Need a quick influx of cash? A $10,000 business loan might be the right fit. Let’s look into these relatively small loans and how you can compare options effectively.
A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.
A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.
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In the realm of business financing, a $10k loan falls on the lower end of the scale and is ideal for small-scale investments such as:
Equipment upgrades
Managing cash flow
Purchasing inventory
Investing in marketing initiatives
Training and development for staff
Small-scale renovation or expansion projects
Covering emergency expenses
However, if your plans are a little larger and require a bigger cash injection, then you might want to consider a larger loan like a $100,000 business loan instead.
Given the relatively small amount of $10,000, your main options are short-term business loans and equipment financing.
Short-term business loans. Ideal for quick cash injections or covering unexpected expenses, these loans typically last up to 2 years and offer rapid approval and funding, often within 24 hours.
Equipment finance business loans. Tailored for businesses in need of new equipment or upgrades, these loans provide a way to acquire assets without hefty upfront costs.
Here's are the pros and cons of each:
Short-Term Business Loans |
Equipment Financing |
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Ideal for |
Quick cash injections, covering unexpected expenses |
Acquiring new equipment, upgrades without upfront costs |
Pros |
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Cons |
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Securing a $10k business loan is usually pretty straightforward. Here's what you need to do:
Research and compare. Start by researching lenders offering $10,000 business loans. Compare options for both short-term loans and equipment financing, considering factors like interest rates, terms and eligibility criteria.
Apply online. Once you've selected a lender, complete the application process online. Provide all required information, including your business details, financial documents, and the purpose of the loan (whether for short-term needs or acquiring new equipment).
Equipment evaluation. For equipment financing, the lender may require an evaluation of the equipment's value and condition. This step ensures that the equipment serves as sufficient collateral for the loan.
Review and approval. Await the lender's decision on your application. Approval timelines may vary depending on the lender's review process and the complexity of your application. They may also come back to you to request additional information.
Funding. After approval, for short-term loans, funds are disbursed directly into your business account, typically within a few business days. For equipment financing, the lender disburses the loan funds directly to the vendor or supplier to purchase the equipment, upon which ownership will transfer to you.
Just like applying for a home loan, your lender will assess 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
The interest rate on a $10,000 loan can vary based on a number of factors like the lender’s criteria, the length of your loan and your credit history.
As of May 2024, the high-interest rate environment sees business loans hovering anywhere from 9% to 26% per year and can be either fixed or variable.
With a fixed rate loan, your interest stays the same for the entire loan term, giving you predictability in your repayments.
On the other hand, variable rates can change depending on market fluctuations. Variable rate loans tend to have lower interest rates at the start of the loan than fixed rate loans, but again, can fluctuate.
Another thing to keep in mind is that a smaller loan, such as a $10k loan will typically have a higher rate than a larger loan.
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. Application fees can be written as either a dollar figure or as a percentage of the total loan amount and are usually non-refundable, even if your application is rejected.
Service fees. Think of these as a maintenance fee to keep your loan ongoing - service fees can either be charged annually or monthly.
Late payment fees. If you ever miss a repayment, you could be charged a late payment fee.
Exit fees. If you manage to pay off your loan before the set term, your lender may charge you an exit fee. However, this usually only applies to fixed-rate loans.
Many lenders may offer the option to make your repayments on a schedule that best suits your business. This could be monthly, fortnightly or weekly and in some instances, daily.
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 you or the business may have or repairing your credit score first before applying.
