Self-Employed Business Loans

Compare the best loan deals for your business all in one place when you consider your options with Savvy.

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, updated on July 26th, 2023       

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What are my self-employed business loan options?

Fortunately, there’s no shortage of options when it comes to accessing financing for your business. You should carefully consider what your business needs before plunging into the application process, as this will help you determine which finance type is best for you. You can choose from the following:

Unsecured business loan

The most common type of finance for businesses, unsecured business loans are highly accessible and boast quick approval and payment time of less than 24 hours. This loan sidesteps any requirement to put forward a valuable business or personal asset as collateral, such as equipment or property, making them more widely accessible to a greater number of businesses. These provide access to funds ranging from $5,000 to $500,0000, although these will differ between lenders. You can compare unsecured business loans with Savvy.

Secured business loan/equipment finance

If you do have an asset that you’d like to use as security for your loan, you can look to secured finance instead. This allows you to potentially access a borrowing range beyond $500,000 (provided your security covers that amount and you’re capable of repaying it), longer repayment terms in some cases and a lower interest rate. Alternatively, you can opt for equipment finance if you’re looking at purchasing a specific asset, which itself acts as collateral.

Line of credit

Many businesses look to lines of credit as a flexible way to access the funds they need. These can be either secured or unsecured and allow you to withdraw money up to an approved limit whenever you like. You’ll only pay interest on the amount you use, with revolving terms available to keep them open over longer terms than other loans.

Business overdraft facility

Overdraft facilities are similar to lines of credit but are attached to your business bank account and allow you to access cash beyond $0. However, they don’t come with set repayments, affording you more flexibility to repay the account at your own speed. Interest rates on overdrafts are often higher than those of unsecured business loans, however, as can be the case for lines of credit.

Invoice finance

Finally, if you’re a business which invoices clients, you can look at invoice finance as an option. This involves selling outstanding invoices to a financier and receiving up to 90% to 95% of the owed sum upfront, before having the rest advanced to you once your client pays your financier. You’ll have to pay a number of fees to do so, though, which may be substantial.

How do I get a self-employed business loan if I’m a sole trader?

While the business loan products available to sole traders are no different to those of any other business, what may differ is your ability to be approved in the first place. Generally speaking, sole traders generate less revenue than small businesses with more moving parts, with their lower cash generation capacity and simpler structures often leading to them being classed as higher risk. This can often result in higher interest rates and fees charged on loan products, which can potentially cost your business hundreds of dollars more overall.

Aside from this, though, the requirements are no different when applying for business finance, which is part of the reason why sole traders can find it difficult to get approved in the first place. Lenders will still have the same eligibility criteria in place, namely a required minimum monthly turnover of at least $5,000 and six months’ worth of trading. You’ll also be required to submit the same documents, namely the following:

  • Your ABN/ACN and GST registration
  • Business bank statements
  • Personal identification documents
  • Record of your business’ rent (if applicable)
  • Business financial statements for larger loans (such as a business plan, tax returns, profit and loss statements and accounts payable and receivable)

Types of business loan

Why compare business loans through Savvy?

How to apply for a business loan

Our Process

Compare and choose with Savvy

Once you’ve considered your options with Savvy, you can select the loan best suited to your business and proceed with that lender.

Gather your documents and submit your application

Make sure your documents are in order and up to date when you submit them alongside your lender’s application form.

Receive a fast outcome

In most cases, your lender can get back to you confirming whether your application was successful within the same day.

Sign your loan contract and receive your money

If approved, you’ll receive a loan application to sign and return to your lender, after which the funds will be transferred to your business’ account for your use.

Frequently asked questions about self-employed business loans in Australia

Can I use a personal loan for my business instead?

Yes – if your business is particularly small or doesn’t otherwise qualify for business financing, you could instead look to a personal loan. These range from as low as $2,000 up to $50,000, making them suitable for smaller investments. They can be paid over one to seven years and used for any personal or business purpose you like. These are unsecured, so the interest rates they come with may be higher than other business finance types.

Am I able to get a business loan as a startup?

Yes – there are specialist lenders in the market who can offer startup business financing despite having less than six months of trading under their belts. These loans are likely to come with higher rates, shorter terms and lowered borrowing potential, as they’re considered riskier. Lenders will also want to see a history of business operation from you in the past, as well as a strong credit score and potentially transferrable skills for running your business.

How much can I borrow with a business loan?

This depends on a variety of factors which will be decided by your lender, such as:

  • Loan security (unsecured loans up to $500,000, secured maximum tied to the value of your asset)
  • Available cashflow
  • Trading time
  • Business and personal credit score
  • Business assets and liabilities
  • Projected revenue generation
How long can I take to repay my business finance?

Different business loans will come with different available borrowing terms. For small unsecured business loans, you can typically secure a term as short as three months up to a maximum of five years, while secured loans allow you to borrow over up to ten years in some instances. Asset finance typically comes with terms of one to seven years. This flexibility enables you to select a period which suits your business’ ability to manage repayments.

Do I have to pay back my business loan on schedule?

No – many business lenders offer loans without any fees associated with paying out your debt early. This option is a highly desirable one for many businesses, as it affords them the flexibility to repay at a faster rate should they become able to. This will help save on interest and fees overall.

Will the type of business I’m running affect my chances of loan approval?

It can – some lenders will have a list of business types and industries with which they won’t work. For instance, pawnbrokers, stockbrokers, tattoo studios and taxi and rideshare services may all be excluded from your lender’s available list of businesses.

Are there any limits on how a business loan can be used?

The only real limit to business loans is that they must be used for business purposes. Whether you’re a restaurant owner looking for a loan or running a medical practice and wanting to give your office a makeover, business loans are highly versatile and can be adapted to your needs.

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