Centrelink Business Loans

Can I get a loan for my small business while I’m on Centrelink benefits?

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, updated on July 12th, 2023       

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It’s no small challenge to keep a small business afloat on the sort of tight budget that Centrelink tends to offer, but it is possible to get a loan to support and expand your business while on Centrelink benefits? Explore your options for finance as a small business owner on a Centrelink budget.  

If I'm on Centrelink and run a small business, can I get a business loan?

Yes, you can. While running a small business on a tight budget is a challenging task for anyone, you don’t need to miss out on the funds you need to give your business a boost. Depending on a Centrelink benefit as part of your income shouldn’t be an obstacle.

Nowadays, there’s a wide variety of lenders on the market and many ways you can access loan funding for a business. Modern online lenders are now developing a well-deserved reputation for being accepting of customers on a tight budget or in difficult financial circumstances, which opens doors for small business owners who don’t meet the criteria of more conventional lenders – including those on Centrelink. Savvy can help you out here – allowing you to quickly and easily compare loans from some of Australia's top lenders and find something suited to your business.

When considering what type of loan you can get to support your business, it’s always worth considering a secured loan. Offering some kind of asset as security can help get approval, boost your lending power and lower the interest rates on a loan. However, the reality is that many people simply don’t have a property or other asset that they can offer, in which case an unsecured loan might be your best bet. These come with higher interest rates and greater restrictions on borrowing, but don’t require a deposit or security. They’re quick and easy to apply for and are among the easiest business loans on the market to get approved.

It’s worth remembering that when you’re on a modest income like Centrelink (or a NEIS allowance – more on that later), you’re unlikely to have access to very large loan amounts, and the rates you’re offered may be higher than average, but the important thing is that you still have loan options on the table.

How do I apply for a small business loan, and does being on Centrelink benefits make it harder?

Applying for an unsecured business loan through an online lender is generally an easy process. It’s best to start with comparing your loan options side by side to see which one is best for you. Once you’ve decided on a lender, you apply through their website without even needing to leave your office, with all documents and finances handled electronically. This makes it a particularly handy option if you operate your business in a regional or remote area.

If you’re on Centrelink benefits, you won’t be able to apply to the big banks, as they’re far stricter when it comes to loan approvals. Fortunately, you can gain approval through a specialist online lender, with many specialising in customers with unusual income streams – including Centrelink or a NEIS allowance. Alternatively, you could also opt for a peer-to-peer (P2P) loan, in which your application is assessed on its merits by investors through a P2P platform and usually doesn’t have the same stringent requirements as bigger lenders. Choosing the right lender can open doors when it comes to loan finance on a Centrelink benefit.

How do I boost my chances of getting approved for a business loan while on Centrelink?

If you’re still a little worried about getting a loan approved, there’s a number of things you can do that could help your chances of getting a loan.

  • Don't ask for too much money – Less money means less risk for the lender, which in turn means better odds of getting approval. Work out exactly what number you need, and what you can definitely afford to pay, and don’t be overambitious in your loan application.
  • Look after your credit score – The credit rating of your business – and your own credit rating – can have quite an impact on your ability to get a loan. Look after your credit ratings by always paying bills and making repayments on time, and not overusing your credit. However, there are still loans available to businesses with poor credit.
  • Keep good business records – Although it can be easy to neglect your records when running a small business, a lender will want to see evidence of how your business is doing and what sort of success it’s seeing. Putting some effort into keeping good records of your business and its finances can pay off when you’re applying for a loan.
  • Consider a guarantor – If you have a friend or family member in a strong financial position who believes you’re trustworthy, you might ask them to go guarantor on a loan. This involves them vouching for you – and offering to help pick up the bill if you can’t make your repayments – and it can strengthen your case with a lender a good deal.

Frequently asked questions about business loans on Centrelink

Are there restrictions on what I can use the money for?

Not really – as long as they’re for business purposes. In Australia, business loans have a lot of flexibility in terms of what they can be used for. You could use the finances for purchasing or upgrading equipment, hiring an extra worker, buying a business vehicle or specialised equipment, or developing a new product. Provided the funds are used for business purposes, the choice is up to you.

How small can a business loan be?

All lenders have minimum loan amounts for their business loans. For unsecured business loans, these can be for as little as a few thousand dollars. You won’t find a business loan being offered for less than four figures, however.

What will a lender consider when assessing me for a business loan while I'm on Centrelink?

A lender will be looking at the same sort of factors as they would with any customer: how well established your business is, what sort of customer base you have and how visible your business is. The primary way your Centrelink benefits come into play is as a source of income – so the important questions will be “do you earn enough to make your loan repayments?” and “is there a significant risk of losing that income stream?”.

Does is matter that I'm a sole trader when applying for a business loan on Centrelink?

No – in Australia, sole trader business loans are perfectly attainable. However, there might be secondary effects of operating as a sole trader that could make getting a loan a little harder – such as a lack of business records and financial documentation. A low doc loan, which requires fewer pieces of documentation, can help with that scenario.

Does my business having seasonal income affect my ability to get a loan on Centrelink?

It doesn’t need to. There are lenders who are willing to work with businesses with seasonal income. Not every lender will accept applications from seasonally-based businesses, but many do.

Are there other forms of government assistance available?

Yes – the New Enterprise Incentive Scheme (NEIS) is a government program which provides an allowance, support, and training for people starting new businesses. There are only 6,300 openings available each year, however, so there’s plenty of competition for spots. There are also various other government grants available for small business owners, including those on Centrelink, if you’re eligible.

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