Our brokers work hard at understanding our client’s unique circumstances and helping them overcome common home loan challenges. Whether you’re a first home buyer or an experienced investor, we’ll help you find the best home loan for your situation. Whether you’re self-employed and have trouble proving your income or you’re a contractor or casual worker, we offer solutions for all types of clients’ income sources.
The right business loan can make a big difference to your company’s bottom line. But with so many options out there, how do you know which one is right for you? Our brokers can assist you every step of the way when it comes to how to get a business loan. At Break Free Home Loans, we compare a wide range of business loans from leading lenders to help you find the right fit for your business. We work with you to understand your business’s financial needs and find a loan that meets your goals.
What Are Business Loans
Getting a business loan can give your business the boost it needs to grow and succeed. However, it’s important to compare business loans before you decide to borrow one. There are a number of factors to consider, such as loan amount, interest rate, repayment terms, and more.
How Much You Can Borrow
Eligibility For Business Loan
When you need to provide capital for your business, there are several types of business loans you can apply for. The eligibility criteria will vary from lender to lender. In general, they will consider the age of your business, its credit profile, and turnover for your application. They will usually ask you to provide information regarding:
- The type of business loan you’re applying for
- Your annual turnover (can range from $50,000 to $200,000 p.a.)
- The purpose of the loan
- Your personal and company credit rating
- How long your business has been in operation (minimum 6 months or a year)
- Whether you have a deposit or security
- Your ABN/ACN
Smaller loans usually will ask for less documentation and offer more lenient lending criteria. Larger business loans will require more detailed documentation and stricter terms. You may be asked to provide financial statements, proof of revenue, a detailed business plan, an asset, cash security, or deposit.
Lenders will verify this information, assess your eligibility to repay their loan, and offer you their loan amount, interest, and repayment terms. How much they are willing to lend you will depend on how well you prove your ability to pay their loan.
Compare Business Loans
- Eligibility criteria: Check if you meet the lender’s criteria. This narrows down your choices. Don’t apply for a loan you can’t qualify for or afford. This will damage your credit score, make it difficult for you to qualify for finance in the future, and cause various problems in the long run.
- Cost: Calculate the cost of your loan and see if it fits your current and future income and expenses. How much can you comfortably repay without causing cash flow problems for your business? If you’re looking at a loan for a startup, you need to have concrete cash flow projections.
- Interest rates and fees: Compare the rates and fees of different loans. Some business loans may offer low interest but high ongoing fees. Be sure to include the overall fee structure of your loan before making a decision.
- Repayment terms: The best business loans won’t only offer you good comparison rates, but have suitable repayment terms for your situation. Can your current cash flow handle the cost of the loan? Lenders offer repayment terms with varying levels of flexibility. Find a loan product that allows you to meet your obligations while managing your business without issue.
What Should You Consider Before Borrowing
Ability To Secure A Loan
Fast Access To Funds
Fees And Rates You Will Pay
How To Get Business Loans In Melbourne?
Choose A Lender
Work out what type of finance you should and can apply for. This is based on the needs of your business. Do you need a line of credit loan or invoice financing? Choose between a secured or unsecured business loan. Work out your ideal terms and choose a loan product that meets your needs. Compare lenders, interest rates, fees and eligibility criteria.
Complete Application Eligibility Checks
Upload Documents For Verification
Organise and prepare the supporting documentation. This includes proof of identification, financial statements, your business plan, financial forecasts and personal financial information. Typically, a company will be required to provide bank statements of the last 4-6 months, credit sales of the last 4-6 months, proof you’ve been operating over the lender’s minimum required period and revenue statements to prove you meet their minimum turnover requirements, and your ABN/ACN.
Types Of Loans For Businesses
A traditional loan or a term loan is a common form of business financing. You’ll receive a lump sum of cash upfront you’ll repay with interest over a predetermined period. They’re suitable for businesses looking to expand and borrowers who have good credit and don’t want to wait long for funding.
- Get cash upfront to invest in your business
- Allows larger borrowing amounts
- Funding is fast if you use an online lender instead of a traditional bank
- A secured term loan gives borrowers a lower interest rate
- A bank term loan needs a lot of paperwork to apply for — provide financial statements and a detailed business plan
- A secured term loan requires collateral or personal guarantee — an asset such as real estate or business equipment
With a bank loan, the time it takes to get approved is long and can take up to two months
- Banks in Australia reject 75% of small businesses that apply for these types of loans — larger, better-established businesses are more likely to get approved
- Costs vary — term loans from online lenders are usually more expensive than traditional banks
With a secured business loan, you have to pledge property or other assets. These can be sold by the lender to repay the loan if you aren’t able to make repayments. It decreases the risk for the lender so secured business loans have lower interest rates compared to unsecured business loans.
