important to ask for feedback from your lender if they do reject your application. This feedback will give you insight into what you did wrong, which you can improve on for the next time you apply. If the lender is unable to provide this feedback, you may want to review your application and see if you can spot any red flags yourself.
Is my personal credit file checked or my company credit file?
The lender will specify which credit history they will need to check, but generally, the lender will want to verify the company directors' credit histories. Your business's financials may also be checked using accounting information that you supply as part of the application process.
Business finance is split into two main categories: debt finance and equity finance. Equity finance is provided by an owner or an external investor, whereas debt finance is provided by a bank, credit union or business lender. Below, you can find out more information about the different types of short-term and long-term business debt finance that are available.
If you have outstanding invoices and you need them to be paid, you can sell them to an invoice financing company and receive what you're owed minus a fee.
Use your outstanding invoices as finance
Receive up to 85% of the invoice amount and choose which invoices you want to finance
You'll need to pay a percentage of the invoice amount
Business overdrafts are attached to your business banking account and allow you to overdraw up to a specified limit on that account. You only pay interest on your outstanding balance.
A pre-determined limit that you can overdraw up to on your business bank account
Suitable to manage a business's day-to-day cash flow fluctuations
Usually comes with an application fee, line or facility fees and interest is paid monthly when the overdraft funds are used
Fully-drawn advance
This is a long-term business loan that allows you to borrow a set amount of money and repay it in pre-determined repayments.
Long-term financing available to purchase a business, property or equipment
A longer loan term of up to 10 years is usually available
Repayments are usually made monthly with both fixed and variable rates available
Cash flow lending
This type of lending allows you to use your expected cash flow as collateral for the loan.
Use your working capital assets as security for a loan
Draw down on funds as required, with your cash flow determining your loan
Interest is charged on the balance outstanding and fees may apply
Trade finance
This type of finance allows you to fund the purchase of goods from domestic or international suppliers.
Various types are available, such as letters of credit or bank guarantees between the buyer and seller
Fill large orders without putting a stop to your cash flow
You'll be charged interest on the amount provided for each trade as well as fees
Elizabeth Barry is Finder's global fintech editor. She has written about finance for over five years and has been featured in a range of publications and media including Seven News, the ABC, Mamamia, Dynamic Business and Financy. Elizabeth has a Bachelor of Communications and a Master of Creative Writing from the University of Technology Sydney. In 2017, she received the Highly Commended award for Best New Journalist at the IT Journalism Awards. Elizabeth has found writing about innovations in financial services to be her passion (which has surprised no one more than herself).
i am recently retired man. i am on aged pension. i need business loan to purchase established business. i want to put some $25000 –$ 35000/ in to it from super annuation funds. i am regularly getting aged pension from centrelink.please guide me the lenders who are liberal in granting business loan to me.
To apply for a business loan, generally, you will need a summary of your business’ financials, a business plan, financial forecasts (including cash flow forecasts) and your personal information. However, many new lenders simply request to log into your business’ accounting software to get this information for themselves.
You can visit these pages to help you choose the lenders for your business.
my question is l am looking for information for a business online banking account, what will be the monthly fees be to have this online account? l have obtained information from NAB and CWB that the account will be zero a month for an online account when you do not use the branch, all banking is done online. to have an OD attached to this online banking business account the fees are below for an unsecured amount.
for OD facility NAB is 14.5% with 1.75% annual fees
for OF facility with CWB 14.75% with 1.75% annual fees
what is will the account fees be with ANZ and Westpac
l cannot see where l find these on your site.
also how long back did a zero fee for online banking start with an online banking account, what year?
1. l am looking for information for a business online banking account, what will be the monthly fees be to have this online account?
Depending on the type of account, some banks have nil monthly fees, others may charge as much as $20. The business bank accounts you can compare in the market is listed here. Most banking accounts these days can be done easily through online.
