How to Get a Business Loan

What's involved in the process of getting a loan for your business? Find out more right here!

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, updated on September 21st, 2023       

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Business loans are a common way for operators to access the funds they need to help them manage the expenses which need covering. However, it's important to know how to get a loan before you apply, which will help you avoid any unnecessary delays or rejections. Find out the key processes with Savvy today in our guide.

How do I get a business loan?

The actual steps involved with getting a straightforward, traditional business loan are relatively simply. The process is slightly different for different lenders, but in general, most loans will require the following:

  • Choose the loan you want – The first step in the process is to find the loan that’s right for your business. The best place to start nowadays is almost always online, first to confirm what type of loan is right for your business, and then to use a comparison website – like Savvy – to compare your options and find the best.
  • Apply (via branch, or preferably online) – The next step is to apply to your lender. The more traditional approach to this is to gather together financial paperwork and make an appointment at a bank branch. Nowadays becoming increasingly common to apply online – via a lender's website. Many banks offer this option, and there are now a large number of online lenders who work exclusively over the internet. Online applications have the advantage of being quick, easy, and convenient – you don’t even need to leave your office.
  • Provide supporting documentation – The next step of the application involves some paperwork from you. You’ve given the lender details about you and your business in the application, and now you need to back it up. You’ll generally need financial information about both you and your business, details of your trading history, and active ABM, personal ID, and bank statements. There might also be other information the lender requests, such as a business plan for a new business (or the purchase of an existing one). If you’re working online, you'll need digital copies of things (although a camera phone photo of ID might suffice, depending on the lender.)
  • Sign off on lender's paperwork – Once the lender has reviewed your paperwork, they’ll make a decision whether to approve your loan or not. If it’s approved, they’ll send through paperwork for you to approve and sign (possibly electronically), including your final loan contract. Once you’ve signed and submitted that, the loan is officially finalised.
  • Receive the money – The money should then be transferred to the bank account you’ve nominated in your application – most lenders work by electronic funds transfer nowadays, unless you’ve specially arranged some other method (such as a bank cheque). In most cases, this will arrive on the same day you apply.

Although loan approval isn’t always guaranteed, the process of applying isn’t a difficult one – provided you’ve got paperwork easily to hand. And if you’re getting started on the hunt, Savvy’s a good place to start comparing business loan options.

Is there a different process for different types of loan?

For the majority of business loans, the basic process follows the pattern shown above. There are variations in terms of how long the process takes, what questions the lender might have, and what documentation (and how much) is required from you. But most still roughly follow that process.

There are a few loans and lenders that don’t exactly fit the mould. For example, a business overdraft is a facility that’s added to an existing bank account, and the process for doing so can be a little more like opening a new account or increasing a credit limit than getting a loan (depending on the lender).

A merchant cash advance is unusual not in how you apply, but how you make repayments – the lender will help you set up a specialised bank account, and you then need to redirect your incoming business cash flow through that account – so there’s a little bit of messing around with bank accounts required.

Lastly, some of the most modern lenders on the Australian market are actually what’s called “FinTechs” – short for “Financial Technology”. These are many and varied, and often have quite specialised purposes – the term includes everything from PayPal to cryptocurrency websites and crowdfunding pages. These can work in a variety of ways and not all of them really qualify as lenders. But those that do will quite often have their own unique method for applying.

Top tips on how to compare business loans & find the best

The type of loan

The best place to start is by figuring out what type of loan is best suited to your business. Do you need a specialised loan to buy specific equipment or refit an office space, or are you needing something general purpose loan that can cover a range of expenses? Do you need a lump sum that you pay off slowly over time like a traditional loan, or do you only need sporadic funds for short times – meaning some type of business credit would be helpful? You can use our business loan repayment calculator to determine which loans are most affordable for you.

Secured or unsecured

Whether you’re willing and able to offer an asset as collateral on a loan or choose an unsecured finance deal will be a significant factor. Offering security can slow the loan process down, but it can mean better rates, more money on offer, and a longer loan term to pay it off. It also means you can’t sell or modify your asset until the loan is concluded. It’s a pretty important decision.

Interest rate & comparison rate

Once you know the kind of loan you’re headed for, it’s time to start talking numbers. The interest rate can be a useful figure, but often the comparison rate is a more useful figure – as it also includes the most significant fees the lender will charge. Both rates are merely a reference though – the official interest rate your business gets offered will depend on the strength of your application.

Extra features

When comparing different loans and lenders, it’s also worth comparing some of the other features on offer. Some lenders will offer a flexible repayment schedule that can be matched to how your business’ finances work. Others offer a redraw facility, where you can pay extra into the loan, but recall some of those funds later if needed. If any of these are of particular value to your business, they’re worth considering.

The type of interest

It's important to compare interest rates on business loans. Many loans have a choice of fixed interest (where your rate is locked at a certain value), or variable rate (which changes with the national interest rate). If you don’t get offered a choice, it’ll normally be variable rate.

Frequently asked questions about how to get business loans

How hard is it to get approved for a small business loan?

Depends on a lot of factors. If your business has been trading for a number of years and has steady cash flow and decent financial reserves, it’ll generally be pretty straightforward to get approved for a small business loan. If you’re a new business, recovering from recent financial hardships, or losing customers and struggling with unusually poor cash flow, it might be more of a challenge. But even in those circumstances there are loans and lenders that are easier to get than others. An unsecured bad credit loan from an online lender, for example, will be open to almost any business that can actually afford the repayments.

How quickly can I get a loan to grow my business?

Different loans take different times to process, but some are very fast. An unsecured loan can generally be turned around in a few days. A large secured business loan will take a lot longer.

Can I still apply for a business loan in-branch?

There are still many lenders that have brick-and-mortar branches that you can apply at – most notably banks and credit unions.

Can I only apply for business loan during business hours?

No. While it’s true that visits to a branch need to happen during business hours, online loan applications can normally be completed at any time of the day or night, 24/7. Your application may not get assessed until work hours when the lender has staff in the office, but you don’t need to be on hand while that’s happening – making it ideal for people with busy work schedules.

Will a good credit score make it easier to get a business loan?

Almost always, yes. Good credit is the engine oil of loan finance – it makes everything go smoother and easier. Good credit can mean better interest rates, more money, and easier approval. It’s always worth looking after your credit rating – both your personal rating, and that of your business.

How do I get a small business loan if I’m not an Australian citizen?

It’s a lot simpler to get a business loan if you’re an Australian citizen or permanent resident, but it’s not required. If you’re not, you’ll need to have the appropriate visa though – specifically, a Business Innovation and Investment (Provisional) visa (subclass 188).

Can I get approved for financing if my business is based rurally?

Yes – regardless of whether you’re looking for a loan in Sydney, financing for your business in Perth or an extra boost for your small country business, you can get approved for a loan through one of our lenders 100% online. Business financiers aren’t really concerned with where your business is based, as long as you can show that it’s generating enough consistent revenue to support the loan’s payments and meets all the required criteria.

What are some other types of business finance?

You aren’t just limited to standard unsecured and secured business loans when taking out a loan for business purposes. For example, if you wanted to gain greater flexibility in terms of how your business purchases its stock, you might look at an inventory or floorplan finance arrangement. For investors setting their sights on property which already has tenants in it, rent roll finance may be the best option for you. There are many different types of business finance, all of which are likely to come with different application requirements, so it’s important to compare and find the one best suited to your needs.

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Compare business loans through Savvy today 

Whether you need a small unsecured loan to boost your cash flow or a larger, secured deal to purchase equipment, you can compare a range of competitive online offers through us before you sign on the dotted line.