Government Loans for Small Business
Find out more about government loan options for your small business in Australia.
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Depending on where you're operating in Australia, there's a wide range of funding options on offer provided by both federal and state governments. It's important to know whether your business is eligible, as it can help ease some of the potential financial strain. You can also compare more loan options from Australian lenders with Savvy.
What government funding is available for small businesses?
Various government initiatives at both state and federal levels operate in Australia with the aim of generating more business activity in Australian communities and enhancing economic output. While direct small business loans are not available from the government, there are plenty of grant programs available which cater to a variety of business niches. Government grants can be applied for through official federal and state government portals. Anybody with the right to conduct business in Australia can apply for a grant. Some examples of these programs include:
New Enterprise Incentive Scheme (NEIS)
Accessible across all states, this scheme is geared towards assisting people who work less than 25 hours per week to start their own business, provided they have already devised a viable business idea and meet other eligibility requirements such as age (over 18) and residential status (citizen, permanent resident or valid visa holder). The program provides income and assistance for the duration of your involvement in the scheme, as well as business training which can help you successfully establish and run your business. The NEIS program can provide assistance to the tune of around $20,000.
CSIRO Kick-Start program
The Commonwealth Scientific and Industrial Research Organisation (CSIRO) offers matched funding through their Kick-Start program, which can come in from $10,000 to $50,000. This is done to enable businesses operating for under three years with annual turnover of under $1.5 million to explore their research idea with the backing and guidance the CSIRO. Businesses must also show that they’re able to match the funding offered as part of their Kick-Start project dollar for dollar.
Regional Development Australia
To help drive development in Australia’s regions, this program provides funding to incubate or support new and existing businesses outside of major metropolitan areas. Provided your business plan aligns with current government-mandated development goals and is active in a regional community, this can be a viable option to access capital. This grant can potentially provide millions in capital applicants who can demonstrate legitimate need and effective planned use of funds.
Are government small business loans better than unsecured business loans?
Usually not – it’s important to note that, for a variety of reasons, government grants are often not a viable option for small businesses when it comes to securing their financing. As such, unsecured business loans are often the best option to suit your business’ needs, especially when you’re operating with a smaller budget and fewer resources.
There are several key differences between government funding and regular business loans which are helpful to keep in mind when assessing which is the correct avenue for your business, so it's important to compare your options with Savvy. The primary differences include:
| Government funding | Business loans | |
|---|---|---|
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Eligibility criteria |
Government programs for business funding generally have restrictive eligibility criteria designed to limit grant recipients to those business owners whose goals align with government development policies. Criteria differs between different types of government funding; however, points that you should expect to meet are:
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The criteria for business loans are far less specific than for a government grant and are easier to meet, with a minimum requirement being that you can provide copies of yours and your business’ financial situation and photo ID. Some lenders such as online business financiers will only require you to have been in business for six to 12 months and generate a minimum monthly revenue of over $5,000, while others such as banks will require you to provide security.  |
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Usage |
Government funding is often contingent on the use of said funds being committed to a specific purpose, as mentioned above. This is often far more restrictive and prevents businesses from making use of the much-needed funds in broader areas that may need more pressing investment. |
Unsecured business loans, in contrast, aren’t at all restrictive when it comes to how you use them. These can be applied to any business-related purpose you require, such as paying for further inventory, funding staff wages or simply boosting company cash flow. |
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Borrowing range |
Because government support for small businesses is drawn from a large net sum intended for support across an entire sector, the amount that you will be likely to receive might be limited in comparison to a loan from the likes of a major bank. You will also be limited in this regard as often grants will require you to match the grant amount with your own capital. Generally, you should not expect to receive grants for amounts over $1,000,000. |
Business loan lenders can offer flexible borrowing ranges to cater to business needs across the board, typically ranging from as little as $5,000 up to $300,000, provided your business has the means to make its repayments. However, interest rates can make them more expensive overall. |
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Ease of application |
Grant applications often entail a lot of upfront work such as writing project proposals, impact forecasts and risk assessments, all without the guarantee of approval. Sometimes this process can be so complex that grant writers can even be employed to maximise your chances of approval, making the application process even more involved. It is not unusual for a grant cycle to take between six and 12 months from public offering to approval and distribution of funds. Â |
Business lenders can typically offer streamlined application processes that make them one the simplest ways to access finance for your business, with some even offering same-day approval for unsecured credit. |
