Business loan application tips

Taking out a small business loan can be key to getting things off the ground for your business startup or expanding operations at your existing business, whether you're after a $20,000 loan to kit out your new office, or a $100,000 loan to really boost your operations to the next level. And if you’ve already done the hard yards and found the right business loans match, the next step is to nail the application process.

So to give you the best chance possible, we’ve put together everything you’ll want to know about applying for a business loan, as well as some handy tips to ensure that your application is a success! 

Am I eligible for a business loan?

Before you begin the application process, it’s worth knowing whether or not you’ll even qualify for a business loan in the first place. After all, it could save you some serious time and hassle. So, what are some of the standard minimum requirements most lenders will need you to meet?

Annual revenue

At the end of the day business loan providers need to be sure that you can actually pay the loan back, which is why most loans will come with a minimum annual turnover threshold. While these vary from lender to lender, don’t be surprised if you need annual revenue of anywhere between $40,000 and $120,000 (at the very least).

Time in operation

While some lenders do offer loans for new startups, there is often a ‘minimum time trading’ threshold you’ll need to meet in order to be eligible for a loan. Generally your business will need to have been in operation for at least 6 months, if not a year or longer.

Financial history

Like any loan, lenders will scrutinise the credit history of both the business and any owners or directors of the business that are applying for the loan - just another good reason to maintain positive credit health. Businesses may also have their tax history assessed, as an outstanding tax debt with the ATO may negatively affect a business loan application.  

What documents will I need to provide?

Now that many lenders allow businesses to apply for loans online, the application process is actually really straightforward. You’ll likely just need a few bits of personal information and documents on hand which can include:

  • Your name, email address, phone number and the name of your business
  • Your businesses’ turnover (usually monthly or annual)
  • The time you've been in operation
  • Your Australian Business Number (ABN) or Australian Company Number (ACN)
  • Financial records (such as bank account statements, accounts, tax history)

How long will the application take, and how fast can I receive funding?

If you’ve got a business need that requires some fast funding then you may be in luck, because many business lenders make application and funding speed standout features. This is especially the case for the new wave of online business lenders that have emerged in recent years, but many of the major bank lenders are also following suit.

Here’s a rough guide on how long the process can take (in the quickest scenario):

  • Applying for a loan: Applications can now take as little as 5-10 minutes
  • Getting your loan approved: Loans can be approved in just 10 minutes
  • Receiving the funds: Your funds could hit your bank account in as little as 24 hours once your loan is approved

5 handy business loan application tips   

Now that you know how the application, approval and funding process works, here are a few handy tips to keep in mind. 

1. Build good relationships: Already have a business credit card, business savings account or business bank account? Having a relationship with a bank could be a good step towards securing a small business loan, especially if you can package all of your business banking products together.

2. Maintain credit health: As we mentioned above, both your personal and your business financial record could be vital to your application success, so avoiding overdraws, exceeding credit limits and bouncing cheques could be good habits to maintain.

3. Resolve tax issues: Even if you’ve got a repayment plan in place with the ATO, an outstanding tax debt could limit your ability to take out a business loan. So before you apply it may be worth fully resolving that debt, or checking in with your lender to see what their policy might be.

4. Prepare a plan: This may be particularly relevant for startups or new businesses wanting to apply for a loan, but many lenders require a business plan outlining how you intend to use the loan. So it could be a good idea to prepare one before you apply.

5. Integrate your finances: Most lenders will require evidence of your businesses financial position, but to make it easier, some lenders are offering financial data integration with accounting software such as Xero and MYOB.

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