Compare Loans for Small Business Owners

Name: Loans for Small Business Owners
Creator: Savvy
Published: 2021-12-20T16:08:08+10:30

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Written by , updated on July 26th, 2023

What are the easiest loans for small business owners to get?

An unsecured business loan is probably one of the easiest and most accessible loans on the Australian finance market and could be an ideal option for a male or female small business owner in need of finance.

A small Australian business – whether it’s a recent startup or an established family business – don't often have a large amount of resources available to them. Many operate out of leased premises and have little in the way of significant resources, and often they operate on fairly tight budgets without large reserves of available cash. This can prove a challenge when trying to secure loan finance, when collateral and deposits are expected. Fortunately, unsecured loans require neither.

Unsecured loans are available from most business lenders in Australia. They don’t come at the cheapest rates, but you get a lot in return for the higher cost – easy applications, fast turnaround time, no requirement for a deposit or collateral, and one of the most easily accessible loans on the Australian market. This is even more obvious when applying through an online lender – who have a reputation for being far more lenient with loan approval than the large banks.

All this means that an unsecured business loan from an online lender is one of the easiest loans to get on the Australian finance market, and an excellent choice for small business owners on the hunt for a loan.

What factors should I look at when comparing an unsecured loan for my small business?

Not every lender is the same, and unsecured loans for self-employed business owners can vary widely in cost and what features they bring to the table. When comparing different unsecured loans to find the best for your business, there’s a few factors to consider.

Interest Rates – The interest rates charges on the loan can make a significant difference to the overall cost of the loan. Even a difference of a percent or two can mean thousands of dollars difference over the course of several years. It’s worth hunting for the best rate on offer for your loan – and remember that rates can change, so make sure your information is up to date.
Loan Terms – Lenders offer different terms or durations on a loan. Some allow you to choose, while others set the term themselves. Make sure you’re going with a lender who offers loan terms that suit your business.
Fees – Fees add to what you pay on the loan, and mean that the interest isn’t the only cost factor. Some are fairly easy to predict, and many lenders will offer a “comparison rate” alongside the interest rate, which accounts for the most basic fees. Other fees will only be charged if certain things occur, like late repayments, or making certain transactions with your loan.
Additional features – There are various other features that set loans apart, such as flexibility with how often you need to make repayments, or the ability to repay the loan early without fees. It’s useful to do the homework on what extras each loan has on offer.

A great place to get started on the process of comparing loans is with Savvy. You can compare unsecured business loans from a range of top Australian lenders, including flexible private lenders, and quickly find the best choices on offer for your small business.

Types of business loan

Unsecured business loans

The most common type of business finance, unsecured loans enable businesses to access the funds they need without attaching an asset to the loan as security. Some lenders may allow you to borrow up to $500,000 and, because there's no collateral, offer same-day approval.

Secured business loans

If your business already owns valuable assets, such as property or expensive equipment, you may choose a secured business loan instead. These loans may increase your borrowing power beyond what an unsecured loan can offer and, crucially, typically come with lower interest rates.

Small business loans

Business loans don't always have to be worth hundreds of thousands. If you're operating a small business and need a boost to help you keep on top of your expenses or expand your company, you may be able to take out a loan starting from as little as $5,000 and unlock further capital.

Low doc business loans

Just because you don't have all the required documents for a standard business loan doesn't mean you're out of options. Low doc finance enables you to use alternative documentation, such as other business financials, in the application process to access the funds you need.

Lines of credit

A commercial line of credit allows you to draw from your loan account whenever your business needs access to their funds, instead of managing a lump sum and repaying it like a regular loan. This can add flexibility to your finance arrangement, providing money when you need it.

Invoice finance

Invoice finance presents another option to business operators looking to free up cash through outstanding invoices yet to be paid by their customers. Your invoice finance can either be invoice discounting or factoring, which present different options when it comes to your invoices.

Equipment loans

A common reason for seeking out a loan is to purchase commercial equipment. You can do this either with an unsecured arrangement or one with the equipment itself as collateral, with the latter potentially increasing your borrowing power and lowering your interest rate.

Supply chain finance

With this finance, when your business purchases product, your supplier provides an invoice which you send to your financier and pledge to repay by a set date. From there, your supplier sells the invoice to your financier at a discounted rate, while you repay the full amount to your financier.

Inventory finance

Under an inventory finance agreement, your lender pays your supplier directly for inventory, which allows it to be signed off and sent to you. From there, you can pay off your debt within a pre-determined period to your lender, which may be longer than the regular debtor period.

Overdraft facility

An overdraft facility is attached to an existing financial account belonging to your business, such as a transaction or savings account, and enables you to borrow up to a set limit after the account’s balance reaches zero. These overdrafts are repaid with interest, but only on what you use.

Cash flow loans

You may simply be in a position where your business needs a boost to its cash flow. If this is the case, there’s a range of stop-gap solutions which may be suitable for your situation, from standard unsecured loans to specialist cash flow loans, invoice finance or even an overdraft.

Why compare business loans through Savvy?

100% free service

It won't cost you a cent to compare a range of business loans through Savvy, enabling you to come back at any time.

Reputable lending partners

You can compare business loan offers through a range of trusted Australian lenders, giving you more confidence in the process.

Online comparison process

You can fill out our simple online form to generate business finance quotes tailored to your business' needs in minutes.

What other types of loan can be useful for small businesses?

Equipment Finance

Invoice Finance

Merchant Cash Advance

Business Credit

Equipment Finance

Invoice Finance

Merchant Cash Advance

Business Credit

Frequently asked questions about small business loans

Will the size of my small business affect the terms I get offered on a loan?

It might, although it’s not just about the size of your business. Lenders have a preference for offering loans to established, successful businesses. So generally a large, well established business chain will generally get better terms than a single small business. But if you’ve been operating your small business successfully since the 1970’s, you’ll probably still get better terms than a similar small business set up in 2017, as you have an established brand and a proven business track record.

As a small business owner, does my personal credit affect my business' loan application?

Yes, when assessing a business loan application, lenders will normally also consider the credit records of the directors / owners of the business. So your personal credit will be a factor. This can be a good thing if have very healthy personal credit.

As the owner, can I use personal finance to obtain a small loan for my business?

Yes, although there can be risks with mixing personal and business finance so it’s not recommended. But it’s also possible to use personal assets as security for a business loan, which doesn’t tend to muddy the water as much – although it can still place your own assets at risk if the business fails.

How much can I borrow as a loan for my small business?

With an unsecured business loan, you can borrow as little as $5,000, and potentially up to around $300,000 – although smaller businesses probably wouldn’t be offered as much as that. If you’re in the fortunate situation of being able to offer security on the loan, these figures can be much higher.

Are there loans available for a small startup business owner?

Yes, many lenders do offer specialised loans for startup businesses, that account for many lender expectations that a new business couldn’t normally meet (like past financial records). Many do require security on the loan, and are often built around the idea of using something like your residential home as collateral to get your business off the ground.

What can I use the funds from a small business loan for?

In Australia, unsecured small business loans can be used for almost any business-related purpose – paying wages, buying equipment, renovating a workplace, training staff, putting on an event, or even all of the above. There are more specialised loans such as equipment finance or fit out finance that are customised for a very specific purpose, but anyone getting one of those loans will normally have a specific goal in mind.