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Business Loans In Melbourne

Break Free Home Loans are a leading Melbourne mortgage broker, with over 20 years of industry experience. We provide lending solutions and advice tailored to your needs. We work closely with clients as trusted advisors and are accessible to clients when needed.

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

Business loans are a form of financial assistance that businesses can use to cover a variety of expenses. These can include start-up costs, business expansion, machinery and equipment purchases, and more.

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

When taking out a loan for business, you can borrow as little as $5,000 to as much as $100,000,000. Most business loans Melbourne finance use a fixed interest rate but there are loans with variable rates. Each lender has their own set minimum and maximum borrowing limits. You’ll have to make repayments either on a daily, weekly or monthly basis depending on your loan.
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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

Once you’ve determined your business needs, you can begin comparing loan options. When comparing lenders and products, here are a few things you need to keep in mind:
  1. 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.
  2. 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.
  3. 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.
  4. 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.
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What Should You Consider Before Borrowing

Work out some of these questions first before you apply for a loan with Aussie lenders.
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Ability To Secure A Loan

Why does your business need the loan? This affects your eligibility for loan products considerably. Is it for machinery and equipment finance, to start a business from scratch or overcome a cash flow problem? You may need to look at a specific type of loan for a business, a short term business loan or other types of finance with a business loan broker.
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Fast Access To Funds

What is the state of your business finances? Are you doing well in your current financial performance? This determines your ability to qualify for a loan. Your credit history will also limit the kind of financing options available to you. What industry is your business in? This also affects your finance options. You also need to consider the loan approval period from different lenders. If you need funding on short notice to prevent your company from going out of business, you need to look into short term financing or specialist commercial lenders.
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Fees And Rates You Will Pay

When calculating your business loan comparison, you need to take into account any fees and rates that may add to the total cost of the loan. This includes any ongoing fees, administration fees, establishment fees, and penalty charges that may apply. You need to determine if fixed rates, variable rates or split rate options are best for your monthly repayments. You should also take into account the different business loan lengths to determine for how long you will be paying interest on your loan.

How To Get Business Loans In Melbourne?

The following is a step-by-step process to take out a loan for a business:

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

Work out how much you need to borrow and what you can afford. Do you have the credit score and income to be eligible for the loan? Establish how much you can afford to repay, and over what period. Make sure your business financials are in order and can take the regular repayments of your loan. Do not over-commit your business.

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.

Apply

Submit your application for your desired loan product. The lender will assess your loan in comparison to the creditworthiness of your business. They will determine your eligibility and offer you a loan amount based on their risk assessment. Once approved, you’ll be asked to sign the loan agreement. You will then receive the funds in your nominated bank account.

Types Of Loans For Businesses

There are different types of loans for businesses available. These are some of the most popular business loans Melbourne finance options:

Traditional Loans

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.

Benefits:

  • 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

Drawbacks:

  • 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

 

Secured Loans

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.

Benefits:

  • 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

Drawbacks:

  • 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

 

Unsecured Loans

The ease and speed of getting unsecured loans make them a popular choice among SMEs.

Benefits:

  • 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

Drawbacks:

  • 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

A business line of credit gives you access to funds up to your credit limit. You pay interest on what you use. For example, if you have a $100,000 line of credit from the bank but only use $50,000, you will only pay interest on the $50,000 you’ve used. It is a flexible way to borrow as you can use the money only when you need it. Business lines of credit are suitable for short-term financing needs, managing cash flow or handling unexpected expenses. They’re also compatible with seasonal businesses or those with seasonal income.

Benefits:

  • 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

Drawbacks:

  • 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

 

Invoice Finance

Invoice financing allows you to receive the funds from your customer invoices sooner. It uses the invoices you have as collateral to get a cash advance, similar to ‘selling’ it to an invoice finance company. They’ll pay you a percentage of the total invoice value (80-95%) immediately and charge an advance fee (usually 2-5%) of the invoice amount. When the customer pays the invoice, you’ll receive the remaining funds minus fees and charges.

Benefits:

  • 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

Drawbacks:

  • 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

Business credit cards work similarly to revolving lines of credit. You can draw on and repay the card as needed as long as you meet minimum monthly payments and don’t exceed the credit limit. They’re suitable for small business finance and are typically used for financing ongoing expenses such as travel, office supplies and utilities.

Benefits:

  • 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

Drawbacks:

  • Interest rates are high, with a variable rate that may rise
  • Extra fees may apply which adds to your total cost

 

Equipment Finance

Equipment finance or equipment loan is a specialized form of lending to purchase machinery and equipment. An example of this is semi-truck financing or auto loans for cars, vans and light trucks. You can own the asset immediately while the equipment or machinery is used as security for the loan. You will have to make regular repayments over the term of the loan, which is usually three to five years. An equipment finance loan’s interest rate can range anywhere from 6% to 15%.

Benefits:

  • 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

Drawbacks:

  • You may need to provide a down payment
  • Equipment can go outdated more quickly compared to the length of your financing

 

Other

You can also get an excellent deal for other types of finance from business loan brokers. This includes business overdrafts, merchant cash advances, microloans, which allow smaller loan amounts ($50,000 or less), peer-to-peer business loans, finance for startups and more.

Why You Might Need A Loan For Business

If you’re asking when is the right time to take out a loan for my business, the answer varies. You may need finance for different reasons and there are situations where it’s ideal to fund these ventures through a loan than paying for them outright. The following are some common reasons why you might need a loan for your business:
1

Purchase Real Estate

A business loan can help you purchase buildings, retail premises and fund expansions. Business expansion is usually a good sign of growth and a valid reason to apply for funding. It’s an essential part of your business plan and strategy.
Z

Renovations

You may need a renovation for functional reasons. For example, your retail location needs to be refreshed, or it may be time for a new office fit-out at your workspace.
F

Buy Inventory And Stock

If you’ve been in business for a while, you’ll know what products or services are most popular and profitable. Although you may be short on cash, perhaps you’ve seen a golden opportunity to buy stock at a discounted price for inventory that’s in demand. A business loan will help you make the purchase and collect profit from increased sales. If you happen to be a seasonal business that sells seasonal products, a loan lets you build up your product inventory so you’re ready for busy times.

New Employees

You may need to hire and train staff as your business grows. There are costs involved when you bring in new employees, from training expenses, to the lag before they contribute to your bottom line. An unsecured short term small business loan can be invested into your company to make up for these costs.
A

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
b

Increase Capital

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.

Other

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

Taking out a loan or credit for your business can be advantageous for a number of reasons. Break Free Home Loans can help you compare business loans and find the right one for your business. We’ll take the time to understand your business needs and find a loan that’s right for you. Talk to us today to calculate comparisons for your finance options.

Contact Us

If you’re looking for business loans in Melbourne, contact Break Free Home Loans today. We’ll help you compare business loans and find the right one for your business. Begin your application with our expert brokers. We have the experience to build a strong case for your loan approval no matter your financial situation.
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Frequently Asked Questions

The following are some of our most 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.

Contact our team

We love to hear from each and every one of you. Please feel free to reach out to us today!