Don't let Centrelink stand in the way of a business idea.
Being on Centrelink doesn’t mean you can’t get a business loan. If you have a solid business idea and can demonstrate its viability, you may be able to get the funding to make it a reality.
This page is for people who are on Centrelink and want a loan for establishing a business. If you’re on Centrelink and need a personal loan for non-business purposes, learn about your options here.
Expert overview: The three most important things about getting a business loan on Centrelink
- Your options are more limited if you receive Centrelink benefits, but there are still a couple of business loan options to consider
- The New Enterprise Incentive Scheme 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 and provide a clear, detailed explanation of how you meet all the requirements.
Business loans you can consider
What business loan options are available for Centrelink recipients?
One of the more likely sources of business financing is a private lender. It can be difficult to find a business loan without an established business history, especially if you’re on Centrelink, but one of these lenders below might be a good option.
These four Australian lenders can offer business loans even if you don’t have an established business, and even if you’re on Centrelink. There are also options if you already have an established business.
- The lenders below will consider your application based on the strength of your ideas, experience and personal drive.
- These lenders can provide financing even if you are on Centrelink.
|How does it work?||What to know||Learn more|
|Max Funding||Business financing up to $300,000. Bad credit applicants are accepted.||Max Funding is a very flexible lender, but you will need to own an asset to be eligible. If you don't own an asset other criteria apply.||More|
|MiFinance||If you have an ABN, you can borrow up to $1,000 for business needs.||These are small, short-term loans designed to cover essential business costs and get paid off quickly. Keep in mind more than 50% of your income can't be from Centrelink.||More|
The New Enterprise Incentive Scheme
The New Enterprise Incentive Scheme (NEIS) is another possible option.
- If you are currently participating in jobactive as a volunteer and enter the NEIS assistance program before the end of your period of service you might be able to get a place in the NEIS.
This program is for people on Centrelink who are prepared to start and work full-time in their own new business. NEIS counts as a Centrelink-approved activity for up to 13 weeks from commencement. The business is required to be upstanding and lawful, and preferably a not-for-profit. This scheme gives outstanding applicants a range of free ongoing business support and mentoring services in addition to an allowance to help with successful establishment. There are 6,300 places available each year and competition is fierce.
What fees and charges should I expect?
The costs of business loans come in two forms.
- Interest rates. These are set as a percentage, and indicate how much extra you have to repay over what you borrowed. Borrow $100 at a 20% interest rate, and you’ll pay back $120 all up.
- Fees. Different lenders have different fee structures. Watch out for account setup fees when you sign up, ongoing monthly fees, exit fees if you cancel the account and early or late repayment fees if you deviate from the arranged payment schedule. These are some of the main fees to look out for, but there may be others. Lenders are required to make all fees clear and comprehensible.
Am I eligible for a business loan and the NEIS?
Your eligibility for business loans depends on the provider. For many business loans you will need to have been established for a certain amount of time, and will need to have an annual turnover above a set threshold.
In the case of peer-to-peer lenders like Bigstone and Thincats you are generally eligible, but may find it very difficult to convince potential investors to get on board if you have a rocky financial history or former unsuccessful businesses. You will generally have a better chance of successfully getting a business loan if:
- 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 stronger credit history
There are often requirements around minimum monthly or annual turnover, and not all available repayment plans may be right for your needs which can rule out other options.
NEIS eligibility criteria
NEIS selection criteria are also strict. To qualify for application alone you must:
- Be 18 or older, on an eligible Centrelink scheme and 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 three years, or have ever received it for a similar business activity
And your business must:
- 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 will always have a controlling interest over it
- Not be a for-profit organisation unless approved by the Department of Employment
If you’re interested in NEIS, a good first step is to register for jobactive, if you haven’t already. You’ll need to do this anyway if you want to get into the program, and can learn more about it.
What should I consider before applying?
Before applying for a business loan, you need to make sure you’re ready and able to start the repayment plan. Remember, you will need to pay back more than you’ve borrowed, so you need a plan that can make it happen.
- Don’t expect it to be easy, and you may need to be prepared for higher rates. Providers and investors may be more hesitant to lend to someone on Centrelink, but you may be able to counterbalance this to a certain extent with an outstanding business idea, or convincingly demonstrating the profitability of your new business.
- Know how you will spend the money in as much detail as possible. Your lender will want to know that the money is being spent wisely and that they can expect a return on investment.
- Consider setting up a calendar around your repayment schedule and work to that. Keeping up with repayments is essential to keeping costs down, as missing repayments can harm your credit rating and incur extra fees.
- Money might be even tighter after you’ve taken out a business loan. All proceeds of that loan are expected to be used for business purposes only, and the extra cost of repayments can make things tough unless you’re sure your business can turn a profit.
FAQs about Centrelink business loans
How much can I borrow with a business loan on Centrelink?
It depends on the lender and how confident they are in your ability to repay the loan. MiFinance offers business loans up to only $1,000 while Max Funding can lend up to half a million dollars. Decide exactly how much you will need, as accurately as possible, and find lenders who offer this amount in their standard range.
How long is the typical repayment period?
The loan term can vary between providers and types of loan. For small, short-term loans like those from MiFinance it’s only a few weeks, but for bigger loans it’s typically between six months and five years.
Will my repayments change, or will they stay the same?
Fixed repayments mean the size of each will be the same, and it will stay consistent over the course of the loan, while variable rates can change. Both are available with business loans.
What happens if my application gets rejected?
The first thing you may want to do is ask your lender why your application was declined, as this can help you out with future attempts. They might not give a reply, but often will.
This can help highlight weaknesses in your business plan or application that you might have missed. Remember that needs and circumstances change, so recheck the options if it’s been some time since you last compared them.