3. How long back did a zero fee for online banking start with an online banking account, what year?
I’m afraid we don’t have information in that regard. But most banks offer cheaper if not zero fees on some of their online bank accounts to their customers helping them save money on monthly charges.
small business unsecured loan of 300,000. to buy an existing profitable business , with low fixed interest , no early payout fee ,over 5years approx. Have financial statements of business and $800,000. assets of my own , so could be secured loan.
Thank you for your inquiry. Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.
Hello,
Just wondering if there are any finance options available for me. Right now all I have is my business plan and projections from my account. That’s it, no assets, no defaults on my credit score however I do have 3 inquiries(Business related). I’m looking for funding for my equipment, without the equipment we can’t start. Is there any chance at all for me?
You’re actually already on the correct page on where you can compare your options for business loans. They also cater to small businesses. Please click on the name of your preferred loan to see more details, then you can click on the ‘Go to Site’ button to submit an online application.
This page will also be helpful. You can make use of the business calculator and get more information.
The amount you can borrow would depend on the assessment of the lender of your income, assets, credit history, etc. You can discuss your loan options with a lender featured above. Be sure to review the criteria and requirements before you apply.
I’m an international student. I want to open a fancy clothing store here in perth.
what i really wanted to ask is, can i get loan? and what should i have to do for that? please help me through this.
You can find out more about temporary resident loan options on this page but I’m unaware of any lenders that can offer business financing if you’re on a student visa. However, you may be eligible for a personal loan. If you’re looking to purchase property or already own property you may be eligible for a secured loan with a bank – you can find out some more information on this page.
seeking an unsecured (start up) business loan of $60,000.00 over 6 years. The proposed business is the same type of business I have been establishing in shopping centers since 1984 (experienced) and have never defaulted.
your thoughts?
The only lender we have available for comparison that will allow you to fund a new business venture is Max Funding – you can find out more about its loan here.
I’m a new migrant on PR, wanting to buy land to build houses to sell. As I currently do not have a job, could you advise avenues that I can utilize to get loan to purchase the land and loan for construction too. Thanks
The business loan available on this site are outlined on the page above, but the only one available for new businesses is Max Finance. You’ll need to get in contact with them directly regarding your current situation and eligibility.
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i am recently retired man. i am on aged pension. i need business loan to purchase established business. i want to put some $25000 –$ 35000/ in to it from super annuation funds. i am regularly getting aged pension from centrelink.please guide me the lenders who are liberal in granting business loan to me.
Hi Vinod!
Thanks for reaching out to us.
To apply for a business loan, generally, you will need a summary of your business’ financials, a business plan, financial forecasts (including cash flow forecasts) and your personal information. However, many new lenders simply request to log into your business’ accounting software to get this information for themselves.
You can visit these pages to help you choose the lenders for your business.
Business loans receiving Centrelink payments.
This page shows all business loans but doesn’t sort our pension applicants.
Hope this helps. Feel free to read through and message us should you have further questions.
Regards,
Nikki
my question is l am looking for information for a business online banking account, what will be the monthly fees be to have this online account? l have obtained information from NAB and CWB that the account will be zero a month for an online account when you do not use the branch, all banking is done online. to have an OD attached to this online banking business account the fees are below for an unsecured amount.
for OD facility NAB is 14.5% with 1.75% annual fees
for OF facility with CWB 14.75% with 1.75% annual fees
what is will the account fees be with ANZ and Westpac
l cannot see where l find these on your site.
also how long back did a zero fee for online banking start with an online banking account, what year?
Hi Claire,
Thank you for your questions.
1. l am looking for information for a business online banking account, what will be the monthly fees be to have this online account?
Depending on the type of account, some banks have nil monthly fees, others may charge as much as $20. The business bank accounts you can compare in the market is listed here. Most banking accounts these days can be done easily through online.
