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Can I get a small business loan to cover business expenses? What type of loan should I get? Explore your business expense loan options with Savvy.
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Many businesses go through short-term periods when money is scarce and some extra funds are needed to cover expenses. A business loan can often be a way to cover such expenses, and nowadays can be surprisingly simple to secure. Find out about small loans to cover business expenses, and whether they’re right for your business, here.
Yes. In Australia, we’re spoiled for choice when it comes to loan options, with a wide variety of lenders able to provide finance for different business expenses. These range from traditional big banks to smaller financial institutions and online lenders, right through to advanced digital FinTechs (short for financial technology).
If you’re looking for a small loan to cover short term expenses for your business, your best option is probably an unsecured business loan. These are one of the easiest and most versatile options on the Australian loans market, and are available from most lenders. They’re built for short term expenses – a few months to a few years – and are one of the easiest business loans to get approved.
Comparing your business loan options closely is important, which is why it’s always useful to do this through Savvy. Our comparison service and rate tables allow you to contrast the best options on the market for dealing with business loans to give you an idea of what you can apply for now.
In Australia, one of the great advantages of an unsecured loan is its flexibility. There are very few restrictions on how you can use the funds or what you can use them on, so they give your business a lot of options.
Some of the expenses you could use a business loan for can include:
The funds do need to be used for business purposes (business loans and personal finance have very different licencing agreements) and you do need to specify what the funds are for in your loan application. But other than that, the choice is up to you.
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.
It won't cost you a cent to compare a range of business loans through Savvy, enabling you to come back at any time.
You can compare business loan offers through a range of trusted Australian lenders, giving you more confidence in the process.
You can fill out our simple online form to generate business finance quotes tailored to your business' needs in minutes.
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Unsecured loans are built in such a way that they’re a little more risk resistant for the lender – meaning they don’t need an asset for security or a deposit on the loan. This makes them very accessible, even without assets or plenty of existing funds.
Unsecured loans are also generally very easy to apply for, as there’s less information and supporting documentation needed. With an online lender, the initial application can often take only a few minutes from the comfort of your home or office.
Unsecured loans are also much quicker to turn around than many other types of loan, especially with online lenders, who tend to use fast internet services to access credit and banking information within moments – generally within 60 seconds of an application being submitted.
The in-built risk resistance also means unsecured loans are relatively simple to get approved, particularly with a smaller financial institution or online lender (who are normally far more open-minded about loan applications that large banks are).
The reason unsecured loans are more risk resistant is tied to the fact that their interest rates are normally higher than the rates for other loans, like those of secured loans. The extra interest acts a little like an insurance policy for the lender, but it does make unsecured loans a little more expensive.
Unsecured loans don’t offer the largest amounts on the market. A lender might still offer $200,000 to $300,000 to the qualified customer for an unsecured loan, but this means they’re not suitable for expansive developments and spending.
If you’re looking for a loan you can pay off slowly over decade or more, unsecured loans probably aren’t the best choice – they're normally geared to be paid off within a few years.
As with many loan products, unsecured loans are a set lump sum that you pay off in regular intervals over a length of time. If you need money sporadically and only for short intervals, they’re not ideal – you might be better off with something like a line of credit.
Yes – your business’ credit rating will have an impact on the interest rate you’re offered on a loan and how much money you can borrow. An excellent credit rating will generally mean much better terms.
An unsecured loan with an online lender is very fast to process and you can generally be signing your final loan contract and receiving the money within a few days of applying. In comparison, big banks can sometimes take many weeks to assess a large secured loan application.
Secured business loans can certainly offer much better rates than an unsecured loan, but the work involved in of setting them up – and the effort involved with the lender assessing the security – is generally far more significant. Many of them also have large minimum loan amounts ($10,000 – $20,000 or more) making them unwieldy for covering smaller expenses.
Most business lenders will offer unsecured loans, which means the choice often comes down to which lenders have the best rates, or sometimes to factors like convenience. Online lenders are a particularly good option for businesses that operate in remote areas, for example, as all transactions are conducted online without the need to visit a branch. They also tend to be very quick, with easy application processes. If you prefer dealing with a lender face-to-face, however, a larger lender with branch access might suit you better.
Most lenders will offer loans as small as a few thousand dollars. A loan that small is generally relatively easy to get approved, and can normally be paid off quickly to keep the overall interest low.
It’s not a good idea. Each loan application you make impacts your credit rating slightly. Additionally, if a lender is reviewing your credit information and sees a number of outstanding debts, they’re less likely to approve a loan. It’s always better to consolidate debts and limit loan applications where you can.
Explore a range of business loan options suitable to your financing needs and apply online through Savvy today.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
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