Compare business loans
Starting up a new business is always a challenge with a number of hurdles to clear along the way, but it doesn’t mean you won’t be able to get approved for the funding you need. Find out more about loans for small startup businesses and consider some of your financing options here with Savvy.
|Lumi Unsecured Business Loan|
Boost your business with fast hassle-free funding from Lumi. Apply online in five minutes without harming your credit score and get funds in as quickly as 24 hours. For a limited time: Business Loans with No Repayments for the first 6 weeks. T&C apply.More details
|Valiant Finance Business Loan Broker|
Valiant is Australia’s leading business loan broker with a network of over 80+ lenders. Apply for a business loan between $5,000 and $1 million and get approved in as little as 24 hours.More details
Disclaimer: Savvy is not advising or recommending any particular product to you. We provide general information on products for the purposes of comparison, but your personal situation or goals are not considered here. Although we try to make our comparisons as thorough as possible, we do not have information on all products on the market on our site.
You should always consult a given offer's PDS or further documentation in the process of deciding on which loan to choose, as well as seeking independent, professional advice. If you decide to apply with one of the lenders listed above via our website, you will not be dealing with Savvy; any applications or enquiries will be conducted directly with the lender offering that product.
Start-up business loans explained
Getting a startup business off the ground is no easy feat, so many business owners will want to look for a helping hand. Is it possible to get a small business loan to help get your startup running, though? What can you do to help get your application approved and are there choices to compare? Learn about loan options for starting up a business in this handy guide.
How do I get a loan for a small startup business?
The good news is that, in Australia, we have a wide variety of lenders available, with many different loans suitable for small businesses that are still getting started. So, although starting a new business can be a difficult process, it’s not impossible to get finance to help the process along.
Many lenders offer specialised startup loans, which can be a great option for a brand-new business without any financial track record to speak of. These often involve using your personal assets as either a deposit or security for the loan and the applications focus more on your business plan than on your business’ past financial history.
Startup loans aren’t the only options to compare of course, but they’re an important one. More conventional business loans can be a possibility for a startup, but they often have minimum criteria in terms of how long you must have been in business and minimum cash turnover – they might require around six months for minimum time in business and a minimum revenue of $10,000 per month, for example. As such, they’re better suited to a business that has been trading for a year or two than one in the process of setting up. Not every small business loan has these restrictions but, when you’re starting out, it does mean less options on the table to compare.
What's the advantage of getting a loan for a startup business, compared to other forms of finance?
The main advantage of financing your business through a loan is equity, which is the ownership and control you have over the business. The idea of equity funding – getting an investor or group to provide the finances for your startup business – is obviously appealing, but it’s worth remembering that if someone else invests in your business, that generally gives them a share in it. This means they’re likely to receive a portion of the profits and potentially have some say in how the business runs.
By contrast, funding your startup with a business loan means you retain ownership – you keep control of the business and you get the profits.
It’s not uncommon for startup owners to use a mix of methods to finance their business – so someone might provide 70% of the funds from personal funds and a business loan, and get an investor to contribute the remaining 30% (giving them a share of the company). The more of your business you finance yourself, the more you stand to benefit.
It is also possible to use credit for short-term business funding, and there are business credit cards that offer interest free terms for the first 12-18 months. These aren’t always a great solution, though. Firstly, if you don’t settle the debt within that initial time frame, you’ll be charged very high interest. Also, making heavy use of your available credit isn’t great for your business’ credit rating. Finally, not every expense is covered by the initial 0% interest rate (cash advances are generally excluded) and it’s easy to find yourself in significant debt if you’re not watching your card statements closely.
How to maximise your approval chances for a start-up business loan?
Having done your homework on the kind of business you’re moving into as a must. For preference, having a few years’ experience working in that industry – especially in a similar type of business – will strengthen your application.
You need to show your lender that you’ve thought through the process of setting this business up, which is where the business plan comes in. The more comprehensive and thorough, the better. This is a good place to show how well you know the industry, as well
Having assets or finances of your own to contribute is always going to strengthen your position; some lenders will regard it as essential.
If you have a supportive friend or family member in a strong financial position but don’t want them as an investor, you could consider asking them to go guarantor on a loan. This involves them vouching for you and committing to picking up the bill if your business fails, which increases your chances of approval, increases your borrowing power and lowers your interest rate too.