No Credit Check Business Loans Australia
Find out if you can take out a loan for your business without a credit check in Australia if you've struggled with credit.
Fact checked
Can my business access no credit check loans in Australia?
Yes – if your business is in a position to provide an asset as collateral, otherwise known as a secured business loan, you can have your application completed with minimal credit checks. This is because much of the risk of approving larger loan amounts is taken away by the loan security provided by your business, which may come in the form of equipment or machinery it owns or equity in either residential or commercial property. If your business were to default on the loan, for instance, the lender can fall back on recouping lost funds by selling the collateral, albeit as a last resort.
Because of the lack of security they offer, your business won’t be able to qualify for an unsecured business loan without having a credit check conducted. These loans pose a greater risk to the lender, who instead relies upon a strong credit history as a significant factor in deciding whether your business is suitable to take on a loan. There are other factors at play, such as your business’ consistency of revenue generation, but having a bad credit score makes it much more difficult to be approved for unsecured financing. Your lender is also likely to conduct a personal check when applying for finance, so this will help inform their decision on whether to approve your business for funding.
What are the benefits of no credit check business loans?
There are a variety of significant benefits which may come about when opting for a secured business loan with no credit check in Australia, including:
Expanded borrowing power
Compared to unsecured business finance, business loans which come with collateral attached boast a far greater potential borrowing range. This is because the loan is largely tied to the value of your asset. While unsecured loans cap their borrowing power at around $500,000 no matter what, you may find your business is eligible to borrow well into the millions, if not tens of millions with some lenders.
Lower interest rates
The decreased level of risk is not only reflected in the lack of credit check but also the potential interest rates which can be offered. Your business can benefit from a marked difference in the rate offered on its loan compared to if no security was put up on the loan. Depending on the size of the loan you’re looking to take out and the period over which you’re hoping to repay it, this could end up saving you thousands of dollars.
Longer available loan terms
Additionally, you can take advantage of longer potential borrowing terms to ensure your business is comfortable in covering its loan debt on a regular basis. While unsecured terms range from three months to five years, adding security to your loan can enable you to repay your debt over as many as ten years. In doing so, you can space out your repayments more easily, making less of a dent in your business’ available cashflow, albeit longer terms will garner more interest overall.
How to increase your business’ chances of loan approval
Supply a high-value asset as collateral
The more your asset is worth, the more you’ll find your business is eligible to borrow from a lender and the safer your application is considered to be. This is particularly the case if the amount your business is borrowing is lower than the accepted value of your asset, as lenders will feel especially safe in approving applications where this is the case.
Make sure you have all the right documents
Perhaps the simplest and most avoidable way for an application to be rejected or delayed is because the operator applying for the loan has neglected to supply the correct documents. For smaller loans, you’re likely to only need your business’ bank details, ABN/ACN and GST registration, photo ID and information on the secured asset (if any), while business financials will be required for larger loan sums of around $200,000 and up.
Apply within your business’ means
It’s important to be realistic when applying for your business loan in terms of what your business can reasonably manage to repay each month. For instance, if your small business didn’t have a massive amount of savings and generated around $10,000 per month in revenue, it’s highly unlikely that it’d be approved for a loan with repayments of $12,000 per month.
Supply a personal guarantee
Another way to add further security to your business loan is to provide a personal guarantee. This works in essentially the same way as a guarantor on a home loan in that you as a company director will become responsible for the loan’s repayments should your business become unable to support them month to month. Some lenders will require a personal or director’s guarantee, but this isn’t always the case.
Doing so is likely to require a personal credit check, particularly if you’re applying for an unsecured loan.
Show a positive record of revenue generation
Of course, what lenders want to see is comfortable, stable revenue being generated each month. If your business is able to show this to your lender, you’re more likely to be approved for the amount you’re looking for, as they can lend to you with greater confidence that your business’ cashflow isn’t as likely to fluctuate or suddenly dry up.
Above all else, they want to be certain your business can support the loan’s repayments.
