Guide to loans for businesses in decline

What financing options do you have if your business is heading into the red?

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Business borrowing guide stage 6

It's almost impossible to maintain consistent periods of high growth. Many businesses experience lulls in revenue or cash flow fluctuations, but if your numbers are starting to go the wrong way your business may be declining. Stimulating growth should be your number one priority, and applying for finance may allow you to do this. Find out what financing options you have in this guide.

When is a business in decline?

While every business may experience downturns, a business in decline is one that is experiencing consistent decreasing revenue and customers. This decline will not be consistent with the cash flow fluctuations of a business and will require intervention from businesses to encourage growth.

Funding needs that are common for businesses in decline

Declining businesses have varied funding needs, which can include the following:

  • Innovate the business product or service. Declining businesses tend to see a sharp drop in take-up of their product/s or service. By innovating the source of profit, whether it be by developing a new product, diversifying the offering or changing the existing service, it can instil growth back into the business.
  • Cash flow assistance. If revenue is lower, the business's cash flow is likely to be under pressure. Declining businesses may be looking for assistance with cash flow issues, whether they be for the long or short term.
  • Human resources. Businesses that are declining may have issues with human resources, which can include needing to reduce employee numbers, consolidate teams or hire additional help in key growth areas.
  • External advice/support. It can be a good idea to seek external advice or support if internal strategies are failing. However, experts cost money. If you don't want to put further strain on your cash flow you may consider finance to assist you with this.

Compare the business loans below

Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Moula Business Loan
$5,000
$250,000
1 to 2 years
2% Establishment fee
A loan of up to $250,000 that can be approved and funded within 24 hours. Available to businesses with 6+ months operating history and $5,000+ monthly sales.
Swoop Finance Business Loan
$1,000
$100,000,000
1 to 30 years
Depending on your loan contract
Apply online and borrow between $1,000 and $100,000,000. Options for good and bad credit borrowers.
Lumi Unsecured Business Loan
$5,000
$300,000
3 months to 3 years
2.5% establishment fee
Apply for up to $300,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
ebroker Business Loan
$5,000
$5,000,000
1 month to 30 years
$0 application fee
Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.
Max Funding Unsecured Business Loan
$3,000
$30,000
1 month to 1 year
$0 application fee
An unsecured business loan from $3,000 that offers convenient pre-approval and no early repayment fees.
Valiant Finance Business Loan Broker
$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.
OnDeck Business Loans
$10,000
$250,000
6 months to 2 years
3% of loan amount
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.
Octet Trade Finance
$200,000
$8,000,000
1 month to 2 years
Transaction fee 2.5%
Access a line of credit to pay suppliers in over 65 countries. Borrow from $200,000 up to $7 million.
Prospa Business Loan
$5,000
$300,000
3 months to 3 years
3% origination fee
Small business loans are available from $5,000 - $300,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $6,000 is necessary.
ANZ Secured Business Loan
$10,000
$10,000,000
Up to 15 years
$600
Benefit from a low rate when you secure this loan with property and/or business assets. Loans from $10,000 available.
ANZ Unsecured Business Loan
$10,000
$1,000,000
Up to 15 years
$600
Apply for a loan from $10,000 with no security required and benefit from flexible repayment terms.
Westpac Business Loan
$20,000
$1,000,000
1 to 30 years
$0 application fee
Purchase a new vehicle, equipment or support your cash flow with a business finance solution from Westpac.
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The types of finance that may be available

There are three main types of finance: debt finance, equity finance and internal funds. As internal funds tend to be limited in declining businesses and equity finance will be extremely difficult to access, the following types of debt finance can be considered:

Loan typeLoan amountFeatures
Line of credit$10,000–$1,000,000
  • Only use as much as you need
  • Pay interest on your balance, not your credit limit
  • Generous loan terms (usually up to 25 years)
Term loan$10,000–$500,000
  • Receive a lump sum and pay it off over a set term
  • Regular repayments can help you to budget
Business overdraft$10,000–$100,000,000
  • Pay interest on your balance, not your overdraft limit
  • Attached to your business bank account
Credit cards$500–Unlimited
  • Pay the minimum balance or pay it off in full if you can
  • High or unlimited credit limits are available
Invoice financing80% of the invoice amount
  • Assist with cash flow
  • No need to wait for invoice payment

Compare invoice financing products

Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Timelio Invoice Finance
$10,000
$100,000,000
Up to 4 months
$0
Get up to 100% of the value of your invoices without having to wait for customer payments, and with no minimum turnover or operating history required.
ScotPac Invoice Finance
$10,000
$150,000,000
From 1 year
No set amount
Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $10,000 in invoices.
ScotPac Selective Invoice Finance
$10,000
$1,000,000
1 to 3 months
$500
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.
Octet Invoice Finance
$100,000
$10,000,000
1 month to 2 years
No Set Amount
Convert up to 85% of your company's receivables into cash flow. The value of your receivables need to be worth at least $250,000 to be eligible.
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How you can compare business loans

Not sure what type of business loan is right for you? By comparing business loans you can select the type of finance that best suits your needs.

