5 expenses better handled with a business loan

By Sophie Wong · · 3 min read
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Colleagues are discussing the budget and whether a business loan is a good idea

Your business can face financial obstacles from time to time and you may be eager for a smarter solution. 

One good one is a business loan. But you might be wondering whether it’s worth taking out a loan for the specific difficulties you’re dealing with. So we’ve broken down a few common scenarios below where a business loan could help out.

1. Business equipment

Firstly, a business loan can help set up your workstations or purchase vehicles for your staff to get around. If you don’t have enough funds to cover typically high equipment costs, a business loan could be something to consider. 

2. Paying staff wages

If you’ve got a big project coming up that’ll help with cash flow but paying your staff is currently exceeding the budget, a business loan could be what you’re looking for. Keep your employees going and operations running until you’re able to pay the loan back. 

3. Better managing cash flow

The ongoing costs of a business might be difficult to manage, especially if you’re finding that the revenue of your business isn’t consistent. A business loan can work to better manage cash flow by ensuring that payments are made - whether it’s to your distributor, or purchasing stock, for example. 

4. Expanding operations

Maybe your business has been doing well and the next thing on your agenda is hiring new staff, or moving the location of your business elsewhere. As this is typically a large expense, a loan might help. And if you have a high annual turnover, you could possibly be eligible for borrowing a larger sum of money to expand your operation. 

5. Getting new inventory

If your budget is temporarily stretched due to inventory costs, you may be worried about keeping up your supply of product to customers. To reduce the likelihood of any hiccups along the way, you might want to think about a business loan as it can be used to cover these expenses while you continue your day-to-day operations. 

Things to keep in mind as you weigh up a business loan

Man is scribbling the pros and cons of a business loan on a whiteboard

If you decide to go ahead with a business loan, you’ll usually pay interest in addition to the amount you borrow. The interest payable will depend on some factors, such as your interest rate type. 

First, there’s a variable rate, which means that interest can go up or down over the life of your loan. Alternatively, there’s also a fixed rate so your interest will stay the same over a fixed period of time which can be helpful if you’d like something more predictable.

But before you get your loan, you’ll need to check your credit score. The good news is there are ways to improve your score, and you might still be able to borrow money by going for a secured loan, which involves putting up an asset as collateral against the loan - like a vehicle, for example. 

Remember, your lender may seize this asset if you default on the loan, so it’s important to keep up with repayments. 

Finally, repayments can vary based on your circumstances and the terms of your loan. For instance, you may feel you’re able to pay off your loan quickly. In this case, you might opt for a short term business loan which allows you to borrow the money for a short period of time (3-24 months). 

Compare business loans

If you’re interested in taking out a business loan, browse our business loans page for some options or start comparing your top choices below.

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  • About Great Southern Bank
    Business+ Unsecured Loan

    A simple way to fund your business’s big plans. Borrow up to $50,000 without using your assets as security. A fixed interest rate means your repayments don’t change over the life of the loan. Apply in minutes with the Business app. Enjoy a fast approval process. $495 establishment fee.

    Interest Rate
    Upfront Fee
    Funding speed
    Rates range from 11.95% p.a. to 22.95% p.a.
    $495
    Varies
    Go to site
    Details
  • About Bizcap
    Unsecured Business Loan

    Business Loans from $5,000 to $2,000,000 with high approval rates. Access to funds in as little as 3 hours. Cash flow friendly repayments and open minded offers.

    Interest Rate
    Upfront Fee
    Funding speed
    On Application
    3%, starting at $399
    from 3 hours
    Go to site
    Details
  • About Lumi
    Unsecured Business Loan

    A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.

    Interest Rate
    Upfront Fee
    Funding speed
    from 9%
    -
    Within same day
    Go to site
    Details
  • About Great Southern Bank
    Business+ Unsecured Overdraft

    Manage the cash flow in your business with ease. Access up to $50,000 without using your assets as security. Lending criteria apply. Access your available limit from your linked Business+ Account. Use your Debit Mastercard for added convenience. Interest is charged on your balance owing, not your limit. Easy online application. $495 establishment fee.

    Interest Rate
    Upfront Fee
    Funding speed
    Rates range from 14.95% p.a. to 25.95% p.a.
    $495
    Varies
    Go to site
    Details

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