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Running a business can be incredibly liberating but it also creates a unique set of challenges. Whether you work solo or with a large team, you’ll undoubtedly need to make critical choices about the best places to invest your time, energy and money.

One of the biggest decisions you need to make is how to best manage your cashflow. Cashflow is one of the most critical factors to the success of any business and a stress factor for many Australian business owners. A business loan can help you navigate this and many other challenges you face as your business grows.

But how do you know what type of business loan is right for you? There are a lot of loan options available for businesses these days, which can make the process seem confusing. To get started, you’ll need to consider several factors including the size of your business, how long you’ve been running, your industry, financial health and more.

We want to help make your business loan decisions a little easier. That’s why we’ve compiled all of the most important information you need to know about business loans.

With the right information, you can then get your business on the fast track for success.

Most Popular Loans

Long Term Business Loan

This is likely what comes to mind when you think of business loans. A long term loan is a lump sum, plus interest that you repay in regular installments over a set period of time. It is typically paid over a time period of 12 months or longer but can run for as long as 30 years. Long term loans are available from traditional banks as well as online lenders.

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Short Term Business Loan

Short term loans are similar to long term loans but are repaid over a shorter period of time, usually around 3 to 18 months. With a short term loan, businesses can access the capital they need more quickly, often within 24 hours. Businesses can also apply and receive approval more quickly as online lenders offer greater flexibility than traditional banks.

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Business Line of Credit

A business line of credit enables you to borrow a certain amount of capital annually. The amount is typically based on accounts receivable and current inventory but usually less than $200,000. A business line of credit can be helpful in managing cash flow shortages but should not be used for long-term investments or major purchases.

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Invoice Financing

Your unpaid invoices are valuable. Invoice financing enables you to use your outstanding invoices as collateral so that you can receive the money you need without waiting on overdue payments from your customers.

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Equipment Financing

If you need to purchase expensive equipment, you can use it as collateral to get a loan and purchase it outright, without hurting your bottom line.

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Merchant Cash Advance

With a merchant cash advance, a lender purchases a business’s future cash flow, so future transactions are used to repay the borrowed funds, in addition to a fee charged by the lender for the loan product.

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Business Credit Card

Business credit cards work similarly to personal credit cards but are design for work spending.

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Business Overdraft

A business overdraft allows a business to access more cash than they have available in their account to increase their cashflow. Overdrafts can offer an extra layer of protection for your business.

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Business Microloan

Microloans are usually reserved for amounts smaller than term loans and have become a popular source of funding for startups.

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Secured vs Unsecured Loans - What's the difference?

The most important thing to know about a loan is whether it is secured or unsecured. With a secured business loan, financing is secured by a valuable asset that you own (such as accounts receivable, a home or equipment) as collateral. With an unsecured loan, you are not required to provide an asset as collateral.

There are pros and cons to both loan types and knowing which one is right for your business depends on your individual circumstances and business goals. Here is a quick breakdown of the key differences:

Secured LoansUnsecured Loans
CollateralCollateral required (see examples of what can be used)No collateral required
Interest ratesSeen as less risky for lenders which means a lower interest rate, usually 2.5% to 13%.Often higher than a secured loan, usually 7% to 30%.
Loan amountsHigher loan amounts, could range from $250,000 to $50,000,000Usually less than $50,000 but can be as high as $500,000
Loan termsTypically, longer terms, 12 months to up to 30 yearsTypically, shorter terms, 3 to 18 months
Approval TimesStricter requirements, usually takes 3 to 4 weeksFast application, can be approved in as little as 24 hours
How applicants are assessed
  • Value of the asset used as collateral
  • Credit history
  • Cash flow history / projections
  • Business plan
  • Tax returns
  • Other personal and business financials and more
  • Annual turnover
  • Credit history
  • Length of time in business
  • Loan amount and purpose
  • Other requirements depending on lender
Best for:
  • Established businesses
  • Financing an expansion, renovations or businesses that are refinancing
  • Businesses with strong credit history
  • Businesses that need funds quickly
  • Businesses operating for less than two years
  • Seasonal or high-volume, small dollar sales businesses
  • Businesses with less-than-perfect credit history
Watch out for:
  • If you are unable to repay a secured loan, the lender can use the collateralised assets to recoup their losses.
  • Some lenders include hidden fees or charge for early repayments
  • Higher interest rates
  • Some lenders include hidden costs and fees
  • Some lenders charge fees for early repayment

Loans per Business Type

Aboriginal & Indigenous Loans

Unique loan options, grants and other business support through government and private organisations available specifically to Aboriginal and Indigenous businesses

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Startups Loans

There are many different funding option that may be available to startups, from traditional loans to investors and crowdfunding.

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Professional Loans

Professional loans, also called industry-specific loans, are designed for the needs of businesses in certain industries.

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What Loan Type Is Recommended for Me?

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What Lenders Look for in Your Business Loan Application

For many small businesses, applying for a loan can be stressful. You may need the funds quickly to avoid running into cashflow troubles or perhaps, the funding will play a crucial role in growing your business. But no business owner wants to waste their valuable time and resources applying for a loan they might not receive.

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10 Mistakes Small Businesses Make on their Loan Application

Small business owners usually have a lot on their plate. Preparing a loan application takes valuable time away from your business so you want to be sure to get it right, the first time. Mistakes on your application can cost your business lots of time and of course, much-needed capital.

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How to Write an Effective Business Plan

What’s the first thing that comes to mind when you think of a business plan? You might imagine a lengthy document that takes weeks to pull together or prevents you from focusing on your day-to-day responsibilities. The reality, however, is that creating a business plan isn’t nearly as daunting as it first seems.

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