Before you start the business loan application process, it's important to have a clear understanding of both how it works and which finance deal is the best for your business. You can learn all about these things right here in Savvy's comprehensive guide to business loan applications.
How do I apply for a small business loan?
There are many key steps you’ll need to take both before you commence your small business loan application and throughout the process itself. Familiarise yourself with these points to help you maximise your chances of swift loan approval. You’ll need to do the following when applying for your business loan:
Make sure you’re eligible
It’s important to review your individual and business situation before pursuing financing. If you don’t meet your lender’s minimum requirements, your application is destined to be unsuccessful before you even start. Each lender will have different requirements, so you should review this again after you’ve selected a loan, but the general minimum eligibility criteria for business finance is the following:
- Applicant must have a valid ABN or ACN
- Applicant mustn’t have any prior bankruptcies, either personal or with a previous business
- Business must have been trading for at least six months
- Business must have a minimum monthly turnover of $5,000
Determine what you need
You should also enter the business loan application process with a clear idea of what you need as a business. It's worth mapping out all of the expenses you’re looking to have covered by your business loan to give you a clear idea of the size of the loan you’re after. This saves you from applying blindly and potentially being approved for far more or far less than you need.
Getting the right loan amount is important, as applying for more than you need can end up costing you an unnecessarily high amount, both on a monthly basis and on interest and fees overall. By clearly understanding what you need it for (such as the purchase of a new refrigerator or to finance new interior fittings), you can save yourself on hassle in the long run.
Compare different options with Savvy
Once you’ve worked out the type of loan you need and can afford, you can start comparing different options with Savvy. We take the guesswork out of choosing your business loan by listing top offers from our lending partners and breaking them down so you can compare across a variety of factors.
Interest rates, while important, shouldn’t be your sole focus, as you should also look at comparison rates to determine whether you’re able to save more money by opting for a low fee offer. You’ll also need to find a lender who offers the loan term, borrowing range and repayment flexibility you’re looking for.
Collect your documentation
After you’ve chosen your lender, it’s time for you to gather the required documents to be submitted with your application. You should always review your lender’s requirements, as the specific documents you’ll need will vary depending on who you choose and the nature of your loan. These can include:
- Photo ID (passport and/or driver’s licence)
- Online banking information (to access bank statements)
- ABN/ACN and GST registration
- Details of regular expenses, namely rent
- Business financials for larger loans (usually $250,000+), including balance sheets, tax returns, profit and loss statements and a business plan
If you don't have your tax returns, though (which are central to business loan applications), you can still apply for a low doc or no doc business loan. These allow you to access the funds your business needs if you haven't been trading long enough to meet tax return requirements, for instance, albeit at higher rates and fees.
Submit your application
Your lender will have a simple application form on their website for you to fill out, which should only take you a matter of minutes to do. Once you’ve completed this, you can submit it alongside the digital copies of your documents directly to your lender.
Receive an outcome
You can receive an outcome from your lender within 24 hours, which will confirm either your approval or rejection. This is done in part via your lender’s advanced online processing tools, which automates part of the process to save on valuable time. You can submit your application at any time of day or night, as online portals are open 24/7. These days, there are lenders operating on the market who can process and approve loans almost instantly in a matter of hours.
Sign your contract and receive your loan funds
Once you’ve been approved, your lender will send through a final loan contract for you to sign. You can sign your agreement digitally and send it back off to your lender, who can then advance the funds directly into your business’ account for access as soon as the same day you apply.