How to give your small business the boost it needs when you can’t draw on your cash flow and assets.
When it comes to your small business, you want to look at ways to invest in your operations without taking too much money directly from your business or from your personal finances. This is where a small business cash loan can help. Sometimes, business expenses will crop up that you need to cover. Whether they be emergency expenses, such as to fix a storefront or to replace vital equipment, or expenses to fund business growth and expansion, such as to invest in marketing material or to purchase new inventory or stock.
Whatever your need, if you don’t have the ready money, or if you don’t want to negatively impact your business’ cash flow or your own personal finances, you might want to consider a small business cash loan.
Compare a range of business finance options
Warning about Borrowing
It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
- For information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor
- Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan
- If you are on government benefits, ask if you can receive an advance from Centrelink: Phone: 13 17 94
The Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.
* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.
What is a small business cash loan?
A small business cash loan is a short-term financing solution that is designed for small to medium-sized businesses. These loans are similar to payday loans in that they have a fast turn-around time and are flexible in terms of who the lenders choose to lend to. Business owners may choose to take out a small business loan to fund business expansion, to pay for emergency business expenses or to invest in their business operations.
How do these types of loans work?
Business owners apply for these loans and, if approved, are usually sent the loan amount within three business days. Approval differs between lenders, but is usually based on how long the business has been in operation, how long you have been operating in your current location, and how much your business income is in sales per month. Small business cash loans are usually for between $1,000 and $250,000, with the loan amount you’re approved for dependent on how much your business makes per month.
How to compare cash loans for small businesses
While this is a relatively new and innovative loan concept, there are still a few lenders offering small business cash loans and so it is worth comparing your options. Here are a few things to keep in mind when comparing business loan products:
- Loan amount. As mentioned, the typical loan amount offered by small business cash lenders is $1,000 is $250,000. The loan amount you’re approved for, however, will likely depend on your monthly business revenue.
- Loan terms. The loan terms for this type of finance is considerably shorter than with other types of loans. You will usually be required to pay the loan back within one year, with some lenders requiring repayment within six months. Make sure you opt for loan terms that you can afford and that work with your business’ cash flow.
- Approval and turn-around time. Most small business cash lenders operate online, making for a quick and simple application process. You’ll usually find out if you’ve been approved quite quickly, with some lenders able to tell you within minutes, and you can have the loan amount within your account within a matter of days.
- Repayment schedule. The repayments schedule is usually determined on a case-by-case basis and so is harder to compare before you apply. Be sure to only agree to a schedule that will have the least impact to your business finances.
- Fees. Depending on the lender you opt for, you will be charged certain fees for the loan. Check to see what fees you will be charged upfront for applying for the loan, as well as any ongoing fees in the form of interest or account-keeping fees.
Things to be careful of
While this loans may seem like a convenient option, due to their quick turn-around time and flexible lending criteria, but there a few things that you should avoid with these type of loans:
- Opting for a higher cost loan. They come with typically higher fees and rates than other business loans due to their flexible lending criteria, which can make them an expensive option. For this reason, you should consider your other loan options and avoid taking out a small business cash loan unless it is your only option.
- Taking out a loan you can’t afford. You should also avoid taking out a loan amount that is above your financial means. For example, you may be approved for a loan based on your previous month’s revenue, but if you know you are coming up for a slow sales season in the next few months you may want to avoid taking out the full loan amount offered to you. Only you know your business and know what you will be able to afford.
How to apply for a small business cash loan
Applying for a small business cash loan is simple. You can compare your options, and once you have found a loan product that appeals to you, click the ‘Go to Site’ button. You will then be safely redirected to the online application form.
You will need to meet specific criteria, set forth by each individual lender, to apply. This criteria will usually require you to:
- Have been in business for a certain amount of time
- Have been at your current business premises for a certain period of time
- Earn a certain amount of revenue per month
You will also need certain business documents to apply. These, again, will differ depending on the lender you choose to apply with. The typical documents required will be something along the lines of the following:
- Financial statements from your business
- A copy of your current business’ rental lease
- Identification documents (driver’s licence, Medicare card, passport) for company directors, applicants
- Documents related to the security you’re providing (if applicable).