How Do I Qualify For a Business Loan?
Find out how to qualify for the business loan you need before diving into the application process.
Fact checked
Business loans are incredibly useful for owners and operators to help ease the financial burden of running their business. However, it’s important to enter the process knowing whether your business is eligible to take out a loan, so you can find out with Savvy in our comprehensive guide.
How do I qualify for a small business loan?
There are several key points of criteria you’ll need to meet prior to commencing your small business loan application. While specific eligibility points may differ between lenders, they’re likely to follow the same general lines across the board. For instance, you'll be able to take out a business loan whether you're a female, male, non-binary or any other business operator. To qualify for your business loan, the following criteria must be met:
Lenders will generally look for borrowers with both a strong personal and business credit history when assessing applications, but specifically will require them to not have any history of bankruptcy on their file. Business loans are still available to borrowers who are struggling with their credit score from some specialist lenders, but they’re much more restrictive in terms of how much you can borrow and charge a higher interest rate.
Minimum trading time
Lenders will usually implement a minimum requirement for time trading as a business. You’ll typically be required to have at least six months under your belt before you can seek out a loan, but some lenders will raise this to 12. Alternatively, there are some instances where specialist lenders may be able to approve startup business loans in Australia, although this will usually require a strong applicant who has successfully run businesses in the past.
Minimum monthly or annual revenue
In addition to this, you’ll need to be seen as a viable business to obtain the funding you’re looking for. The lowest monthly turnover requirement available is around $5,000, while required minimum annual turnover can fall anywhere from $60,000 to $1 million depending on your lender. If your business isn’t earning the required revenue, your lender will deem it a greater borrowing risk and won’t accept your application.
Business assets
Some lenders will look to your business to determine whether it has any viable existing assets on its books. While many business loans are unsecured, part of assessing the value and available funds in your business is incorporating and valuing its assets. These can be anything from heavy machinery to a food truck to industrial food storage spaces.
Verifiable credit
Finally, one aspect of determining your suitability for a business loan is your history of repaying similar loans in the past. This is especially the case if you’re returning to the same lender as previous successful loans, as establishing a relationship with them can go a long way towards aiding your chances of approval for another.
How to apply for your business loan
Work out what you need
It’s important to enter the application process knowing exactly what you need in terms of business loan funds. You can map out a plan of the intended purposes of your loan clearly to give you a definitive budget, which will help you stick to it and not borrow or pay more than you need to.
Compare your options with Savvy
The next step is to consider and compare the best offers on the market, which you can do with Savvy. We break down offers to simplify the comparison process so you can contrast loans based on interest rates, fees, borrowing ranges, fees, loan terms, repayment flexibility and anything else you value.
Submit your documents and application
Once you’ve decided on a lender, you can fill out their simple online application form (which will only take you a few minutes) and send it through to them alongside the required documents.
Receive an outcome
It shouldn’t take long to receive an outcome after you submit your application, with some lenders able to confirm approval on the same day you apply.
Return your loan contract and access your funds
If successful, your lender will send through a loan contract for you to sign digitally and return to them. Once they receive this, they can advance your approved funds directly into your business’ bank account, enabling you to start using them however you wish. This process can take as little as 24 hours overall.
