Small Business Loans

How much funding do you need for your business?

$
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
* Enquiring will not affect your credit score
Head shot photo of Emma
Emma

"My business funding was super quick. Really appreciated the fast turn around. Getting a small business loan is much easier than it used to be. You can literally get funding the same day!"

Compare loans from all the best lenders
Illustration of a small business preparing to launch

Small Business Loans in Australia

A small business loan is a type of business loan specifically for small and medium-sized businesses. Generally you need to have been trading for at least 6 months and have a minimum monthly revenue of $5,000. Loans up to $150,000 can be approved and funded on the same day with only providing your bank statements and no security.

The best small business loans available are perfect if you need fast access to working capital or to pay one time expenses.

In this guide, you’ll learn:

1.   

What business loans are available

Go to section

2.   

What you can use the money for

Go to section

3.   

The different types of business finance available in Australia

Go to section

4.   

How lenders assess a business loan application

Go to section

5.   

How to prepare a business case

Go to section

6.   

How to compare lenders and choose finance for your business

Go to section

What is a Small Business Loan?

A small business loan is a term loan that allows a business to borrow an amount of money based on the amount of revenue generated by the business. The business will then repay the lender over an agreed term. Loan amounts can range anywhere from $5,000 up to $500,000, with loan terms between one month and five years.

There are two types of small business loan:

A crane delivering equipment

Secured

A business asset or your residential property is used to guarantee the loan

A delivery van with a package

Unsecured

You do not offer any security as a guarantee on the loan

Illustration of an online small business retail store

You can read all about how to apply for a loan without security in our unsecured business loans guide.

Money Tip
Money Tip Image

Secured loans present less risk to a lender, and will often have lower interest rates than an unsecured loan.


Who uses small business loans?

Over 70% of Australian businesses have ‘credit’ of some form. Small business loans are used by all kinds of Australian businesses. They are incredibly popular with seasonal businesses, or SMEs that require fast access to working capital.

Below are the top 10 reasons Australian SMEs use these loans:

  • Increase working capital

  • Buy inventory and stock

  • Buy equipment or machinery

  • Smooth out seasonal cash flow

  • Pay staff or employ new staff

  • Renovations

  • Advertising and Marketing

  • Buy a competitor out

  • Move premises

  • Pay BAS or Tax Payments

Two men and a woman analysing interest rate data

For other items - e.g. a car for business purposes - you would want to use a chattel mortgage, a particular finance with tax benefits for business. For larger pieces of equipment for your business, or a fit out, you may wish to consider equipment finance.
‍
If you'd like to learn about the tax benefits of various types of equipment finance in Australia, you can read our chattel mortgage vs lease vs hire purchase comparison guide.

Money Tip
Money Tip Image

A chattel mortgage offers considerable tax benefits for a business financing a vehicle predominantly for business use (at least 51% business use).

How to choose a business lender for a loan

You can apply for a small business loan with banks or specialist online lenders. If you choose to apply with your bank, the application and approval process will often be much more complex and time-consuming and more often than not, banks do not like to fund smaller amounts to business. If you’re applying for less than $100,000 you may wish to look first at a specialist lender.
‍
Specialist lenders are well-known for providing fast approval. If you choose to apply with a specialist lender, you can apply online and often be approved the same day, as these types of lenders will only require your business bank statements to assess your ability to repay the loan amount.
‍
You can apply for a Small Business Loan online with a number of specialist lenders. You can see how each business finance lender compares in our reviews:

Prospa Logo
See our review
Get Capital Logo
See our review
Lumi Logo
See our review
Moula Logo
See our review
Limba Logo
See our review
Max Funding Logo
See our review

How much funding do you need for your business?

Find the best rate now.

What is the minimum I will need to apply?

The minimum requirements for a small business loan in Australia are:

  • An ABN

  • A GST-registered business

  • Permanent Citizenship or Residency

  • A minimum business-operating time of six months

  • Business bank statements

If you require more than $150,000, you will need to also provide:

  • Profit and Loss Statement - (provided by your accountant)

  • ATO Portal access

Illustration of a team analysing data
Illustration of a man and woman navigating a maze

How to qualify

Qualifying for a small business loan is very simple - if your business bank statements illustrate an ability to comfortably repay your desired loan amount within the agreed loan term, you will qualify for approval. It’s that simple!
‍
If you are applying for an amount up to $150,000, you will likely be approved the same day. If you are applying for more than $150,000, you will need to demonstrate to a lender that your business revenue is sufficient to repay the higher amount, and that your business revenue will remain stable for the term.

Illustration of a man being declined in an online application

How to avoid being declined

There are many reasons you may be declined for a small business loan, and avoiding this can often this can be as simple as ensuring you apply for the right type of business loan and with the correct documentation.
‍
Here are the top 5 reasons applications are declined:

  • Your business financials do not illustrate an ability to service the loan amount

  • A business-owner or director has bad credit

  • Your business revenue is too dependent on a small number of customers

  • The outlook for your market sector is poor

  • Your business hasn’t been operating for long enough

If you have a poor credit rating but still need to apply, you can learn about the process and how to choose the right lender in our bad credit business loans guide.

