How to make sure you choose the right $10,000 business loan for you
If you’re in need of a quick cash fix to get your business rolling or back on track, then you might be considering a $10,000 business loan. Taking the time to compare your options is important, as there are a number of things to consider. But don’t worry if it is your first time shopping around on business loans because we’ve answered a few common questions.
How do I know if I’m eligible for a business loan?
Just like applying for a home loan, your lender will asses your eligibility. While most lenders may differ in what they ask for, some common requirements include:
- Be a fully registered business with an active Australian Business Number (ABN) or Australian Company Number (ACN)
- Have a minimum turnover, which can start at $40,000
- Be in businesses for a minimum of between 6 months to 2 years
- Have a pristine credit history and no unpaid tax bills
What can I use a $10,000 business loan for?
A business loan can be used for many small expenses, like purchasing new computer equipment, help with cashflow or even pay for training courses for your staff. However if your plans are a little larger and require a bigger cash injection, then you might want to consider a $20,000 business loan instead.
What are the types of $10,000 business loans available?
Once you start comparing $10,000 business loans, you’ll notice that there are a few different types around. While there is no better loan type, you’ll need to decide which is the right option for your business.
Short term business loans
Short term business loans are usually taken out by business owners who are in need of some quick cash to cover an unexpected bill or expense. Typically, these loans don’t last longer than 2 years and are able to be deposited into your business account within 24 hours if you’re approved.
You might want a short term business loan to pay invoices or give your business a quick cash injection. But just keep in mind, these types of business loans often come with different interest rates than you might be used to. Depending on the lender, you could find that interest is charged on a weekly, fortnightly, monthly or even daily basis.
Equipment finance business loans
If you’re in need of some new equipment or are planning to upgrade existing equipment, an equipment finance business loan could help.
More frequently asked questions
What should I be looking for in a business loan?
If you’re serious about taking out a $10,000 business loan, then it’s important to make sure you’re choosing the right one for your business. Aside from choosing a great interest rate, you might also want a loan that comes with flexibility. Here are a few things you’ll want to keep an eye out for:
As a business owner, the last thing you want is to be tied up in fees. When it comes to business loans, some of the most common fees you may come across are:
- Application fees - This is a one-off charge you’ll pay at the start of your loan, which can be quite pricey. One other thing to keep in mind is that application fees can be written as either a dollar figure or as a percentage of the total loan amount.
- Service fees - Think of these as a maintenance fee to keep your loan ongoing - service fees can either be charged on an annually or monthly.
- Late payment fees - If you ever miss a repayment, you could be charged a late payment fee.
- Valuation fees -This is a fee charged by the lender to determine the true value of your business.
- Exit fees - If you manage to pay off your loan before the set term, your lender may charge you an exit fee.
Many lenders may offer the option to make your repayments on a schedule that best suits your business. This could be monthly, fortnightly, weekly and in some instances, daily.
And if you’re committed to paying off the loan as fast as you can, then you might want to look into repayment features, like having the power to make additional repayments to your loan. By making these extra repayments, you could also save on interest. But of course life can be pretty unpredictable, especially as a business owner, which is why you might want a redraw facility. If an unexpected bill falls into your lap, you’ll be able to redraw your additional repayments to cover the cost.
Where can I get a $10,000 business loan if I have bad credit?
If you or your business has a poor credit history, then you might be considering a bad credit business loan. It’s important to know that Mozo does not compare bad credit loans, as they often come with excessively high interest rates.
In this case, it might be worth using any savings your or the business may have or repairing your credit score first before applying.
What do I need to apply for a $10,000 business loan?
Ready to apply for a $10,000 business loan? Then it’s time to start gathering some personal details. While every lender will have their own application process and may ask you to provide different details, some of the most common details you could asked for include:
- Your drivers license
- Your ABN or ACN
- Your financial information, such as your bank account and tax record