  • Loan amount. Business lenders generally have a minimum and maximum amount that you can borrow, so make sure the loan you need falls within that range. Keep in mind that your business may not be eligible for the loan amount you apply for.
  • Flexibility. Can you borrow more over the course of the loan term if you need to? Can you pay back the funds earlier if you're able to? Do the repayments fit in with your business's cash flow and budget?
  • Repayment affordability. How much will your repayments be and can your business afford it? If your business will struggle to manage the repayments then consider borrowing a lower amount or extending the loan terms.
  • Turnaround time. Some non-traditional business lenders can have your funds to you within 24–48 hours, but other lenders may take longer. Make sure you can receive the funds when you need them.
  • Cost of the loan. Loan costs vary and are explained in more detail below, but make sure the interest rates and fees are competitive when compared to similar loan offerings.

Will your business be eligible for a loan?

Business lenderRequired minimum revenueOther criteria that must be metFind out more
Banjo Loans$500,000 per year
  • Minimum two years in operation
  • Be a registered Australian business or Australian citizen/permanent resident
  • Director's credit scores need to be over 510
More
Bigstone$250,000 per year
  • Have been in operation for at least 9 months
  • Be an Australian company/trustee
  • Have more than one employee
More
Business Fuel Loans$10,000 per month
  • Minimum one year in operation
  • Have at least one year left on your lease
  • Your rent needs to be up-to-date
  • Have been residing in the same location for one year
More
Capify$10,000 per month
  • Minimum three months in operation
  • Be an Australian registered business, sole trader, contractor, company, trust or partnership
  • Have fair credit
More
GetCapital$10,000 per month
  • Minimum nine months in operation
  • The loan is 100% for business purposes
More
Kikka$10,000 per month
  • Minimum one year in operation
  • Have an ABN/ACN
More
NABNo minimum
  • Minimum one year in operation
  • Be a sole trader, part of a partnership with up to two partners or part of a company with up to two directors and a valid ABN
  • Be an Australian citizen/permanent resident
More
Max FundingNo minimum
  • Own vehicle or real estate for security
  • If you don't have security, need to earn $6,000 per month and have relatively good credit
More
Merchant Cash$5,000 per month
  • Minimum one year in operation
  • Have a property or vehicle as security if you want to borrow for longer than one year
More
MiFanance$400 per week (personal income)
  • Have an ABN
  • Not receive over 50% of your income from Centrelink
More
Moula$5,000 per month
  • Minimum one year in operation
  • Have an ABN or ACN
  • Have a fair or better credit history
More
OnDeck$100,000 per year
  • Minimum one year in operation
  • Be operating in one of OnDeck's approved industries
More
ProspaNo minimum
  • Minimum three months of business bank statements
More
Spotcap$100,000 per year
  • Minimum one year in operation and two years of financials
  • Have an Australian online bank account
  • Be an Australian registered business
More
ThinCatsNo minimum
  • Have industry-experienced directors with a strong net tangible asset position
More

The costs to consider

It's more than just the interest rate you need to consider. Here are some of the costs to expect with a business loan:

  • Interest rate. Check whether the rate is fixed or variable and what type it is. For example, is it a factor rate? You should also check the comparison rate to get a better idea of the overall cost of the loan.
  • Upfront fees. These may be called application or loan origination fees, but work in essentially the same way. The fee will be added to your repayment amount once you've been approved for the loan.
  • Ongoing fees. Check if any weekly, monthly or annual fees are charged with the loan. You may also have to pay a direct debit fee or something similar that will increase the cost of your loan.
  • Default expenses. If your repayment is late, payment is missed or you default on the loan you will be charged various fees relating to enforcement. Get in contact with your lender if you think you'll have trouble repaying the loan.

Questions to ask before you apply

Can my business afford the loan?

This is the most important question to ask and one you need to determine before you apply for the loan.

Is the loan affordability based on current profits or projected ones?

A business in decline has to be careful with profit projections, especially when it comes to being able to afford a loan. If you're relying on projected profit uplifts you may want to consider a more flexible loan that allows you to repay the minimum amount on the balance, such as a business credit card or line of credit.

Have I organised my application?

Some newer lenders may base their decision on your business's revenue and other similar financial data. However, if you're applying with a bank you will need business plans and cash flow projections. Make sure you've checked what you need before you start the application and ensure your business is in the best position to be approved.

What am I using the funds for?

Have a plan for every dollar of the loan amount should you be approved. This will not only help you with projections for your business but may also help you be approved.

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