Money Tip
Money Tip Image

A business plan can be a powerful tool in demonstrating to a lender how you will use and repay the loan amount.

Three men measuring a pile of money

How much can I borrow?

In Australia, you can borrow between $5,000 and $500,000 on a small business loan. The average loan amount for small business is $30,000.

If you want to quickly compare repayments, you can use our free Business Loan Calculator.

Minimum and Maximum Amounts

Minimum Amount Maximum Amount
$5,000 $500,000

Important: The actual amount you can borrow will vary between lenders

What are the rates?

The interest rates on a small business loan in Australia range between 5% to 30%.
‍
The interest rate applied to your loan will depend on the amount you wish to borrow, the lender you apply with, and the profile of your business. For example, a business with a strong, consistent trading history and stable revenue will likely be offered a lower interest rate than a new business with irregular profits.

Two men and a woman analysing interest rate data

Rates

Loan Amount Interest Rate
Lender 1 $30,000 9.90%
Lender 2 $150,000 15.00%

Important: This is an example and actual rates may differ

What are the terms?

Terms on a small business loan can range from one month up to five years. The average term is around 12 months - a short-term loan can help your business with working capital, while a longer term can be used for bigger purchases.

Minimum and Maximum Terms

If you have a poor credit rating but still need to apply, you can learn about the process and how to choose the right lender in our bad credit business loans guide.

Illustration of a man assessing loan terms
Minimum Term Maximum Term
1 month 5 years
A small business loan case study

Small Business Loan Case Study

Type of Business: Retail

Loan Amount: $30,000

A retail business has been in operation for a number of years.
‍
In previous years, the business owner has seen a consistent spike in sales between December and January which resulted in the store’s entire inventory being sold out.
‍
Based on this reliable trading pattern and projected revenue over the holiday period, this year the business owner is confident they can purchase an additional $30,000 of inventory and sell it to increase their profits.
‍
The business takes out a small business loan to purchase additional stock, which they are then able to sell for an increased total annual profit. The business owner then comfortably repays the loan amount in full, and the retail store has boosted cash flow for the coming year.

Just need access to funding for a rainy day?

If you’re not looking to fund a one-off purchase or expense, you may wish to consider a different type of small business finance. You may wish to consider either:

Lender Funding

Business Overdraft
Lender Funding

Business Line of Credit

Each of these types of business funding will allow you to have access to funds should you need them, the benefit being you do not need to pay anything on the undrawn amount.

Small Business Loans Summary

Small business loans in Australia allow borrowers to access funding from their bank or lender, with the approved amount dictated by the revenue of the business. Banks will offer lower rates, while specialist lenders offer same-day approval. The type of lender most suitable for you will depend entirely on your business.
In summary:

  • Are available from banks and specialist lenders

  • Only require your bank statements to assess approval

  • Can range from $5,000 to $500,000

  • Are offered between one month and five years

Pros   ✓ Cons   ✘
  • Same-day approval through specialist lenders
  • Slow approval and processing time if through a bank
  • Fast access to cash
  • Need to be able to demonstrate an ability to repay the loan through your P&L statements
  • Only need to supply your bank statements
  • Difficult for new business with limited trading history

Small business loans FAQ

How does a business qualify?


A business can qualify for a small business loan if they can provide a lender with bank statements that illustrate their ability to comfortably repay the loan amount.

Do I have to provide bank statements?


Yes, you have to provide bank statements to a lender when applying for a small business loan. This will allow a lender to quickly assess your business revenue and determine if you can comfortably repay the total loan amount and interest.

What is the difference between a small business loan from a bank and a specialist lender?


The main difference between a small business loan from a bank is that the application and approval process will take much longer than through a specialist lender. The main benefit of applying through a bank is a slightly lower interest rate.

What is the average interest rate on a small business loan?


Currently, small business loan interest rates in Australia range between 5% to 30%. Due to the number of lenders and loans available in Australia, the average interest rate varies. This is why it is important to ensure you compare lenders to find the best rate for your business.

Do you need a deposit for a business loan?


No, you do not need a deposit for a business loan. It’s important to note that a deposit is not the same as security - or collateral - and you will need to provide collateral if applying for a secured business loan.

Can I get a small business loan with bad credit?


Yes, you can get a small business loan If you have a poor credit rating. To learn how to apply for a loan if you have defaults or are an ex-bankrupt, read our bad credit business loans guide.

How long does approval take?


If you apply for a small business loan online with a specialist lender, you can often be approved for finance in under 24 hours.

Can a small business loan be unsecured?


Yes, a small business loan does not always require security. If you do not have collateral or do not want to provide security on a business loan, you can read our unsecured business loans guide.

Can a business make early repayments?


In most cases, lenders will allow you to repay your loan early without any penalties or fees. If you plan on repaying your loan amount early to reduce the amount of interest you pay, check with your lender to ensure you won’t incur any fees or penalties for doing so.

How can I compare lenders for a small business loan?


When comparing lenders, there are three important aspects of a small business loan to consider:

  • The loan amount

  • The interest rate

  • The fees or charges for your loan

How much funding do you need for your business?

Find the best rate now.