Should you get business loans from multiple lenders?

If you’re considering additional financing, using multiple lenders may benefit your business.

If your business is growing and not getting the cash it needs from current financing, you may have begun considering additional sources of financing. Whether you’re looking to replenish your shelves or cover the cost of hiring, applying for additional loans can provide your business with the cash it needs for continued growth and increased revenue.

However, when considering additional financing, it may be a good idea to source your loans from multiple lenders. If done correctly, having multiple lenders can offer benefits that you can’t access when you stick with just one lender for all your financing needs.

Can you get business loans from multiple lenders?

It is possible to get business loans from multiple lenders. In fact, many companies make it a policy to use multiple lenders rather than using just one lender. Doing so may potentially provide numerous benefits such as increased leverage of under-utilised assets and access to larger funding potential.

However, in the end, the decision of going with a single lender or multiple lenders will depend on your particular business situation. Make sure you’re aware of the benefits and drawbacks of using one or multiple lenders and conduct a cost-benefit analysis for whatever options you consider.

Jump ahead to find out the benefits>>>

Prospa Business Loan Offer

Prospa Business Loan

  • Borrow up to $250,000
  • Same-day turnaround
  • Repay early without penalty
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Prospa Business Loan Offer

The Prospa Business Loan allows you to borrow up to $250,000 for your business needs. The loan is available for new or existing business needs and features no upfront fee and no fees for early repayment.

  • Interest rate type: Variable
  • Application fee: $0
  • Minimum loan amount: $5,000
  • Maximum loan amount: $250,000
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Compare business loans from a range of lenders

Rates last updated March 17th, 2018
Name Product Min Loan Amount Max. Loan Amount Loan Term Application Fee Product Description
Prospa Business Loan
0.25 to 2 years
Apply for up to $250,000 and receive your approved funds within one business day. Note: Businesses must have a turnover of more than $5,000 per month and be able to demonstrate 6 months of trading history.
NAB QuickBiz Loan
1 to 3 years
An unsecured business loan from $5,000 that can be processed in 1 business day. Businesses that apply and are approved before 30 April 2018 are eligible for a discounted interest rate of 12.95% p.a.
OnDeck Business Loans
0.5 to 2 years
$0 (2.5% origination fee)
Apply online for up to $150,000 with OnDeck and receive approved funds in one business day.
Moula Business Loan
0.5 to 2 years
Small business loans of up to $250,000 approved and funded within 24 hours.
Transparent fees and rates. Note: Business must have been operating for at least 12 months and have monthly sales of at least $5,000.
Sail Unsecured Business Loan
1 year
2.5% origination fee
Apply for up to $100,000 even if you have bad credit. Note: Business must have been operating for at least 6 months and have turnover over $50,000.
GetCapital Flexible Business Loan
0.25 to 1 years
1.5% to 2.5% initial draw down fee
A flexible business loan that allows you to earn Qantas rewards points. Note: Business must have been operating for at least 9 months and have monthly sales of at least $10,000. Flexible Business Loan
0.5 to 1 years
1.5% Initial draw down fee
A 100% online business loan with amounts available from $5,000. Flexible eligibility criteria and transparent rates and fees.

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What are the benefits of borrowing from more than one business lender?

  • More funding opportunities. If done correctly, going with multiple lenders allows you to maximise the leverage of each individual asset you have. Having just one lender may force you to tie up alternative assets, which stops you using them for future financing. Using multiple lenders frees up those assets that would otherwise be tied up across different loans with one lender.
  • Asset risk with using one lender. If you have multiple loans from one lender and, for instance, you default on one of these loans, all other assets used as security for non-defaulted loans can potentially become tied-up with your defaulted loan. In addition, many banks have policies in place to prevent customers from taking out more than one loan at a time. Even for those that don’t have such policies, you’ll still likely require a near-faultless credit score and repayment history.

What are the benefits of keeping your finance with a single lender?

  • Easier administration. Opting to borrow from multiple lenders increases administrative work as you’ll have many points of contact and various accounts for repayments and loan management. Make sure you’re aware of any administrative limitations your business may have.
  • Quicker to get funds. Using one lender for additional loans may be beneficial since your lender already has a good idea of your business and credit history, along with a decent understanding of any other business assets you have. This makes it far quicker to apply for extra funding compared to applying with a new lender who will have to go through the entire business approval process.

What should I consider before applying?

Make sure to keep in mind the following points when considering additional business funding from multiple lenders:

  • Purpose of the loans. Depending on why you’re applying for additional loans, opting for more than one lender may be a bad idea. If you have business opportunities that’ll result in more growth and revenue, taking on additional debt may be a good idea. But there are circumstances where you should never think of taking out another loan. For instance, taking out a loan to clear out a previous loan can result in higher costs for your business. Make sure you do the maths before utilising this tactic.
  • Cost of the loans. Whether or not you use multiple lenders, taking out numerous loans means increased cost for your business. Make sure you’re well aware of all interest rates, fees and other charges associated with any loan you take out. More importantly, be aware of how an additional loan might affect your monthly cash flow and work out whether you’re able to make the extra repayments every month. Otherwise, you may be putting your entire business at risk.
  • The lender. If you’re not able to get funding from traditional sources, it can always be tempting to search for an alternative. Even though there are many credible lenders offering alternative financing, some lenders may offer enticing financing facilities only to significantly increase interest rates and other fees later on. Always ensure the lender has a good reputation before applying, and carefully read documents before signing.

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