5 Tips on How To Get Small Business Loans Australia

Finding finance for your business is an exciting yet sometimes confusing process. For many small business owners, borrowing money via a small business loan is necessary to elevate their business to the next step.

As Aussie-based commercial lending specialists, at darkhorsefinancial.com.au, we want to help see Aussie small businesses succeed, which is why we’re providing our top 5 tips on how to get a small business loan.

What are small business loans?

Before we hit you with our top tips, let’s take a quick look at small business loans and how they work. The amount of business financing options out there is vast. Business loans aren’t all one and the same; here are some of the different business loan options available to your small business:

Unsecured small Business Loans

An unsecured small business loan is a loan you take out for your business that doesn’t have collateral attached (such as a physical asset or commercial property). The benefit of unsecured lending is that it is often very flexible, and the funds can be used for almost any purpose. One of the downsides can be that interest rates are higher than when you offer up a level of security to the lender.

Secured Business Loans

Business finance with collateral attached to it is considered to be asset-backed lending, otherwise known as secured business loans. A common secured business loan is equipment finance, where the equipment you’re purchasing with the borrowed money is used as the security for the loan. One of the main benefits of secured lending is that it’s viewed as slightly less risky by most lenders, so you’ll generally access a more attractive interest rate.

How to boost your chances of getting a small business loan

Getting business finance doesn’t start with an application — a prudent business owner knows that the process begins well before hitting the apply button. Here are our top 5 tips on boosting your chances of getting a small business loan:

1. Start with a business plan

Business planning builds a robust foundation for you to grow your business upon. Understanding your industry, your market, and your operation will not only provide insight into when the right time to borrow money for your business is, you will also be able to demonstrate to your prospective business lender the essential components of your business.

Coming to the table with research, realistic calculations and financial forecasts is a great way to show that it’s not a haphazard application for funds, but a financial decision backed by diligent business practice and strategy.

2. Brush up on your financial knowledge

Without a basic level of financial knowledge, navigating the sea of lending and finance options can be difficult. This is because there are a range of concepts and terminology that you’ll need to be able to comprehend to determine what is appropriate for your business needs.

3. Show your ability to repay the loan

Suppose your business has only been operational for a short while, or you’ve been one of the many small businesses whose cash flow has been impacted by the pandemic and supply chain shortages over recent years. In that case, it’s possible that your financial statements may not depict your full capacity to repay a business loan.

Using your business plan to forecast revenue and showcase your working capital can help to demonstrate your ability to repay the loan across the loan term.

4. Be realistic about your borrowing amount

Most lenders will put a cap on your borrowing limit, as well as offer different loan terms. Remaining realistic about how much you need (rather than just how much you want) will help make your loan payments more affordable, and a realistic loan amount could help get you approved.

5. Know how your personal circumstances could affect your application

During the application process, particularly for start-up businesses, there is insufficient trading history to assess the application on the business’s creditworthiness. This is where your personal financial situation, including your credit rating, could impact your application if you’re following the traditional lending route.

At darkhorsefinancial.com.au, we help small businesses access finance from a range of different lenders, which means the lending criteria is not as rigid and unforgiving as some of the big banks and traditional lenders. This makes our commercial lending solutions particularly favourable to businesses with bad credit, or small businesses in their start-up phase. 

Helping you access the right small business loans

Whether you’re looking to improve your cash flow or watch your business grow, accessing funding for your business — particularly if you have bad credit — is made easy with darkhorsefinancial.com.au. Our Australian Credit Licence allows us to support businesses of all sizes across Australia.

To discuss the finer details and learn more about how our commercial lending services could help your business get a small business loan, reach out to our team.