Business loans for Centrelink recipients

Can I apply for a business loan if I am a Centrelink recipient?

If you receive payments from Centrelink, getting a traditional business loan may be more difficult. But it won't be impossible, particularly if the business has an established history and/or you have other forms of income.

Business loans you might be able to apply for include:

• Non-bank business loans. Non-bank lenders include independent lenders and neobanks. These institutions are smaller than traditional banks. They generally provide cheaper, more competitive loans. Their lending criteria are also more flexible.

• Peer-to-peer business loans. A peer-to-peer loan is borrowed from an individual investor and not a traditional lender. Applications for these loans are faster, with competitive rates and flexible lending criteria.

• New Enterprise Incentive Scheme (NEIS). This is a government-funded program for applicants who receive payments from Centrelink. It provides training and income assistance for Centrelink recipients who wish to start and work full-time in their own business.

Our expert says: Applying for loans isn't the same for everyone

"Even traditional business lending isn't always simple. When you add in different types of income, like casual work or Centrelink, it can become even less simple.

Consider whether your income is fully from Centrelink payments and what those payments are, as well as whether you want a business loan for a new business idea or to grow one that's already established. Check lender criteria thoroughly before you apply to improve the likelihood of approval, so as not to harm your credit score with multiple failed applications."

Rebecca Pike

Senior Money Writer

Which lenders offer business loans for Centrelink recipients?

You can apply for a business loan from non-bank and peer-to-peer lenders.

These lenders will consider your application based on the strength of your ideas, experience and personal drive. They provide financing even if you receive Centrelink payments.

If you have a rocky financial history or former unsuccessful businesses, you may find it difficult to convince potential investors in peer-to-peer lending.

The following peer-to-peer lenders offer business loans even if you don't have an established business.

What fees and charges should I expect?

There are two main costs that come with a business loan:

• Interest rates. This is set as a percentage. It shows how much you will have to repay for the amount you've borrowed. For instance, if you borrow $100 at a 20% interest rate, you'll have to pay back $120.
• Fees. The fee structure of your loan will depend on your lender. Fees could include an establishment fee, ongoing monthly fees and exit fees. While these are some of the main fees to look out for, there could be others. These fees add to the cost of your loan, so make sure to include them in your calculations.

What should I consider before applying for a business loan on Centrelink?

• Getting a loan will not be easy. Lenders and investors may be more hesitant to lend to someone on Centrelink, especially if that's your only income. You may be able to convince them if you have an outstanding business idea or if you can demonstrate the profitability of your new business.
• Your loan might cost more. You will need to be prepared to pay higher interest rates because of the increased risk to the lender.
• Know how you're using the finance. The lender will want to know how the money is being spent and if it's being spent wisely. They will also want to know if they can expect a return on their investment.
• Missing repayments costs penalties. Set up a calendar around your repayment schedule and work according to it. Missing repayments will result in extra fees and can harm your credit rating.
• Money may be tighter after you've taken out a business loan. All proceeds of the loan will have to be used for business purposes only. Having to make repayments can make finances tight unless you're sure your business can turn a profit.

Does Centrelink give business loans?

Technically, no. Centrelink doesn't give business loans. But some Centrelink recipients can apply for NEIS assistance. NEIS is managed by Centrelink and the Department of Human Services. It is not a business loan, but it it does provide assistance by way of temporary rental assistance and a temporary allowance.

What is the New Enterprise Incentive Scheme (NEIS)?

NEIS is a government-funded program. It is designed to help Centrelink recipients start their own businesses.

If you're on Centrelink, NEIS can help you start and work full-time for your own business. It counts as Centrelink-approved activity for up to 13 weeks from commencement.

The business is required to be upstanding, lawful and preferably not-for-profit. There are 6,300 places available each year.

What support can you receive on the NEIS?

• Accredited small business training
• Business mentoring and support for up to 52 weeks
• NEIS allowance for up to 39 weeks
• NEIS Rental Assistance for up to 26 weeks

Am I eligible for the NEIS program?

