Business loans for Centrelink recipients

If you receive Centrelink payments, you may be eligible to apply for business loans from non-bank lenders and peer-to-peer lenders. If you're looking to start a business, you can apply for NEIS assistance, which provides training and income assistance for Centrelink recipients.

Business loans you can apply for while on Centrelink

Bria Horne

Expert overview: The 3 most important things about getting a business loan on Centrelink

• Your options might be limited when you receive Centrelink benefits, but there are still a number of business loan options to choose from.
• The NEIS, which provides New Business Assistance, was specifically designed for Centrelink recipients who want to start and work full-time in their own business.
• The key to being approved for a business loan is to carefully review the eligibility criteria. You should provide a clear, detailed explanation of how you meet the requirements.

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 prove to be difficult. It may also be difficult to find a business loan without an established business history. However, there are business loans you can apply for, such as the following:

• 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.

Which lenders offer business loans for Centrelink recipients?

You can apply for a business loan from non-bank and peer-to-peer lenders. The following non-bank lenders offer business loans even if you don't have an established business. 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. There are also options if you already have an established business.

You can also apply for a loan with the following peer-to-peer lenders. If you have a rocky financial history or former unsuccessful businesses, you may find it difficult to convince potential investors.

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. There could be fees for establishing your account, ongoing monthly fees, exit fees if you pay off your loan early and early or late repayment fees if you pay outside the schedule. These are some of the main fees to look out for, but there could be others. These fees add to the cost of your loan, so make sure to include them in your calculations. Leaders are required to make all fees clear and comprehensible.
  

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

Before applying for a business loan, you need to make sure you're ready to start making repayments. Keep in mind that you'll be paying back more than you borrowed. You will need to plan for it.

• Getting a loan will not be easy. Lenders and investors may be more hesitant to lend to someone on Centrelink. You will also need to be prepared to pay higher rates. 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.
• Plan for how you'll spend the money in as much detail as possible. 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.
• Set up a calendar around your repayment schedule and work according to it. Keeping up with repayments will help you keep costs down. 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.

What can I use a Centrelink business loan for?

There are several uses for a business loan, including the following:

• Starting your own business
  
• Growing your existing business
  
• Boosting your cash flow
  
• Buying inventory, commercial property, vehicles, machinery, equipment and tools
  
• Exporting goods overseas
  
• Conducting research and development
  

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 can help you get self-employed and start your own business.

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.

It offers accredited small business training, business mentoring, business-plan development and allowances for eligible participants. This includes NEIS allowance for up to 39 weeks and NEIS Rental Assistance for up to 26 weeks.

It is part of the New Business Assistance initiative.

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.

• If you're currently participating in jobactive as a volunteer and enter the NEIS assistance program before the end of your service, you may be able to secure a place in the program.
  

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.

In the aftermath of COVID-19, the eligibility criteria for NEIS were expanded.

• From 15 October 2020, people can access NEIS and start their own businesses if they are working 25 hours per week or less.
  
• From 7 December 2020, existing micro-business owners impacted by COVID-19 can access NEIS if they need help keeping their business running or if they need to refocus their operations to meet new areas of demand.
  

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 Centrelink 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:

💵 Work out how much you need to borrow and what you can afford.

🔎 Look for lenders. Check their eligibility criteria to ensure you can apply.

🖨️ 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
  

📱 Apply.

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.

Why you can trust Finder's business loan experts

You pay nothing. Finder is free to use. And you pay the same as going direct. No markups, no hidden fees. Guaranteed.

You save time. We spend 100s of hours researching business loans so you can sort the gold from the junk faster.

You compare more. Our comparison tools bring you more business loans from across the market.

Written by

Elizabeth Barry

Lead Editor

Elizabeth Barry was the lead editor for Finder. She has over 10 years' experience writing about a range of topics with a focus on personal finance. You’ll find her writing and commentary in a range of publications and media including Seven News, the ABC, MSN, the Irish Times and Singapore Business Review. See full bio

Elizabeth's expertise

Elizabeth has written 239 Finder guides across topics including:

• Banking
• Personal finance
• Investing