2. What is will the account fees be with ANZ and Westpac?
You can find more information about ANZ business accounts and its fees on this page. For Westpac, Depending on the account, they charge $10 monthly account fee for their Westpac Business One Account – Low Plan and $20 for Westpac Business One Account – High Plan
3. How long back did a zero fee for online banking start with an online banking account, what year?
I’m afraid we don’t have information in that regard. But most banks offer cheaper if not zero fees on some of their online bank accounts to their customers helping them save money on monthly charges.
Hope this helps.
Cheers,
May
small business unsecured loan of 300,000. to buy an existing profitable business , with low fixed interest , no early payout fee ,over 5years approx. Have financial statements of business and $800,000. assets of my own , so could be secured loan.
Hi Tom,
Thank you for your inquiry. Please note that we are not affiliated with any company we feature on our site and so we can only offer you general advice.
Whilst we can’t really recommend a specific lender to you as we are a comparison website, you may like to check our guides on these pages:
Secured business loans
Unsecured business loans
Secured vs. Unsecured business loans
You’d be best to confirm directly with the lender about your loan options and eligibility.
Best regards,
Rench
Hello,
Just wondering if there are any finance options available for me. Right now all I have is my business plan and projections from my account. That’s it, no assets, no defaults on my credit score however I do have 3 inquiries(Business related). I’m looking for funding for my equipment, without the equipment we can’t start. Is there any chance at all for me?
Regards,
Mike.
Hi Mike,
Thanks for contacting finder.
You may visit these links https://www.finder.com.au/determining-your-business-finance-options and https://www.finder.com.au/equipment-finance for you to get a better look on the business loan, equipment funding and funding options available to you, and how you can determine the best type of financing for your business.
Cheers,
Joanne
Is there a possibility of being funded without collateral and a guarantor? Low doc, etc..?
Hi Trevor,
Thank you for your inquiry.
You may want to consider the following low doc loans.
Low Doc Personal Loans
Low Doc Home Loans
I hope this information has helped.
Cheers,
Harold
A lot of small businesses sell on the basis of sec-52 statement? I want to obtain a business loan on that basis. Please help me.
Hi Gun,
Thanks for your inquiry.
You’re actually already on the correct page on where you can compare your options for business loans. They also cater to small businesses. Please click on the name of your preferred loan to see more details, then you can click on the ‘Go to Site’ button to submit an online application.
This page will also be helpful. You can make use of the business calculator and get more information.
Cheers,
Rench
I want to invest in a business and I want to know how much I can borrow
Hi Joss,
Thanks for your question.
The amount you can borrow would depend on the assessment of the lender of your income, assets, credit history, etc. You can discuss your loan options with a lender featured above. Be sure to review the criteria and requirements before you apply.
Hope this helps.
Cheers,
May
I’m an international student. I want to open a fancy clothing store here in perth.
what i really wanted to ask is, can i get loan? and what should i have to do for that? please help me through this.
Hi Aashim,
You can find out more about temporary resident loan options on this page but I’m unaware of any lenders that can offer business financing if you’re on a student visa. However, you may be eligible for a personal loan. If you’re looking to purchase property or already own property you may be eligible for a secured loan with a bank – you can find out some more information on this page.
I hope this helps,
Elizabeth
seeking an unsecured (start up) business loan of $60,000.00 over 6 years. The proposed business is the same type of business I have been establishing in shopping centers since 1984 (experienced) and have never defaulted.
your thoughts?
Hi JH,
The only lender we have available for comparison that will allow you to fund a new business venture is Max Funding – you can find out more about its loan here.
Hope this helps,
Elizabeth
Hi,
I’m a new migrant on PR, wanting to buy land to build houses to sell. As I currently do not have a job, could you advise avenues that I can utilize to get loan to purchase the land and loan for construction too. Thanks
Hi Sam,
The business loan available on this site are outlined on the page above, but the only one available for new businesses is Max Finance. You’ll need to get in contact with them directly regarding your current situation and eligibility.
Hope this helps,
Elizabeth