If you're interested in NEIS, a good first step is to register for jobactive if you haven't already. You'll have to be registered if you want to get into the program. You can learn more about it here.

The selection criteria for the NEIS are fairly strict. To qualify for the application alone, you must meet the following criteria:

• Be 18 years of age or older and on an eligible Centrelink scheme. You must be fully eligible for jobactive or disability employment services.
• Be participating in jobactive as a volunteer and commence in NEIS Assistance before the end of your service period.
• Not convert to an Age Pension before or during NEIS.
• Be available to participate in NEIS training and work full-time in the proposed NEIS business.
• Not currently be going through bankruptcy.
• Not have received NEIS assistance in the last 3 years or have ever received it for a similar business activity.
  

Additionally, your business must meet the following criteria:

• Not be already operating on a commercial basis
• Be independent when established
• Be legal, upstanding and capable of withstanding public scrutiny
• Have been assessed as commercially viable
• Not be based on the takeover or purchase of an existing business
• Not directly compete with an established business unless your business will do it differently or if you can prove there's unsatisfied demand in the area.
• Be operated and located entirely within Australia
• Be structured so you'll always have a controlling interest over it.
• Not be a for-profit organisation, unless approved by the Department of Employment.

How can I apply for a business loan?

Whether you're eligible for a business loan will depend on the provider. For many business loans, your business needs to be established for a certain amount of time. There are also requirements around monthly or annual turnover. Your chances of getting a business loan increase in the following situations:

• Your business has been continually operating for a long time.
• Your business has demonstrated earning capability.
• You and your business are currently debt-free and have a strong credit history.
  

To apply for a business loan, you will need to do the following:

1. Work out how much you need to borrow and what you can afford.
2. Look for lenders. Check their eligibility criteria to ensure you can apply.
3. Organise and prepare the required documentation. This can include the following:
   • Proof of identification, such as a driver's licence or passport
   • Your business's ABN/ACN
   • Your personal and/or business financials
   • Your business plan
   • Financial forecasts
4. Apply! You can usually follow the instructions on the lender's website.

How long lenders take to respond will vary between lenders and their processing times. Some lenders may allow you to repay your loan early without penalties.

More questions about getting a business loan on Centrelink

• What makes me eligible for a business loan?

  Typically for a business loan you'll need to meet eligibility criteria around business turnover and the time the business has been in operation. You'll need to provide business bank statements and other business records.

  This is on top of other lender criteria around age, residency and your personal credit history.

• Is it easy to get a business loan?

  Getting a business loan will be easier for some businesses than others. The application and approval process really depends on your business. For example, a business that has been turning over a lot of money and running over a few years will probably find it easier than a new business with low profits.

  To make the business loan process easier, you should have all the necessary financial statements and paperwork ready before you apply. It may also be a good idea to speak to a commercial broker or financial advisor.

• Can I get a business loan if I'm self-employed?

  Yes, you can get a business loan if you're self-employed. You'll need to check lender policies to know specific criteria though. You will need to use the loan specifically for business purposes and may need to tell the lender what the loan is for.

  Rather than the traditional finance statements and documents expected from a large business, you can apply with fewer documents.

  You can speak to a commercial broker or your financial advisor for support.

Written by

Elizabeth Barry

Journalist

Elizabeth Barry is an experienced journalist with over 10 years of expertise in personal finance, contributing to outlets like the ABC, Sydney Morning Herald, and 7News. She holds a Master of Arts in Creative Writing and a Bachelor of Arts in Communication from the University of Technology Sydney, and has earned multiple award nominations, including a Highly Commended recognition at the 2017 Lizzies. Elizabeth began her career at Finder in 2013, progressing through roles to become Lead Editor, where she oversaw a wide range of personal finance coverage until 2024. See full bio

Elizabeth's expertise

Elizabeth has written 208 Finder guides across topics including:

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