How Do I Qualify For a Business Loan?

Find out how to qualify for the business loan you need before diving into the application process.

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, updated on September 4th, 2023       

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Business loans are incredibly useful for owners and operators to help ease the financial burden of running their business. However, it’s important to enter the process knowing whether your business is eligible to take out a loan, so you can find out with Savvy in our comprehensive guide.

How do I qualify for a small business loan?

There are several key points of criteria you’ll need to meet prior to commencing your small business loan application. While specific eligibility points may differ between lenders, they’re likely to follow the same general lines across the board. For instance, you'll be able to take out a business loan whether you're a female, male, non-binary or any other business operator. To qualify for your business loan, the following criteria must be met:

Lenders will generally look for borrowers with both a strong personal and business credit history when assessing applications, but specifically will require them to not have any history of bankruptcy on their file. Business loans are still available to borrowers who are struggling with their credit score from some specialist lenders, but they’re much more restrictive in terms of how much you can borrow and charge a higher interest rate.

Minimum trading time

Lenders will usually implement a minimum requirement for time trading as a business. You’ll typically be required to have at least six months under your belt before you can seek out a loan, but some lenders will raise this to 12. Alternatively, there are some instances where specialist lenders may be able to approve startup business loans in Australia, although this will usually require a strong applicant who has successfully run businesses in the past.

Minimum monthly or annual revenue

In addition to this, you’ll need to be seen as a viable business to obtain the funding you’re looking for. The lowest monthly turnover requirement available is around $5,000, while required minimum annual turnover can fall anywhere from $60,000 to $1 million depending on your lender. If your business isn’t earning the required revenue, your lender will deem it a greater borrowing risk and won’t accept your application.

Business assets

Some lenders will look to your business to determine whether it has any viable existing assets on its books. While many business loans are unsecured, part of assessing the value and available funds in your business is incorporating and valuing its assets. These can be anything from heavy machinery to a food truck to industrial food storage spaces.

Verifiable credit

Finally, one aspect of determining your suitability for a business loan is your history of repaying similar loans in the past. This is especially the case if you’re returning to the same lender as previous successful loans, as establishing a relationship with them can go a long way towards aiding your chances of approval for another.

How to apply for your business loan

Further business loan qualification questions answered

Do I need to provide security for my loan?

No – at Savvy, we’re partnered with lenders who offer unsecured small business loans, which are a more accessible type of finance for businesses which may not have the assets required to secure their loan. These loans are faster to process than those which come with asset collateral, giving you access to the money you need sooner.

Will my loan come with a fixed or variable interest rate?

Business loans typically come with fixed term interest rates. These remain the same across your loan term, which brings a greater sense of certainty regarding your financial commitments across your loan term. Variable rates can also be accessed on business loans, albeit aren’t as common, and can allow you to take advantage of decreases in your lender’s interest rate and save over the course of your loan.

Can I still qualify for a business loan if I don’t have the right documents?

Yes – low doc business loans exist for business owners who are missing key documents but are still looking to take out a loan. These are less common in the market, but there are many specialist lenders who can help you access the funding you need even without the usual required documents. Because these loans are considered a greater risk to lenders, though, they come with higher interest rates and typically enforce lower caps on borrowing.

Are there small business loans available from the government?

Yes – if you’re an Indigenous business owner, Indigenous Business Australia (IBA) offers loans to help start, grow and buy businesses. These can range from as little as $10,000 up to $5 million. There are other grants on offer to other Australian businesses, such as New Business Assistance with NEIS and Regional Business Australia (RBA). Check the federal government website, as well as that of your state or territory government, to find out what grants you’re eligible for.

How do I qualify for a loan to buy a business?

There are a few more steps that go into your application for buying a business compared to simply taking out a loan for your current one. Lenders will look at additional factors such as whether you’re asset-backed (typically whether you own commercial or residential property), the last two years’ worth of financials from both the business you’re looking to purchase and your existing business and whether you have any transferrable skills pertaining to your new business (such as a plumber buying a plumbing business).

Can seasonal businesses still qualify for business financing?

Yes – you can compare business loans with Savvy even if your business only earns its money seasonally. It’s important to choose a loan which fits within your business’ limitations, with some lenders also offering custom pay schedules to help ease the burden.

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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.