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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Running a business often means facing moments when you need a financial boost. Whether you're looking to launch an exciting new online venture, upgrade your company's technology, or expand your office space, a business loan might be exactly what you need to take that next step.
But before you start approaching lenders, it's worth understanding exactly what you're getting into.
Getting a business loan isn't quite as straightforward as other types of lending. Most lenders will look for these key requirements:
Being over 18 and either an Australian citizen or permanent resident
Proof that your business has been operating for at least a year
A minimum business turnover (varies by lender)
A healthy business or personal credit score
Clear purpose for the loan funds.
Each lender has specific requirements and risk appetite, so it's worth knowing where you stand before applying. They'll look closely at your industry type, current financial position, and loan repayment ability.
Regarding business loans in Sydney, you've got three main types to consider, each suited to different business needs.
These are what most people think of when they imagine a business loan. You borrow a set amount and pay it back in regular instalments, usually fortnightly or monthly. Such loans are perfect when you need a specific amount for a particular purpose, like buying new equipment or renovating your space.
Think of these as a financial safety net - you have access to a set amount of money that you can dip into whenever you need it, only paying interest on what you actually use. They're incredibly useful for managing cash flow, especially if your business deals with seasonal fluctuations or irregular payment cycles.
This newer option connects businesses directly with investors through lending marketplaces. While the loans themselves usually follow either the instalment or line-of-credit model, you might find better rates here, especially if your business has a compelling story or strong financials.
Finding the right business loan isn't just about getting approved - it's about finding terms that work for your business's specific situation.
Here are the key features to consider:
Lower rates generally mean lower costs over the life of your loan. However, don't get so focused on the rate that you miss other important factors. Consider whether the rate is fixed or variable, and look at the comparison rate that includes fees.
The length of your loan term can dramatically affect both your monthly payments and the total amount you'll pay in interest:
Shorter terms mean higher payments but less interest overall
Longer terms mean lower monthly payments but more interest over time
Choose a term that balances affordable payments with reasonable total costs.
Business loans often come with various fees that can significantly impact the total cost:
Upfront fees: Application or establishment fees, either flat rate or percentage-based
Ongoing fees: Monthly or annual service charges
Drawdown fees: Charges for withdrawing money from a line of credit
Early repayment penalties: Fees for paying off your loan ahead of schedule.
One of the main decisions you'll need to make is whether to opt for a secured or unsecured loan.
A secured loan requires collateral such as:
Property
Vehicles
Equipment
Other valuable business assets.
These usually offer lower interest rates because they're less risky for the lender. However, you need to be comfortable that your assets are on the line if things go wrong.
If you don't have assets to offer or prefer not to put them at risk, an unsecured loan might be your best option. While they usually come with higher interest rates, they offer:
No collateral requirement
Faster approval process
More flexibility
Less paperwork.
Be sure to check some of the providers in the tables above to compare and find the right business loan for you.
Whether you're running a small business, a big company or a new start-up, there's a good chance that you'll need some extra funding at some point along the way.
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