Small business loans

What makes a “small business” loan?

There’s no special category of loan reserved for small businesses. The term simply describes the lending available to businesses that aren’t large corporates: sole traders, partnerships, family trusts and small companies. Most Australian businesses fall into this group, as the ABS business counts show.

What’s different is how lenders assess you. With small businesses, the owner and the business are closely linked. Lenders look at your personal credit, your personal assets and often ask for a personal guarantee, alongside the business’s own trading.

The main small business loan types

Loan type	Best for	Security
Unsecured business loan	One-off needs	None (guarantee)
Line of credit	Recurring gaps	None or property
Equipment finance	Tools, machines, vehicles	The asset
Invoice finance	Slow-paying customers	Your invoices
Second mortgage	Larger amounts	Property

If you want to see all 55 types in one place, the A–Z index lists every loan and the alternative names people use for them.

How to choose your first business loan

Start with two questions:

1. What’s the money for? Equipment points to asset finance. Slow-paying customers point to invoice finance. A tax bill, a stock-up or a gap points to cash flow lending.
2. What security do you have? Property opens the widest range. The asset itself works for equipment. Invoices work for invoice finance. Nothing at all means unsecured.

Our Loan Finder filters every loan by those two answers. The guide to the types of business loans explains each one in more depth.

Getting ready to apply

• Use a dedicated business bank account.
• Lodge BAS on time, even if you can’t pay in full.
• Know your monthly turnover and existing repayments.
• Have ID, ABN details and recent statements ready.
• Be clear on the amount and how it’ll be repaid.

Lenders reward tidy, consistent information. If your paperwork is behind, low doc options exist.

An illustrative example

A mobile dog-grooming sole trader wants a second fitted-out van. With twelve months of steady trading, equipment finance secured by the van itself funds the purchase, and the second van starts earning straight away. (Illustrative only.)

What else is small business loans called?

Lenders, accountants and search engines don’t all use the same words. You’ll also see this entry described as SME loan and Sole trader loan. In our A–Z index every one of those names points back to this page, so whichever term you searched, you’ve landed on the same thing. If a lender uses a name you don’t recognise, ask them to describe how the security, the term and the repayments work; that tells you far more than the label.

Where does it sit in the directory?

This entry lives on the cash flow and unsecured shelf. It’s most often used for cash flow and working capital, buying, starting or growing a business, equipment and vehicles, and the security usually involved is whatever suits the deal, from nothing at all to property. It is one of the quicker entries to put in place when the paperwork is ready. Its closest neighbours are:

• Unsecured business loans — No property on the line — typically $5,000 to $500,000 for trading businesses.
• Revenue-based finance — Repayments flex with your daily sales or card takings.
• Bad credit business loans — Past defaults or a declined bank application don’t automatically end the conversation.
• Low doc business loans — Borrow on BAS, bank statements or an accountant’s letter when tax returns lag.

To compare all of them at once, filter the Loan Finder by purpose and security.

Common mistakes to avoid

• Starting with the product instead of the purpose. Decide exactly what the money must achieve, then choose the structure that fits it.
• Not comparing secured and unsecured options. The same need can often be met either way; the right answer depends on amount, credit and timing.
• Under-estimating the total cost. Ask for the full amount repayable in dollars, including every fee, before you compare offers.
• Applying everywhere at once. Multiple applications can leave a trail of credit enquiries. One well-prepared enquiry is better.
• Leaving it until the last minute. Facilities are easier to arrange while trading is strong, not in the middle of a crunch.

What should I ask before signing up for small business loans?

A short list of questions saves a lot of regret. Put these to any lender or specialist before you commit:

1. Which structures did you consider for me? A good specialist explains why one option beats the others for your situation.
2. What’s the total cost in dollars? Compare like with like across secured and unsecured offers.
3. What security or guarantees are needed? Know exactly what’s on the line before you sign.
4. How are repayments timed? Match frequency to how money comes into your business.
5. What happens if things change? Ask about early repayment, top-ups and hardship options.

If an answer is vague, ask again or ask for it in writing. Good lenders are happy to explain their terms clearly.

Small business, real options

If you run a small business and need funding, a quick enquiry shows what’s realistic. There’s no credit check when you enquire, and it goes to one specialist rather than a mob of lenders. They’ll call you to talk it through.

Please give us accurate details about your structure, trading history and what the money is for. That’s what gets you matched properly first time. Start your enquiry.