- Interest rates are usually more competitive compared to other business loans, starting around 5%
- Higher borrowing limits compared to unsecured business loans
- Generally has more flexible repayment terms
- You must put up assets as security for the loan
- You need to complete a large amount of paperwork
- There is a rigorous and long approval process which can take up to two months
- Many small to medium businesses are unsuccessful in getting approval — Australian banks reject 3 out of 4 SMEs seeking a traditional secured bank loan because they are bound by regulatory limitations
- The lending process is not as complicated and not as strict with documentation
- A quicker and more straightforward loan approval process
- No need to put up collateral or assets as loan security
- Higher interest rates due to risk posed to lender — for example the interest rate of a secured business overdraft is around 8% while an unsecured overdraft from the same bank is 12%
- Lower borrowing limits compared to secured business loans
Line Of Credit
- Paying interest only on the money you’ve drawn provides more flexibility than a term loan
- Typically a line of credit is unsecured so there’s no collateral required
- You can also repay the loan at your own pace
- Requires strong revenue and credit profile
- Cannot borrow a lower amount as business lines of credit start at a $50,000 minimum — not a good option for those looking to borrow much less
- Carries additional costs such as maintenance fees and draw fees
- Good for businesses looking to turn unpaid invoices into fast cash
- You don’t need to let your customers know their invoice is being financed
- Good for businesses that want to control their invoices and cash flow
- Costly compared to other options — the 2-5% interest rate may seem low but it applies for only a short time frame, the length of time it takes for the customer to pay the invoice. On an annual basis, the annual interest rates for invoice finance is higher compared to other business loans.
- You are still responsible for collecting the invoice payment
Business Credit Card
- Easy application — the provider will check basic details such as your income and length of business operation, your credit report and score to determine creditworthiness
- You can earn rewards on your purchases
- No collateral required
- Most business credit cards offer an interest-free period (usually 55 days) — if you pay off your balance before this introductory period ends, you won’t have to pay any interest
- Interest rates are high, with a variable rate that may rise
- Extra fees may apply which adds to your total cost
- Allows businesses to own equipment outright
- You can build equity in the equipment
- You don’t need to use another asset as collateral
- You can get competitive rates if you have strong credit and business finances — rates also depend on the value of the equipment
- You may need to provide a down payment
- Equipment can go outdated more quickly compared to the length of your financing
Why You Might Need A Loan For Business
Purchase Real Estate
Buy Inventory And Stock
Buy Equipment Or Machinery
You may want to purchase plant equipment or machinery for your business. Capital goods like these have high costs but produce income for the business over long periods. Usually, they’re difficult to self-finance or purchase with cash. When you need a machinery or equipment asset that is essential to your operation, a loan can be a great option. The company supplying it may offer some form of finance as well. This way you can keep growing without harming your cash flow.
For many business owners, an equipment loan or equipment finance is appealing as it offers the following advantages:
- Small or no deposit or upfront payments — this minimizes the impact on working capital
- Flexibility on a repayment plan to match your cash flow — usually terms are up to five years
- Quicker and easier to secure than other loan financing options
- You may be able to claim GST credits for GST included in lease charges
A wide range of business finance can be provided to meet working capital, staff commitments and marketing needs. This includes funds for buying competitors, equipment and machinery, and other capital goods.
You can take out a loan for a variety of purposes, such as making tax payments, managing cash flow, relocating and expanding.
Business Loans Calculators
Frequently Asked Questions
How To Get A Business Loan In Melbourne?
The first step is to contact a business loan broker like Break Free Home Loans. We’ll assess your business needs and find the right loan for you. We have access to a wide range of lenders and can find the best finance option for your business. We’ll also negotiate with the lender on your behalf to get you the best possible deal. This process includes:
- Working out the type of finance you need
- Assessing your business’s financial situation
- Comparing loan products and advising you on the best one
- Helping you with eligibility checks
- Submitting an application to the lender
Our brokers can take care of all the paperwork and legwork when applying for a business loan. This includes finding the right lender, negotiating the best interest rate and terms, and submitting the loan application for you.
What Are Business Loans?
What are business loans and how can they help your business?
A business loan is a loan that is specifically designed to help businesses finance their activities. The funds from a business loan can be used for a variety of purposes, including buying new equipment, expanding your business, or even just covering the costs of day-to-day operations. There are many different types of business loans available. They can be used to finance:
- Working capital
- Business expansion
- Business acquisition
- Equipment purchases
How To Compare Business Loans?
When you compare business loans, there are a few things you should look at:
- Interest rates
- Loan terms
- Fees and charges
- Repayment options
Work out what type of financing you need and which options your business is eligible for. Look into the state of your finances and see if you meet the lender’s borrowing criteria and whether their loan suits your needs. Review the loan term, monthly payment amounts, interest rate, borrowing limits, and more. You need to find out which loan repayment is most suitable for your cash flow so you won’t have any problems down the road.