Small Business Loan Requirements

Familiarise yourself with the ins and outs of lender requirements for small business loans today.

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, updated on September 4th, 2023       

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Whether you're looking to start your own small business or continue operating your current one, it's common to need access to finance. However, there are certain requirements you'll need to meet, which you can learn more about with Savvy in our comprehensive guide.

What requirements do I need to meet in order to get a small business loan?

There are a variety of requirements that you might need to meet in order to be eligible for a small business loan, which may vary depending on your lender. These requirements can essentially be broken down into two groups: business requirements and administrative requirements. The most common of these include:

Business requirements

Criterion Details
Time in operation
If you are taking out money for your existing business, lenders might require you to have already been in business for a period of six to 12 months. You will need to provide evidence of your operations meeting this threshold in the form of documents such as a business activity or cashflow statement.
Business revenue
Even if your business has been active for a sufficient amount of time, you will still need to prove that your business generates enough revenue on a per-month basis to cover the cost of your loan. A common threshold for lenders to expect your business to meet is revenue of over $5,000 per month.
Business credit history
As well as your personal credit history, your business will likely need to have a positive credit score in order to borrow funds as well. This can be achieved by making sure that your business’ bills and debts are paid on full and on time. There are still options available to business whose credit score isn’t as strong, but the loans with the best terms are reserved for those with good credit.

Administrative requirements

Criterion Details
Government ID
You will need to be able to provide a copy or your government-issued photo ID such as a driver’s license or passport.
Business ID
Your Australian business or company number (ABN or ACN) will be to be given to your lender, as this is your business’ unique identifier.
Proof of income
For loans taken out to start a new business, you will need to provide your personal proof of income, such as six months of bank statements or a letter from your accountant.

How should I compare small business loan requirements?

Your first step in comparing your small business loan options should always be to utilise Savvy’s online comparison tools to get a quick idea of the available options which fit your needs. Next, you will want to look at the following requirements of each of your options and how these fit with your situation.

Loan type

The requirements of your business loan will differ depending on the specific type of business loan that you are applying for. For example, a regular unsecured business loan will generally have less stringent requirements than a secured business loan, for which you will need to provide a suitable asset as collateral to be approved for. In contrast, lines of credit will require businesses to show their lender that they’re capable of paying off higher amounts quickly and intermittently, as they’re granted access to funds up to a set limit and draw from it as they see fit. Invoice finance, another type of business finance which provides businesses credit based on currently-owed revenue, will require you to provide copies of outstanding invoices as a part of your application.

Business activity

For obvious reasons, if a lender requires your business to have been active for a set period of time before you can access credit, this option will not be suitable if you are looking to start a new business. Even if you do have an established business, you will need to ensure that you can provide the necessary proof to meet your lender’s requirement.

Business revenue

If your business is already running and you are accessing further credit to continue its operation, you might find that you will meet certain lenders’ requirements regarding your business’ minimum revenues, but not others. Having multiple types of finance at once could affect how you apply, as lenders will want to see that you’ll be able to manage repayments on your own and could be dissuaded from approving you if your outstanding debt is too great. You will need to make sure that you choose a loan option which can cater to your business’ current circumstances.


Depending on your circumstances, some lenders may mandate that you provide an asset as security for your small business loan. This is most common for loans for new businesses, or for loans taken out to purchase new equipment for a business such as a vehicle or machinery. Assets eligible for use as security include your home or other properties, other commercial properties such as shops or the equipment purchased with your loan.

Need to know more about small business loan requirements?

Which lenders have the most lenient requirements for a small business loan?

Generally, online lenders who specialise in easily accessible business loans can offer you finance with the least stringent requirements. For example, often these lenders will not require security and many are open to applicants who have imperfect credit histories. The only requirement you will need to meet is having been in business for around 6-12 months and to have a minimum monthly revenue in the area of $5,000.

Can I still get a small business loan if I don’t meet all of my lenders’ requirements?

While there will always be room for negotiation at the discretion of your lender, and they may be able to accommodate your finance needs with alternative products, you should not expect to be approved for the loan you have applied for if you have failed to meet the lender’s stipulated requirements. One alternative for those who can’t meet all of their lenders’ requirements is a low doc business loan – an option specifically designed to cater to those who can only provide limited documentation for their loan application, such as if your business is new and can’t supply the required files.

Are there credit alternatives I can access in the event that I can’t meet the requirements for my small business loan?

If you fail to meet some of the requirements attached to your loan approval, there are still alternative options that you can pursue. If you do not have a sufficient credit history for approval from certain lenders, you can explore bad credit business finance options, which there are plenty of online. Other alternatives to a business loan which might work for you also include a business credit card for smaller purchases, a business line of credit or even a government grant, provided you are eligible.

If I am not approved for my loan, can I reapply at a later date when I know I can meet the requirements?

Yes – if your loan application is rejected, you can reapply later once all requirements are met. However, you should note that failed loan applications appear on your credit history and will be viewed as a negative ‘mark’ against your credit score. Therefore, you should take the time to check that you will meet the requirements laid out by your prospective lender to ensure that you application is approved the first time around. If you are unable to meet the requirements, you should wait until you can or find an alternative loan which is more suited to your business.

How can I improve my chances of meeting the requirements for my small business loan?

While there is no ‘one size fits all’ approach to preparing for a business loan application, there are some general approaches you can take to make sure you meet the majority of requirements. These include making sure that you have the necessary paper work in order, as outlined above, ensuring that your business’ financial records are accurate and align with the forecasts in your business plan and that your credit score is as strong as possible.

Can I strengthen my small business loan application by providing documents in excess of my lenders’ requirements?

Yes – by opting to provide additional evidence of your suitability for credit approval, such as a comprehensive business plan, cashflow statements, balance sheets or security, you can improve your approval chances. This can lead to a greater approved borrowing range and being able to take out a loan with lower interest rates. This is because extra documentation can increase your lender’s confidence in you as an applicant.

Are there restrictions on how a business loan can be used?

As long as they’re used for business purposes, your business loan funds are highly flexible and can be tailored to your needs. For instance, you might want to boost your company’s available funds so you can run your next marketing campaign, fit out the front of your shop to make it more appealing to customers or purchase inventory. You can also use a business loan to help you purchase an existing business, such as a microbrewery or vineyard. You can also cover other outstanding debts, such as applying for a tax debt loan. Whatever costs you might need covered in the business space, a loan can help you.

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