Centrelink Small Business Loans
Is it possible to get a loan to help start a small business while on Centrelink payments? Learn about start-up loan finance for Centrelink customers.
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Starting up a new small business is challenging under the best circumstances, especially while you’re on Centrelink payments and working with a limited budget, but is it actually possible for someone receiving Centrelink benefits to get a small loan to help start a business? Explore the possibilities of getting loan finance for a start-up business with this guide.
Are there loans available for starting a small business while on Centrelink benefits?
Yes – there are options available for loans to help start a small business, even if part of your income support is through Centrelink payments. In Australia, we have many choices when it comes to business lenders, and many of them have loan products suitable for start-ups.
Getting finance for a new business can be particularly challenging because, in the early days, you don’t have much in the way of a credit history, a track record of trading, or assets that can be used for loan security. In addition to this, a modest Centrelink income also doesn’t command a lot of borrowing power, such as a maximum $30,000 loan, so you can’t expect the best rates or largest loan amounts on the market. However, there are still possibilities. For example, an unsecured loan (available from most business lenders) requires no collateral or deposit and is one of the easiest types of loan to secure.
You can use the Savvy to quickly examine and compare lender options for unsecured business loans, as we have access to a range of Australia’s top online lenders.
Many lenders also have specialised “start-up” loans specifically for getting a business off the ground. These are very handy, as they avoid some of the requirements other loans might come with – such as minimum time operating as a business or minimum cash flow. Start-up loans are built on the understanding that you may not meet those criteria yet.
Is there government assistance for setting up a small business while on Centrelink payments?
Yes – there are government support options for setting up a small business even for customers on a Centrelink income. One of the most significant is the New Enterprise Incentive Scheme, or NEIS. The NEIS is a government program that supports people setting up a new business and can provide training, support and an allowance to people starting up a new business (even while you’re on Centrelink benefits).
It doesn’t provide a lump sum towards your business finances, so it wouldn’t necessarily remove the need for supporting finance such as a loan, but an NEIS allowance could work very well in tandem with loan finance. They can provide for your everyday needs while you focus on getting the business up and running well. However, there are only 6,300 slots available in any given year, and competition is pretty fierce
What do you need to provide with a start-up loan application?
A detailed business plan
With little track record to date for your business, more weight is going to be placed on your plans for the business. You’ll want to show that you’ve carefully researched and thought through each aspect of setting up this business – what resources you’ll need, what time-frames are involved and how you’re planning to get skilled staff onboard. Showing that you have experience in the industry – or as a manager of a business – will also help here.
Financial records to date
Not all start-ups apply for a loan on day one. If you’ve already been in business for a few months, showing records of how your cash flow and finances have gone so far can be valuable – showing how well you’ve traded over three months might give lenders a better insight into how much business you could expect over the next three years.
A comprehensive budget with financial forecasts
Planning your budget out carefully has a number of advantages. First, it shows lenders that you’ve thought carefully about each expense you might face. Second, it allows you to be a bit more precise about how much you want to borrow, meaning you may not need to ask for as much.
ID and personal financial records
As with any loan, you’ll need to submit some personal ID for the lender to verify your identity. Also, when your business is brand new and has little trading history, more weight is placed on your personal financial track record. As such, information indicating this – such as bank statements – may be required.
