Finding a $100,000 loan for your small business
Whether you’re looking to grow your business or kickstart a new project, a $100,000 loan could be a massive leg up getting you there. When it comes to finding the right loan for you, there are a number of factors to consider, like the interest rate, fees and other loan features. So if it’s your first time considering a business loan, here are a few things you’ll need to keep in mind.
Why would I need a business loan?
While it’s one thing to have the dream of starting up your own business, having the funds to get that dream rolling is another. And if you’re like the many small business owners that don’t have hundreds of thousands of dollars stashed away in your business savings account, you might be considering another plan of attack.
Some of the most common uses of a $100,000 business loan include:
- Paying wages
- Employing new staff
- Buying new stock or equipment
- Paying invoices
How do business loans work?
If you’ve never had take out types of business financing before, then you might not be aware of the type of business loans out there. Generally business loans come in two types: secured and unsecured.
Secured business loans often come with lower interest rates but in order to get that lower rate, you’ll need to put up an asset as security, like your home, car or business. So if you ever become unable to make your repayments, the lender will have the right to repossess your asset and sell it on your behalf.
But if you don’t like the idea of using an asset as collateral, you might want to consider an unsecured business loan. These are the more common type of business loan you’ll come across when you start shopping around. Just keep in mind that while you won’t be asked to provide security, unsecured loans typically come with higher interest rates.
Other common business loans you might see are short term business loans or equipment finance business loans. As you can probably tell by the name, a short term business loan is a temporary financing option - usually for business owners looking to give their business a quick cash injection. These also often exists as a line of credit to pay invoices.
An equipment finance business loan is a type of loan that can be used specifically to buy new equipment for a business. This could be because you’re looking to grow or expand your business or need to give your tools an upgrade.
Then once you’ve found the right loan for your business, all that’s let to do is apply You’ll typically have the money deposited into your account within 24 hours. Then you can put the money toward your business in whatever way you’d like.
How do I know if i’m eligible for a $100,000 business loan?
Of course, $100,000 is no small amount of money, so you want to know that you’re eligible before you apply and while eligibility requirements differ between lenders, some of the more common requirements include:
- Being fully registered with an active Australian Business Number (ABN) or Australian Company Number (ACN)
- Be in business for a certain amount of time, usually between 6 months ans 2 years
- Having a minimum annual turnover, which can be at least $40,000 per annum
- Having a clean credit score and no outstanding tax bills
More Frequently asked questions
How much interest will I pay on a $100,000 loan?
It doesn’t take an expert to know that $100,000 is a decent chunk of change to be borrowing, so it’s important to look for a competitive rate when you start shopping around for business loans.
Business loans may be a little different to what you’re used to and one thing you’ll want to keep an eye out for is how interest is charged.
Depending on the lender, interest may be charged on a weekly, fortnightly or daily basis. And in some cases, there may not be an interest rate with the loan, as the lender could provide you with a customised interest rate if your application is successful.
What fees will I need to budget for?
Taking out a business loan could see you paying fees like:
- Application fees - A one-off fee charged at the start of your loan - keep in mind these can either be written as a dollar figure or a percentage of the total loan amount. Just keep in mind, if the application fee is advertised as a percentage, with a large loan, this may be a very steep
- Ongoing fees - This is typically a maintenance fee to keep your loan ongoing.
- Valuation fees - If you’re taking out a secured business loan, a valuation fee covers the cost of assessing the value of the asset you’re using as collateral.
- Late payment fees - As the name suggests, if you’re late to make a repayment on your loan, you could be slapped with a late payment fee.
- Exit fees - If you’ve paid off your loan before the loan period ends, you may be asked to pay an exit fee.
Repayment features you might like to have
Your loan may also come with a few handy repayment features, which can help you cut down on the amount of interest you pay.
For example, some lenders allow you to make additional repayments to your loan, getting you out of debt faster and saving on interest. And if you ever need that cash again for an unexpected bill, a redraw facility allows you to withdraw the money.
What do I need to apply for a $100,000 business loan?
Once you’ve found the right business loan for you, it’s time to apply. The details you’ll need to submit an application will depend on the lender, however some of the more common documents you might be asked to provide are:
- Your drivers license
- Your ABN or ACN
- Financial information, such as your bank account and tax records