How to get a small business loan in Australia: A complete guide

Most businesses need extra funding at some point, for things like covering gaps in cash flow or ad campaigns that target new customers. One of the main financing options in situations like these is a loan, where you borrow a sum of money from a lender and repay it over time, typically with interest.

This guide will explore business loans in detail. We’ll look at the different types available (with a few provider recommendations), and cover all the documents and requirements in a step-by-step guide on how to get a small business loan in Australia.

Why do small businesses seek loans?

A business loan is a source of funding that many startups and small enterprises look to secure that can help drive growth and expansion, as well as shore up finances and support day-to-day operations.

Common reasons to seek loans include:

• Expanding into a new location or market
• Buying equipment, tools, or vehicles
• Covering surprise expenses and supporting cash flow
• Investing in R&D, or new technology and staff
• Exploring growth opportunities, such as exporting overseas

Types of small business loans available in Australia

While you might be familiar with ‘basic’ loans where you get a lump sum with repayment terms, there are other loan facilities available to businesses. The main options include:

• Term loans - the most common type of loan: a lump sum borrowed from a bank or lender, which is repaid over time. These are either secured (backed by collateral) or unsecured.
• Line of credit - flexible borrowing up to a set limit, where you only pay interest on what you use. Often called a ‘revolving loan’¹.
• Overdraft - a line of credit attached to a business transaction bank account, with interest typically calculated daily and charged monthly.
• Hire purchase agreement - buying an asset or new equipment with finance, paying off instalments over time with interest.
• Invoice finance - borrowing against unpaid invoices to get cash upfront instead of waiting for customers to pay.
• Trade finance - a popular import and export style loan where you borrow money to fulfil orders and fill the gap until you get paid.
• Government-backed loans - grants or funding schemes from the Australian government, usually to incentivise investment in specific industries. These are national or state/territory-specific in Australia².

How hard is it to get a small business loan in Australia?

In most cases, securing a business loan does require quite a bit of work — lenders in Australia often assess applications based on the ‘5 Cs’ of credit: Character, Capacity, Capital, Collateral, and Conditions. These all demonstrate your ‘creditworthiness’ and are key to your chances of approval.

A few factors that might make it difficult include:

• Business stability or industry risk - volatile sectors can be harder to finance.
• Existing debt levels - outstanding liabilities can reduce your borrowing capacity.
• Loan size vs business size - larger loans are harder to justify.
• Quality of financial records - incomplete statements can undermine applications.

How to get a small business loan in Australia

There’s more to getting a business loan than quickly filing out an application online. It’s a process where the preparatory work really pays dividends: collating all the key documents and choosing the right loan type, and lender can boost your chances of approval.

Here’s a breakdown of what to do before applying and how the process typically works in Australia.

Preparing for a small business loan

When you apply for a loan, lenders will assess your business in detail. They’ll look at your revenue and cash flow to see if you can afford payments, and both your personal and credit history to assess the risk. That’s why you need to do some ground work beforehand to put yourself in the best place to secure funds.

Most lenders will expect you to have¹:

• A clear view of your financial health — including income, expenses, debts, and cash flow.
• Up-to-date financial statements and forecasts to show your recent performance and future prospects.
• A copy of a full tax portal report with BAS documents
• A defined funding amount and repayment plan based on what you can realistically afford.
• A solid business plan covering how the loan will be used and the ways it supports growth.
• Your ABN and important business details - directors of Pty Ltd companies may need to provide supporting information like individual income tax returns³.
• Proof of identification, such as an Australian passport
• Details of any assets you’re offering as collateral (for secured loans).

Applying for a small business loan

After you’ve finished your preparation, applying for most loans will be much easier. Each lender is likely to have their own requirements, but the process is quite similar each time, starting with your business plan and shortlisting providers, to submitting everything and waiting for approval.

1. Prepare your business plan

Fundamental to your application, most lenders want to see a business plan to understand how you’ll use the funds and repay the loan. Think of it as a roadmap — starting with an overview of your finances, then defining your objectives and how you expect to achieve them. If you don’t already have one, the Australian government has a business plan tool to get you started⁴.

2. Choose the right loan

As we outlined earlier, there are multiple loan options available, so row back to the findings from your financial assessment to find the ‘best fit’. For example, a term loan might suit a larger, one-off investment like buying machinery, while an overdraft or line of credit could better serve short-term cash flow gaps. There are also tax implications to consider.

The government recommends speaking with a business adviser or accountant for tailored guidance¹.

3. Compare and verify potential lenders

Once you’ve shortlisted a few viable lenders, compare them based on key factors like interest rates, fees, terms, and support. It’s very important to go through the terms and conditions in fine detail, even reading the small print, to set expectations and flag any potential restrictions.

It’s also important to run a short ‘vetting’ process to make sure the third party is legitimate. Most big banks are fine, but for lenders you’re not familiar with, check the ASIC register and read online reviews to avoid scams.

4. Gather all your documents

Next, prepare your documentation. This typically includes all the details lenders want to assess, like your business plan and financial statements. There are specific eligibility criteria and requirements set by each lender, so having everything organised upfront helps to speed up the process and reduce delays.

5. Apply and wait for approval

With everything in place, it’s finally time to submit the application following the lender’s process, either online or in person. The lender will assess your financial position using the documents you disclosed, though they may request additional information before making a final decision.

Small business loan providers in Australia

There are a few outlets for business loans in Australia. Major banks like Westpac or NAB offer structured loans with competitive rates. You can also look at government-backed programs, which often target startups for loans and micro businesses — these might be worth exploring if you qualify. There are non-bank lenders, which might approve loans faster, but typically with the caveat of higher rates.

Wise Business: Moving your business funds across borders

Securing a loan is a significant milestone for any growing company, but the real work begins when you start deploying that capital. Businesses with expansion plans are often involved in paying international suppliers for new equipment or funding marketing campaigns in foreign markets

Wise Business helps solve the challenge of high conversion fees eating into your new budget. By using the mid-market exchange rate and avoiding the hidden markups often found with cross-border transfers, you can ensure the funds you worked hard to secure actually go toward your business goals.

Wise Business helps streamline overseas business payments without foreign transaction fees, saving up to 3x compared to other providers.

• Free to register — Send money to 140+ currencies with no hidden exchange rate markups
• Make up to 1,000 transfers at once with the Wise batch payments feature
• Fast, low-cost payouts to customers, freelancers, employees, investors, and suppliers globally
• Automate invoice payments, recurring transfers, and international payroll
• Fast and fully secure payments through Wise, even for large amounts

Tired of hidden fees and complex processes when making overseas payments?

Start sending with a Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

FAQs

1. How hard is it to get a small business loan with bad credit in Australia?
It can be tougher to get a small business loan with bad credit, as lenders usually see it as higher risk. You might be offered a smaller loan with higher interest rates, or asked to provide some form of collateral as a result.

2. How long does it take to get a small business loan in Australia
Approval times for small business loans vary based on the lender and loan type. It can take a few weeks to get one from a traditional bank, especially for larger or secured loans. However, online and non-bank lenders are often faster — in some cases, you could get a decision within a couple of days for smaller amounts.

Source:

1. Business Gov Au - Apply for a business loan
2. Business Gov Au - Grants and programs
3. NAB - What you need to apply for a business loan
4. Business Gov Au - Business plan tool