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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, updated on July 12th, 2023       

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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?

Frequently asked questions about Centrelink small business loans

Can my repayments for a small business loan change?

If you’ve selected a variable rate for your small business cash advance loan, the amount you pay each time will go up and down a little with changes in your lender’s interest rates. If you have a fixed interest rate, your repayments will remain the same unless the rate on your loan reverts to a variable interest rate at some point (many fixed rate loans do revert to variable rate after a set time).

Should I offer collateral for a small business loan while I'm still on Centrelink?

If you have collateral to offer, it can certainly improve your chances of getting loan approval and the interest rates you might get offered on a loan. Security also raises your potential borrowing power, as it increases your lender’s confidence in you. Many start-up loans will require this, but you should be careful what you offer: if the business fails, there’s some chance you could lose your asset, so think carefully before offering your family home as security. However, you can still get approved without collateral, even as a startup.

Would a guarantor help my application for a small loan to start a business?

Yes, they definitely can. Your guarantor needs to be someone in a fairly strong financial situation and it’s a significant responsibility, but it lowers the risk for the lender, meaning better chances of approval and lower interest for business loans for self-employed workers.

If my circumstances change and I'm no longer on Centrelink, can I re-negotiate my small business loan?

You can’t generally renegotiate the terms of a loan after you’ve signed off on it, but most business loans can be refinanced – taking out a different loan with better terms to settle the current debt. You can potentially save a fair bit of money this way, but you just need to be careful what your lender allows in terms of settling the loan early. It can sometimes attract pretty steep fees, which can lessen the financial benefit.

Will it help my small business loan application if I improve my credit rating?

Yes – lenders will look at your personal credit score (as well as that of your business) when assessing a business loan, and good credit ratings are always preferred in the lending business. Even if your credit rating isn’t perfect, taking steps to improve it in the lead-up to applying, such as paying off existing debts and lowering credit limits, can help your application.

How much could I get from a loan to start a small business while on Centrelink?

In theory, there are loans suitable for a start-up business that offer as little as a few thousand up to $100,000. In reality, however, the maximum amount you get offered will depend on your finances, your credit rating, the security you can offer, and various other factors. If you’re on Centrelink payments (or an NEIS allowance) and don’t have many resources to play with, you probably shouldn’t count on a $100,000 loan to start your small business.

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