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Start Up Business Loan 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.

Need a start up business loan to finance your company off the ground? Talk to experienced brokers from Break Free Home Loans. We can help you complete an application that addresses the eligibility requirements of your chosen lender for your best chance of approval. If you’d like to borrow finances using the best small business startup loans in Melbourne, contact us today.

What Are Start Up Business Loans

Before taking out a start up business loan, you should understand what startups are and if you actually qualify for finance. Startups are newly formed businesses that are fast growing. They are developing their products and services at this stage. Startups can be sole traders, partnerships or organisations with models that are rapidly scaleable. Because startups experience change in terms of product, model and staffing frequently, they face high uncertainty. Their lack of capital and revenue stream necessitates owners to take up small business startup loans at the minimum.

How It Works

Start up business loans are different from loans aimed at small businesses. This is because startups are designed for rapid growth as opposed to the steady growth typical of small businesses. Startups have little to no internal funds or profit to provide working capital. It’s why they often can only choose between two types of finance, debt or equity. Debt finance means borrowing money so the business takes on debt, while equity financing involves the business securing funds from investors or a public float in exchange for a share of the company.

How Much Can You Borrow

The amount you can borrow will depend on a number of factors, including the type of business you’re starting, your personal circumstances and your credit history. Generally speaking, you can borrow up to $500,000 AUD for a start up business loan. This can be used for a variety of purposes, including working capital, equipment purchases and property improvements.

How To Apply

To apply for a start up business loan, you’ll need to provide the lender with some information about your business, including your business plans and financial projections. The lender will also want to see proof that you have the necessary collateral to secure the loan.

If you’re starting a small business in Australia, you may be eligible for a government-backed small business loan. These loans are typically offered at lower interest rates than other types of loans and can be used for a variety of purposes, including start up costs, equipment purchases and working capital.

Bank Requirements For Business Startup Loans In Melbourne

Financing for new business can be obtained from banks, financial institutions, online lenders and private investors. When applying for a business startup loan, the following criteria are some of the common conditions you need to consider:

How Long You Need To Have Been Operating

To qualify for large business startup loans, you generally need to have been operating for two years and have a good credit history. You will also need to provide financial information, such as your business plan and tax returns. Some lenders may be more lenient and offer a loan if you’ve been in operation for a minimum of 6 months or a year.

Revenue Criteria

The minimum revenue criteria to qualify for start up business loans from Aussie lenders spans a broad range, from $0 up to $1 million AUD. To qualify for start up business loans, you will also likely need to:

  • Be over the age of 18
  • Be an Australian citizen or permanent resident
  • Have a good credit history
  • Have a viable business plan

Paperwork To Prepare

Generally, you need to provide your detailed business plan and personal information to apply for new business loans. The following are some documents you’ll need to qualify for start up business loans:
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  • Business Plan
  • Personal Financial Statement
  • Loan Application Form
  • Copy of ID (passport, drivers licence, etc.)
  • Proof of Address
  • Bank Statements

These requirements may vary depending on the lender. For secured start up business loans Australia finance, you may also be asked to offer a guarantee. The paperwork involved can include your asset statements. Doing this can help you lower repayments, but it also puts the asset at risk if you happen to default on the loan.

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Proof Of Identification

Proof of identification refers to a driver’s licence or passport, or other government issued ID. You should also provide details of the business start up loan you are applying for, and proof of your business ownership.
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Your Business Plan

Your business plan should include your business structure, products or services, target market and marketing strategy. The lender will likely ask for other documentation such as your business registration, ABN, and tax returns.
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Main Financial Reports For The Last Three Years (If Available)

Include your personal financial statement as well as your business’ balance sheet and income statement. You will also be asked to provide tax returns to see if you are fiscally responsible for your business.
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Financial Forecasts

You need to provide 3 years of financial projections for your business. This is so the lender can assess if your business has the steady revenue stream it needs to pay off your loan obligations alongside its usual payables.

Personal Financial Information

Lenders will also need to review your personal financial statements and your proof of collateral if you’re applying for secured business loans for startups. You will need to provide some form of collateral to secure the loan, such as real estate, equipment or inventory. You will be required to sign a personal guarantee form.

Things To Know About Financing For New Business

These are some of the most important factors to consider when you are comparing small business loans for startups:
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Deposit

You can start your business with no deposit, however you will likely need to provide some form of collateral. The amount you will need to put down as a deposit will depend on the lender and the type of loan you are applying for. When a deposit is asked, lenders usually request between 10% and 30% of the loan amount.

