Cash Advance Loans for Small Business

Name: Cash Advance Loans For Small Business
Creator: Savvy
Published: 2022-01-20T14:55:27+10:30

Home > Business Loans > Cash Advance Loans For Small Business

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Written by , updated on July 26th, 2023

How do small business cash advance loans work?

A small business cash advance loan is simply another name for a standard small business loan. They follow a very simple model: you apply (and get approved) for a certain amount of money, which is advanced to your business as a lump sum, and repay that amount in instalments (most often weekly) over a set period with interest until the full amount is repaid.

In most cases, these come as unsecured small business loans. Unlike secured business loans, unsecured finance doesn’t require you to put forward any valuable assets as collateral for your loan. This is highly useful for small businesses such as sole traders and family-run operations who perhaps don’t have the business assets to meet these requirements or don’t want to put their residential property up as collateral. The latter in particular usually isn’t worth the effort if you only need a small loan.

The size of the loan you can qualify for will vary depending on a variety of factors, such as your business’ trading history, credit score, assets, liabilities and overall cashflow. However, quick unsecured business loans in Australia range from a minimum of $5,000 up to a maximum of $500,000, giving you significant potential borrowing power. Additionally, you can choose whether to repay this over as few as three months up to a maximum of five years. These are both key factors to consider when comparing business loans with Savvy.

What can I use small business cash advance loans for?

Because they come without any affixed assets which dictate their value and (sometimes) what they can be used for, quick unsecured loans for small business owners in Australia can be utilised for any business purpose you like. Provided you’re utilising the funds for business purposes, your lender isn’t fussed about how you make use of the cash. Some of the potential uses for your business loan include:

Boosting your working capital

You might simply want some extra money to be added to circulation for use throughout your business. Increasing cashflow is a common use of business loans, as it gives you more freedom as an operator to distribute money across all facets of your business.

Covering the cost of renovations

Whether you’re getting a new coat of paint on the inside of your shop or fitting out the entire premises, a loan can cover you for any expenses in this regard.

Purchasing new equipment or technology

Equipment finance isn’t a necessity when it comes to adding assets to your business. You may want a loan of this nature instead to provide you with the flexibility to cover additional expenses at the same time.

Cover staff payments or increase your workforce

Staff form the backbone of countless businesses around the country, so a loan can help you keep them on your books by enabling short-term wage cover. You may also want to increase your budget and hire further staff, which may include additional marketing in some cases.

Pay for inventory

It’s important to keep on top of your business’ inventory needs so you’re not caught short by unexpectedly busy periods. Cash advance loans can also enable you to take advantage of especially good deals which you may not otherwise be able to afford.

Types of business loan

Unsecured business loans

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.

Secured business loans

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.

Small business loans

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.

Low doc business loans

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.

Lines of credit

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

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.

Equipment loans

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.

Supply chain finance

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.

Inventory finance

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.

Overdraft facility

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.

Cash flow loans

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.

Why compare business loans through Savvy?

100% free service

It won't cost you a cent to compare a range of business loans through Savvy, enabling you to come back at any time.

Reputable lending partners

You can compare business loan offers through a range of trusted Australian lenders, giving you more confidence in the process.

Online comparison process

You can fill out our simple online form to generate business finance quotes tailored to your business' needs in minutes.

How to apply for your small business loan

Compare as many offers as you can with Savvy

Gather all the documents you need

Submit your application and receive an outcome

Receive an outcome and sign your contract

Have your funds advanced to your account

Compare as many offers as you can with Savvy

Gather all the documents you need

Submit your application and receive an outcome

Receive an outcome and sign your contract

Have your funds advanced to your account

Common small business cash advance loan queries answered

Is my business eligible for a loan?

Aside from their documentation requirements, lenders will enforce minimum qualification criteria for each business to meet to be approved for financing. This namely comes in the form of a minimum monthly turnover (at least $5,000, with some lenders setting it higher) and trading time (at least six months, with some lenders asking for up to 12). However, there are lenders who can approve applications for loans from startup businesses with no collateral.

How long does it take to receive my loan funds?

The length of time it takes to process your cash advance loan will vary depending on several factors, such as how complex your business’ financial situation is and whether it needs to be assessed further. However, if you comfortably satisfy your lender’s criteria, your fast business loan can be approved, processed and funded on the same day you apply, within a matter of hours.

What fees can apply to my business loan?

The most prominent fee to be charged on business loans is the application or origination fee, which is commonly charged as a percentage of your loan amount of between 2% and 3%. However, there are lenders in the market who are willing to waive this cost, so you can benefit from comparing options right here with Savvy to find a lender who doesn’t charge in this area. Similarly, some lenders will charge you a fee for paying off your loan early, which is dependent on the time left to run on your loan, while others don’t.

Is 100% of my business loan repayment tax deductible?

No – you won’t be able to claim the full repayment as a tax deduction for your business. However, what you can claim is the interest portion of your instalment each month, so you should keep a thorough record of your payments made and interest paid if you plan on claiming it at the end of the financial year.

Can I get approved for a business loan if I’m on Centrelink?

Yes – lenders primarily look at your business’ cashflow, rather than focusing all of their attention on your personal finances, so you can personally be receiving Centrelink benefits and still qualify for a loan. This is also the case if you’re the recipient of a government grant, such as an allowance through New Business Assistance with NEIS.

How are secured business loans different from unsecured?

Secured business loans make use of an asset as collateral for the loan, which differs from unsecured fast business loans. Because the loan is backed by a valuable asset, such as equity in property or business machinery or equipment, you’re generally able to borrow greater amounts upwards of $1 million (provided your asset is valuable enough to cover the size of your loan). These can also come with longer loan terms of up to ten years, giving you more time to repay them and helping your business remain comfortable doing so.

What is a small business merchant cash advance?

A small business merchant cash advance is different from a cash advance loan in that funds are approved and sent to a business but repaid using a pre-determined percentage of their credit and/or debit card sales. A portion of each sale is withheld, which is known as the holdback (typically around 20%), while the lender will also charge a fee for service, which can cost up to as much as 30% to 40%.

What if I don't have access to my business' tax returns?

There are options available if you don't have your personal and/or business tax returns available, namely in the form of low doc and no doc loans. These utilise your other business financials, such as profit and loss statements, an income declaration and a business plan (in some cases) to paint a picture of your business' financial situation. These loans typically come with higher rates and fees, though, as they're seen as a greater risk.