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$20,000 Business Loans
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The features and benefits of $20,000 business loans
Repay at your own pace
Part of the beauty of a business loan is that you can pay it off at a speed which suits your business’ cashflow, with terms as short as three months available to take out.
No security necessary
You won’t be required to put forward your car, home equity or any other valuable asset as part of your finance deal, as we work with lenders offering unsecured business loans.
Low rates and fees
As lenders vie for your business, they’re more willing to lower rates and fees to entice you to take up a business loan with them, helping you cut down on the cost of your loan.
No paperwork required
Save on the hassle of organising stacks of paper for your application and complete it all online, with digital copies of your documents and loan contract all part of the process.
Apply 24/7
Because this process takes place online, you’re free to submit your application whenever suits you, which is valuable for business owners without enough hours in the day.
Line of credit options available
Loans aren’t the only type of finance you can take out, though, as lines of credit are seen as a highly flexible option which enables you to access funds whenever you need them.
Types of business loan
The most common type of business finance, unsecured loans enable businesses to access the funds they need without attaching an asset to the loan as security. Some lenders may allow you to borrow up to $500,000 and, because there's no collateral, offer same-day approval.
If your business already owns valuable assets, such as property or expensive equipment, you may choose a secured business loan instead. These loans may increase your borrowing power beyond what an unsecured loan can offer and, crucially, typically come with lower interest rates.
Business loans don't always have to be worth hundreds of thousands. If you're operating a small business and need a boost to help you keep on top of your expenses or expand your company, you may be able to take out a loan starting from as little as $5,000 and unlock further capital.
Just because you don't have all the required documents for a standard business loan doesn't mean you're out of options. Low doc finance enables you to use alternative documentation, such as other business financials, in the application process to access the funds you need.
A commercial line of credit allows you to draw from your loan account whenever your business needs access to their funds, instead of managing a lump sum and repaying it like a regular loan. This can add flexibility to your finance arrangement, providing money when you need it.
Invoice finance presents another option to business operators looking to free up cash through outstanding invoices yet to be paid by their customers. Your invoice finance can either be invoice discounting or factoring, which present different options when it comes to your invoices.
A common reason for seeking out a loan is to purchase commercial equipment. You can do this either with an unsecured arrangement or one with the equipment itself as collateral, with the latter potentially increasing your borrowing power and lowering your interest rate.
With this finance, when your business purchases product, your supplier provides an invoice which you send to your financier and pledge to repay by a set date. From there, your supplier sells the invoice to your financier at a discounted rate, while you repay the full amount to your financier.
Under an inventory finance agreement, your lender pays your supplier directly for inventory, which allows it to be signed off and sent to you. From there, you can pay off your debt within a pre-determined period to your lender, which may be longer than the regular debtor period.
An overdraft facility is attached to an existing financial account belonging to your business, such as a transaction or savings account, and enables you to borrow up to a set limit after the account’s balance reaches zero. These overdrafts are repaid with interest, but only on what you use.
You may simply be in a position where your business needs a boost to its cash flow. If this is the case, there’s a range of stop-gap solutions which may be suitable for your situation, from standard unsecured loans to specialist cash flow loans, invoice finance or even an overdraft.
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How to compare $20,000 small business loans
Interest rates
Interest rates are one of the most important aspects of the small business loan comparison process. They form the basis of your loan’s cost, accumulating based on your outstanding loan balance until you’ve paid it off in full. It’s crucial to compare interest rates because even the smallest difference can result in a meaningful saving.
A $20,000, 12-month loan at 8.5% p.a. would save you over $150 in interest alone compared to the same loan at 10% p.a., for instance.
Fees
On top of your loan’s interest rate, you’ll also need to consider the fees charged when comparing different offers. The primary cost to think about is your loan’s origination fee (or application or establishment fee), which may cost up to 3% of your loan amount but may depend on the size and length of your loan.
You won’t usually have to pay any ongoing administration fees, but you’ll be charged a small fee if you submit a late payment (around $30).
Loan terms
Always ensure your lender offers the loan term you’re looking for, as it’s crucial that you’re able to secure a deal which you’re comfortable in managing your instalments throughout the repayment period. If you need to take more time to repay your loan, it’s better to opt for a lender who can offer it than not remain fully comfortable.
In contrast, though, if your business can power through a $20,000 loan in three months, doing so will help you save a considerable amount in interest.
Repayment flexibility
It’s always best to give yourself the opportunity to repay above and beyond the minimum amount required. In doing so, you’ll reduce your principal at a faster rate, cutting down on payable interest, as well as shortening your term to help get the loan off your books sooner.
Having repaid your debt in full ahead of schedule looks good to other lenders and credit reporting agencies, as your score will rise and potentially open you up to better deals.
Eligibility criteria
Above all else, though, you should always confirm whether you and your business are eligible to take out a loan before looking to apply. While criteria may differ slightly between lenders, the main business loan requirements in Australia are:
- Must have a valid ABN or ACN
- Must have been trading for at least six months with a monthly turnover of $5,000 or more
- No record of prior bankruptcies
Frequently asked business loan questions
You can select whether to take up a business loan with a fixed or variable rate. However, fixed rates are more common and often preferred by business owners thanks to the stability they offer, with repayments staying the same across your loan term. You’re able to budget around your instalments more effectively when you know what the financial commitment will be into the future. In contrast, variable rates are left open to fluctuation throughout your repayments, which positions you to take advantage of rate decreases.
Once you submit your application, you can be approved and have your business loan transferred directly into your account in as little as 24 hours. After it hits your account, you’re free to use the funds straight away. The speed at which unsecured small business loans are able to be processed is one of their most attractive traits to borrowers. Smaller loans, such as $20,000 or even $10,000 business finance, can often be processed at a faster speed than more substantial finance agreements.
Business loans are designed to be versatile to just about any need. Whether you need a micro loan to serve as a helping hand to purchase much-needed equipment, help renovate your business premises, cover employee wages for a short period or simply add to its cashflow, a business loan will do the trick.
No – not all lenders will require applicants to be asset-backed as part of their loan eligibility. This typically refers to prospective borrowers needing to be home owners to qualify for a business loan. However, this is only really the case for larger business loans upwards of $100,000 to $200,000; lenders won’t be as concerned about asset backing for a $20,000 loan.
Probably not – again, most lenders will only need to see your in-depth business financials for loans above a certain limit, often around $200,000 to $250,000. There may be some circumstances where your lender might request a business plan, for instance, while applicants with bad credit or without the required documents will need to go above and beyond in showing greater evidence of their business’ viability for a loan. However, your lender will always need to see your business bank account details to gain access to statements.
Yes – just because your business’ income is seasonal doesn’t mean you can’t be approved for financing. You’re likely to find that this places some restrictions on your borrowing, as you’ll need to take out a loan which remains comfortable for you to repay all year round. Some lenders are able to offer special payment plans for seasonal businesses, but this isn’t the case across the board.
Helpful business loan guides
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