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Rates

The interest rates on a startup loan for new business entities are often higher than for other types of business loans. This is because start up companies are considered a higher risk by lenders. However, there are a number of start up business loans available, each with their own interest rate and repayment terms that may offset these considerations should they give you the value and loan features you need.

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Fees

Most lenders will charge fees for start up business loans. These fees can include an application fee, a monthly service fee and/or an annual fee. Be sure to ask about all fees before you apply for a loan.

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Payments

If your business isn’t’ off the ground yet, it can be difficult to determine how much you’ll be able to repay. It’s why you need clear projections and financial forecasts. Compare your loan product’s term, repayment flexibility, monthly payments, interest rate and the overall comparison rate, including its fee structure. Work out an approximate budget and make sure you can afford the loan alongside your regular expenses.

Reasons To Get Business Loans For Startups

There are many reasons why Aussie companies opt for new business startup loans, including:
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Develop Products

One of the most common funding needs for startup businesses is their product development costs. Realising business ideas into a market-ready product or service is even harder when upfront costs are high and a business in its early stages has no revenue.
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Market Products

A new business’ main challenge is acquiring a customer base. Getting customers is a startup hurdle and marketing your product is the most effective way to do so. No matter if it’s online or offline, through modern social media or mail newsletters, these activities require time and substantial investment.
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Expand The Business

You’ll need resources if you’re planning to grow your business. With the uncertainty of cash flow in startups, it’s a good idea to use external funding to expand your business.

Operational Expenses

From hiring staff, leasing business space such as coworking space to paying the salaries of staff and founders, you need funds. The larger the business grows, the more operational expenses your startup will need.

Alternatives For New Business Loans

The following are some popular alternatives to business loans for your startup:
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Venture Capital

In equity capital financing, venture capital firms provide funds for startups and early stage businesses. To qualify for this type of financing, your business has to demonstrate strong potential revenue streams and business strategy.
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Angel Investors

Individual investors may want to finance your startup in exchange for a partnership agreement. You can find them on startup hubs, meetups or investment groups.
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Crowdfunding

This is a newer form of financing and involves raising money from a group of people, typically through an online platform. Look into whether there are donation fees that are deducted from your fundraiser goal or any other charges you may have to pay.
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Government Funding

The Australian government provides small business grants through a number of programs including the Entrepreneurs’ Programme, the Cooperative Research Centres Projects program and the Accelerating Commercialisation program.
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Personal Loans

Personal loans are a great option for start up business loans because they can be used for a variety of purposes. You can use the loan to buy equipment, hire employees, or even to lease office space. The interest rates on personal loans are usually lower than most commercial loans.

Business Charge Cards

If you need a small business loan and require access to an ongoing line of credit, a credit card can be a suitable option. When you choose a card with 0% interest p.a. on purchases and pay off your balance before the offer period ends, you can avoid having to pay interest as a cost of borrowing.

Got Questions? We’re Here To Answer

Talk to us today. Our brokers are more than happy to answer any questions you may have. We have the credentials and experience to build a strong case for your loan approval.

Frequently Asked Questions

These are some of our most popular questions when it comes to small business start up loans.

Can I Borrow Money To Finance A New Business In Melbourne?

Yes, you can apply for startup business loans as long as you meet your chosen lender’s eligibility requirements. These loans are specifically designed for small businesses and can be used for a variety of purposes such as working capital, equipment financing, or inventory financing. Startups may have difficulty qualifying for traditional bank loans, so these can be a good option.

You’ll be offered a rate based on the details you provide in your loan application. Some lenders may offer you a rate estimate before you submit a full application. The application process usually requires detailed business plans and you may need to put up security. Pre-qualifying for your loan will help you gain a better understanding of whether you can afford your repayments and if it’s the best finance option for you.

How Much Can I Borrow With A Start Up Business Loan?

The amount you can borrow with start up business loans will depend on the lender, but it is typically between $5,000 and $500,000 AUD.

What Are The Alternatives For Start Up Business Loans?

There are many different alternatives to start up business loans available. The most common are personal loans, business credit cards, private investors, venture capital, peer to peer loans, government funding and business lines of credit. Each has their own set of qualifications and terms.

Contact our team

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