A quick guide to business loans and your credit file

Seize control of your credit rating and take the first steps towards getting the working capital your business needs.

Last updated:

Business loans can be a stepping stone to financial growth. The key to being approved for one is understanding your credit file.

If you're a small business owner, you're probably familiar with the long wait before you find the outcome of a loan application. Being denied access to credit is frustrating when you're looking to get your business started or take it to the next level. Learn how your credit file works and improve your chances of being approved.

Prospa Business Loan Offer

Prospa Business Loan Offer

  • Same day funding
  • Flexible repayments
  • Unsecured and secured options
Security Logo

100% confidential application

Prospa Business Loan Offer

Get access to a small business loan from $5,000 - $300,000 with a limited time 6 week repayment pause and the chance to win $6,000 if your loan is settled before 31 December 2019. T&Cs apply, click "go to site" to view on Prospa site.

  • Loan Security: No asset security required to access funds up to $100,000
  • Interest rate: from 9.9% p.a. to 26.5% p.a.
  • Comparison rate: from 11.75% p.a. to 33.5% p.a.
  • Establishment fee: 3% origination fee
  • Minimum Turnover: $6,000 per month
  • 6 months trading history as a new business
  • 3 months trading if purchasing an existing business
Go to site
Promoted

Business lenders you can compare

Updated November 21st, 2019
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Apply Now
$5,000
$300,000
3 months to 2 years
3% origination fee
Small business loans are available from $5,000 - $300,000 on terms of up to 2 years.
Note: New loans settled by 31 December 2019 offer a 6 week repayment pause to use when they choose plus the chance to win $6,000. T&Cs apply, click "go to site" to view on Prospa site.
$5,000
$300,000
3 months to 1 year
3% origination fee
An unsecured business loan up to $300,000 for eligible businesses. Businesses operating for a minimum of 6 months and having turnover of at least $10,000 a month can apply.
$10,000
$250,000
6 months to 2 years
2.5% origination fee
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
$5,000
$200,000
3 to 18 months
2.5% establishment fee
Apply for up to $200,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
$10,000
$500,000
6 months to 2 years
$0 establishment fee
A flexible business loan up to $500,000 with convenient top up and redraw facilities. Business must have been operating for 9 months+ and have monthly sales of $10,000+. Note: The establishment fee will be waived if you apply and are approved before 30 November 2019.
$5,000
$500,000
6 months to 3 years
$0 application fee
A loan of up to $500,000 that can be approved and funded within 24 hours. Available to businesses with 6+ months operating history and $5,000+ monthly sales. Note: Get the chance to win $2,020 in a prize draw if you submit your application between 1 November 2019 and 30 January 2020.
$5,000
$1,000,000
3 months to 5 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 70 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
$2,000
$300,000
1 month to 1 year
$0 application fee
An unsecured business loan from $2,000 that offers convenient pre-approval and no early repayment fees.

Compare up to 4 providers

What is a credit file?

A credit file is a comprehensive document which is created for any business or individual who has made an application for credit, whether that credit has been approved or not. Activities included in your credit file can be interactions with a traditional credit provider such as a bank or lender, or with a utility provider.

What's the difference between a personal and company credit file?

Your personal credit file contains a record of applications you've personally made for credit, as well as accounts you've held in your name. It helps credit providers determine your risk as a borrower.

A company credit file contains information on a company and helps other businesses determine the risk they take doing business with that company. information held on a company credit file can be used to assess the business' suitability for finance. The personal credit file of directors may also be checked if a business applies for a loan.

What's included in my company credit file?

Your company credit file includes both positive and negative information about your business and its activities:

  • Company details. Relevant information such as the company structure and shareholders.
  • Credit information. This includes any applications you've made for credit, accounts you've defaulted on, court judgements and external administration.
  • Business events. Any relevant business events that have been lodged with ASIC will be included. This can include credit enquiries, shareholder data and company information.
  • Personal Property Securities Register (PPSR). Any details from the PPSR held on the business will be included.
  • A score. The credit file will summarise your business with a single-figure score. This score should be based on statistical best practice. It will often determine whether or not the business is approved. Company credit ratings are grade-based and range from a D-grade, where your company is classified as an extremely high risk and as being in severe financial distress, to a AAA-grade, where the company has a negligible risk level and an extremely strong financial capacity. There are 21 grades in all.

Can I improve my company's rating?

Your credit score isn't set in stone. You can take control of your income and outgoings and dramatically improve your credit score over time. Keep the following in mind for a good credit score:

  • Pay your bills early or on time. This may sound obvious, but many businesses underestimate the impact this can have on a credit rating. It can also affect your relationship with suppliers and partners.
  • Maintain a low balance on company cards. As with overdue payments, high totals on multiple credit cards will do little to instill trust with potential lenders.
  • Communicate with your creditors. Don't be afraid to negotiate with suppliers if you feel that modified, flexible terms regarding your repayments could help your company better manage your finances. Ultimately it will benefit them as well.
  • Don't delay improving your finances. Improving your credit rating takes time and it is unlikely that you will see real change for at least a few months. However, the sooner you get your payments current, the sooner the process can begin.

My file is back on track. Now what?

With your finance in order, it's up to you to secure the right business loan for your firm. Keep the following tips in mind before you submit your next business loan application:

  • Look through your credit history. You can check your credit history for free once a year, or if you've been denied credit in the previous 90 days. Credit reporting bureaus will also offer quick access to your credit file for a fee. Knowing this information puts you in a strong position to negotiate and answer difficult questions about any negative listings.
  • Be honest. Lenders can view your credit file and will be able to find out if you have been rejected for a business loan. They can also see how many lenders you've applied for in the last two years. Being dishonest with this information will only hold your application back.
  • Do your research. There are many loan options, from prominent lenders such as banks to services specialising in small businesses. Not only will knowing the options available save you time, it also gives you the power to bargain for exactly the kind of loan you want.
  • Have your paperwork ready. Before you step through the door of your chosen lender, make sure you have a complete set of documents to support your application. Bank statements, invoices and projections will all add weight and help convince the lender that you can be trusted with their money.

Picture: Shutterstock

Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.

2 Responses

  1. Default Gravatar
    TinoFebruary 3, 2019

    I want to know if a person’s personal credit rating is very poor, will that impact the decision on the same person’s business loan application?

    • Avatarfinder Customer Care
      JoshuaFebruary 7, 2019Staff

      Hi Tino,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      The answer to your question is yes. When a person applies for a business loan, the lender would also consider his/her credit score along with other factors. The better your credit score, the better your chance of getting approved.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

Ask a question
Go to site