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Micro Business Loans
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The features and benefits of micro business loans
Flexible repayment terms
You can take the time you need to repay your business loan, with terms available as short as three months and as long as several years to fit your repayment capabilities.
Choose to borrow what you need
Business loans enable you to take out a small amount to cover your lesser (but important) expenses, with loan sums available for as little as $5,000 up to $50,000 or more on the higher end.
Make additional contributions
Of course, you don’t have to stick to your loan’s minimum repayments if you don’t wish to, as many of our micro finance lenders enable businesses to contribute extra payments across your term.
No asset security
Micro businesses who don’t have the asset security, such as property or equipment, to back up their loan, it won’t get in the way of them getting approved for an unsecured small business loan.
Unrestricted business usage
As long as your loan is being used for business purposes, you can distribute the funds however you like, from adding to your cashflow to renovating the premises and everything in between.
Claimable interest
The interest portion of your loan repayment is able to be claimed as a tax deduction, so you can trim hundreds of dollars off the cost of your loan overall.
Types of business loan
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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Top tips for increasing your approval chances
Have all the right documents ready
Part of increasing your approval chances is ensuring you have all the right documents to go with your application. If you don’t have these, your lender simply won’t consider it in almost all cases. Fortunately, with microloans, you’re unlikely to need to supply business financials and instead rely on your personal ID, ABN/ACN and GST registration and business bank statements. Not having these on hand when applying can hold up the process.
Show a positive, consistent trading history
The safer your lender considers you to be, the more likely you are to be approved for the loan you’re looking for. Part of this is displaying a consistent, comfortable trading history to your lender, with longer operating periods always preferred. Additionally, having ample cashflow to comfortably service your loan’s repayments will also boost your approval chances, as micro finance lenders want to leave as much room for revenue fluctuation as possible.
Maintain or improve your credit score
Another part of the ‘safety’ element of your application which your lender will closely assess is your business’ credit score. This is a number which serves as a reflection of your past record paying off debts, such as other finance deals or simply rent or utility bills. The higher your score, the better your record when it comes to paying these on time and in full. You can improve your score by continuing to pay on time or lowering business credit card limits.
Work out exactly what you need
Finally, it’s often useful to map out the expenses which need covering before applying for your loan. This will help you gain a grasp of exactly what you need to borrow, rather than applying blindly for potentially far more or less than you need. If you’re applying for a small startup business loan, your lender may want to see where the money is going, so having this plan can help you increase your chances of approval.
Applying for your micro business loan, from start to finish
It’s useful to enter the online business loan application process with a sense of how everything works and what the steps to expect will be.
While all lenders have their own individual way of assessing applications, they mostly follow the same broad strokes, so these steps are likely to apply across the board.
Read through them before you apply to give yourself the best possible preparation for your application and help ensure it smoothly sails through for approval.
Compare your options with Savvy
Once you have a feel for the sorts of loans available in the market, you can compare from our panel of lenders and proceed with your application on their site.
Gather your documents and apply
Scan all of your documents (or provide access if they’re online) and send them alongside your application form directly to your lender via their online portal.
Receive a fast outcome
Once they’ve had the chance to assess this, you’ll likely receive an outcome on the same day you apply and as soon as an hour afterwards.
See the funds hit your account
After you’ve signed your loan contract, your lender will advance the funds directly into your business bank account, all of which can take place within the same 24 hours.
Common micro business loan queries
There’s always a range of grants available to small businesses offered by both federal and state governments. However, the number of loans offered in general is limited. There are Indigenous business loans offered by Indigenous Business Australia, which can help start new businesses and support or purchase existing ones. Make sure you keep an eye on government sites to ensure you’re able to take advantage of grants wherever possible.
Yes – there are specialist lenders who can work with businesses who struggle with their credit score (as well as business owners in the same boat). You’ll find that a low credit score will inhibit your ability to borrow more than $30,000 over longer terms. Additionally, interest rates and fees are often higher on these loans compared to standard business finance.
The main criteria your business will need to meet are related to minimum monthly turnover and minimum trading time. Businesses are required to generate at least $5,000 in revenue each month, while they’ll typically also need to have been in business for at least six months (although some lenders can work with startups with less trading time in certain circumstances).
In most cases, yes – business loans generally come with fixed rate terms, which enable more accurate budgeting and a degree of certainty to be maintained throughout the repayment cycle. You’re protected against interest rate rises in this period, so you won’t have to worry about price hikes during your repayments.
Yes – many small businesses aren’t registered for GST due to their relative lack of turnover. If you’re generating less than $75,000 annually and you don’t have to register for GST, you can still apply for your business loan.
If you have a strong personal record, you may benefit from a small personal loan instead of a business loan. This may also be necessary in some cases if your business doesn’t meet your lender’s requirements, so you’re required to take out the loan yourself. These loans are offered for a similar amount of up to $50,000, although they may come at a higher rate depending on your profile as a borrower.
Helpful business loan guides
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