How to Apply For a Small Business Loan

Read through the step-by-step process of applying for your small business loan right here.

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, updated on September 21st, 2023       

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Before you start the business loan application process, it's important to have a clear understanding of both how it works and which finance deal is the best for your business. You can learn all about these things right here in Savvy's comprehensive guide to business loan applications.

How do I apply for a small business loan?

There are many key steps you’ll need to take both before you commence your small business loan application and throughout the process itself. Familiarise yourself with these points to help you maximise your chances of swift loan approval. You’ll need to do the following when applying for your business loan:

Make sure you’re eligible

It’s important to review your individual and business situation before pursuing financing. If you don’t meet your lender’s minimum requirements, your application is destined to be unsuccessful before you even start. Each lender will have different requirements, so you should review this again after you’ve selected a loan, but the general minimum eligibility criteria for business finance is the following:

  • Applicant must have a valid ABN or ACN
  • Applicant mustn’t have any prior bankruptcies, either personal or with a previous business
  • Business must have been trading for at least six months
  • Business must have a minimum monthly turnover of $5,000

Determine what you need

You should also enter the business loan application process with a clear idea of what you need as a business. It's worth mapping out all of the expenses you’re looking to have covered by your business loan to give you a clear idea of the size of the loan you’re after. This saves you from applying blindly and potentially being approved for far more or far less than you need.

Getting the right loan amount is important, as applying for more than you need can end up costing you an unnecessarily high amount, both on a monthly basis and on interest and fees overall. By clearly understanding what you need it for (such as the purchase of a new refrigerator or to finance new interior fittings), you can save yourself on hassle in the long run.

Compare different options with Savvy

Once you’ve worked out the type of loan you need and can afford, you can start comparing different options with Savvy. We take the guesswork out of choosing your business loan by listing top offers from our lending partners and breaking them down so you can compare across a variety of factors.

Interest rates, while important, shouldn’t be your sole focus, as you should also look at comparison rates to determine whether you’re able to save more money by opting for a low fee offer. You’ll also need to find a lender who offers the loan term, borrowing range and repayment flexibility you’re looking for.

Collect your documentation

After you’ve chosen your lender, it’s time for you to gather the required documents to be submitted with your application. You should always review your lender’s requirements, as the specific documents you’ll need will vary depending on who you choose and the nature of your loan. These can include:

  • Photo ID (passport and/or driver’s licence)
  • Online banking information (to access bank statements)
  • ABN/ACN and GST registration
  • Details of regular expenses, namely rent
  • Business financials for larger loans (usually $250,000+), including balance sheets, tax returns, profit and loss statements and a business plan

If you don't have your tax returns, though (which are central to business loan applications), you can still apply for a low doc or no doc business loan. These allow you to access the funds your business needs if you haven't been trading long enough to meet tax return requirements, for instance, albeit at higher rates and fees.

Submit your application

Your lender will have a simple application form on their website for you to fill out, which should only take you a matter of minutes to do. Once you’ve completed this, you can submit it alongside the digital copies of your documents directly to your lender.

Receive an outcome

You can receive an outcome from your lender within 24 hours, which will confirm either your approval or rejection. This is done in part via your lender’s advanced online processing tools, which automates part of the process to save on valuable time. You can submit your application at any time of day or night, as online portals are open 24/7. These days, there are lenders operating on the market who can process and approve loans almost instantly in a matter of hours.

Sign your contract and receive your loan funds

Once you’ve been approved, your lender will send through a final loan contract for you to sign. You can sign your agreement digitally and send it back off to your lender, who can then advance the funds directly into your business’ account for access as soon as the same day you apply.

Common queries about applying for small business loans

What government small business loans are available?

Indigenous Business Australia offers Aboriginal small businesses loan packages to help with anything from cash flow to the purchase of required equipment. While there aren’t really any government loans available to non-Indigenous businesses, there are a variety of grants and schemes on offer at both state and federal levels which you may be able to take advantage of. Some of these include the New Business Assistance Scheme through the NEIS, Regional Development Australia and the Research and Development (R&D) Tax Incentive. Check your state or territory government’s website to see if you’re eligible to receive assistance.

Will I need to supply asset security for my loan?

No – we work with lenders who offer unsecured business loans across Australia. This means you won’t need to put up a valuable asset as collateral for your loan. However, some lenders may require borrowers to be asset-backed (such as by property) as part of the eligibility criteria. This won’t necessarily mean your home or home equity will be involved in the loan, though.

Can I apply for a line of credit loan instead?

Yes – we work with lenders who offer lines of credit to small businesses. These are seen as a highly flexible source of accessing funds, as you can withdraw from your account as often as you like and only pay interest on the amount withdrawn. It’s important to note, though, that lines of credit often come with higher interest rates than business loans, so leaving significant amounts outstanding could end up costing you more than taking out a loan.

How long can I take to repay my business loan?

Business loans in Australia are flexible, with terms ranging from three months to five years. However, the term which you’re approved for will be dependent on whether your lender believes you’ll comfortably be able to repay your loan. For instance, if you wanted to take out a $100,000 loan with a 12-month repayment period but your business only earned $90,000 annually, you wouldn’t be approved. In equal measure, a lender likely won’t approve you for a small loan of around $5,000 to be repaid over several years, as it presents undue risk to them. If you want to see the effect different loan terms can have on the cost of your finance overall, you can use Savvy's business loan repayment calculator.

Can I claim my business loan repayments as tax deductions?

Partly – while you can’t claim any of your principal repayment, interest can be tax-deductible. If you’re looking to claim these, you should ensure you have thorough records of your repayments and interest across the financial year.

Can I apply for a loan if I’ve just bought a business?

Yes – while the requirement for business owners is usually a minimum of six months in operation, you can take out a loan as soon as three months after you purchase an existing business, if not sooner in some cases. Because these are less risky than startups or businesses otherwise in their infancy due to being established and having been running for an extended period in some cases, lenders are generally more willing to be more lenient with their loan criteria.

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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.