small business loans

How to Apply for Small Business Loans

Starting your own business and becoming your own boss is everyone’s dream. But getting there requires work, commitment, and plenty of costs. Luckily, you can get small business loans to help you grow and scale your business. 

With that said, we put together this guide on how to choose the best small business loans that suit you and how to apply for them.

Step 01: Find the types of small business loans that fit

The first step on how to apply for small business loans is knowing the types of loans that are available and applicable to your small business. 

We put together a list of options for startups, businesses with bad credit, and government loans. 

Small business loans for startups

These are financing options for small business owners who are just starting out but have no assets to use.  

  • Fully Drawn Advance

This is one of the long-term small business loans for startups that are ideal for sizable one-time purchases such as equipment, machinery, and even property. It is a fixed-term loan where business owners can get money upfront and have flexible repayment schemes. 

  • Cash Flow Lending 

A cash flow loan is one of the short-term loans for startups. It is best for business owners who need upfront cash for the everyday expenses of the business. 

This is ideal if the small business owner does not have any history of repayment yet, has a low credit score, and those that have outstanding debts. 

  • Trade Finance

This is another type of short-term business loans for startups that have international trading processes. It is best for business owners that need financing to purchase stocks or products from an overseas supplier. 

This is one of the loans for startups that are low risk and minimise the barriers most startups experience when they enter the international trading scene.

  • Asset Finance

Asset financing is long-term business loans that can help address startup needs, such as purchases of business assets, usually vehicles and equipment. 

This is a great financing option for small business owners since the interest rates are flexible. However, it is important to note that the loan amount most lenders provide is determined by the credit history of the business.

  • Leases and Hire

Similar to asset financing, leases and hiring loans are financing options that provide monetary assistance for aspects of the business to startups, specifically leasing, renting, and hiring staff. 

However, the similarities stop there. Leases and hiring loans are medium to long-term agreements between business owners and lenders. 

Small business loans for bad credit 

There are also other small business loans for bad credit owners. Here is a couple of them:

  • No Credit Business Loans

It can be quite challenging for business owners to apply for loans when they have low or bad credit scores. Luckily, there are small business loans for bad credit that are available online

These lenders do not need to conduct credit checks. In fact, the application process is much simpler and the success rate for loan applications is astronomically higher compared to bank loan applications. 

  • Bad Credit Business Loans

Similar to no-credit business loans, bad credit loans provide another financing alternative for business owners who may not be eligible to apply for other types of loans.

It enables business owners to get loans fast without requiring any collateral or securities. However, the interest rates and repayment fees will be higher compared to conventional lenders. 

With that said, it is important to note that while these business loans are easier and more convenient they also come with more risk. That is why it is important to carefully choose and assess the terms and conditions before entering a loan agreement.

Government small business loans

There are also government fundings that are made with the specific purpose of assisting startups and small to medium enterprises. 

  • SME Recovery Loan Scheme 

It is one of the government funding that were recently made available to provide financial aid for business owners who were affected by the COVID-19 pandemic. The SME Recovery Loan Scheme offers secured and unsecured loan options amounting to $5 million AUD with a maximum loan term of up to 10 years. 

  • New Enterprise Incentive Scheme (NEIS)

This is one of the government small business loans that is geared to incentivise and assist entrepreneurs. It is a schedule that provides financial assistance of up to $20,000 AUD as well as business training, to name a few. 

This is available for people over the age of 18 years old and residents of Australia, whether they are natural-born citizens, permanent residents, or valid visa holders. 

  • CSIRO Kick-Start Program

The Commonwealth Scientific and Industrial Research Organisation (CSIRO) is a kick-starter program arranged by the Australian government to help entrepreneurs explore their research idea and get assistance of up to $50,000 AUD and backing.

This is available for business owners who have been operating for less than 3 years and have an annual turnover of under $1.5 million AUD. 

  • Regional Development Australia

This is one of the government small business loans that are designed to aid entrepreneurs and drive development in other regions of Australia. 

It is an incubation fund that is available for business owners outside of the metropolitan areas of the country and can provide financial assistance to the millions. 

As an added bonus for female business owners, check if the loan you are considering prioritises women. There are also plenty of financing options both in Australia and internationally that are geared to provide assistance and small business loans for women entrepreneurs.

Step 02: Research small business loans available

Now that you know Australia’s top business loans available for small to medium business owners. The next step is to research and identify the best small business loans that match your company’s needs. 

There are three things any business owner should always consider: 

  • Interest rates. Consider the interest rates in terms of the repayment schedule. Also include the collaterals for secured and unsecured loans.
  • Loan fees. Ensure there are no hidden fees and check the percentage that will be deducted for repayment of each fee. Here are common business loans that are usually included: Application fees, ongoing fees, valuation fees, early repayment fees, dishonour fees, late payment fees, and discharge fees.
  • Loan features. Cross-check the features of the loans that you are considering. For flexibility and convenience, consider the extra repayments, redraw features, amount of loan, and funding speed. 

small business loans

Step 03: Consider what banks and lenders look for 

Before checking the requirements of a bank or a lender, business owners need to ensure that they meet the lender’s criteria. 

This is an essential step if the business owner applies for business loans from banks and other traditional financing institutions. With that said, most banks use the 5 Cs method to examine the applicant’s eligibility:

  • Character
  • Collateral
  • Capacity
  • Capital
  • Conditions

Step 04: Organise essential bank loan requirements

Aside from the “5 Cs method,” most banks and other conventional money lending institutions also require business owners a couple of things before they get approval.

Here are the most common business loans requirement in Australia that you should note and organise before you apply for small business loans:

Financial Statements

This is essential to show banks and lenders all the business owners’ and companies’ financial health. Business owners applying for a loan should add these: 

  • Assets
  • Liabilities 
  • Net worth 
  • Income streams
  • Personal expenses
  • Business activity statements (BAS)
  • Latest tax returns
  • Statements from the Australian Taxation Office (ATO)

Proof of Individual Income

Banks and lenders want to know if you are capable of paying back loans. For this part, it is important to add two of the most recent individual tax returns and an ATO Notice of Assessment.

Bank Statements

Aside from the financial statement, bank statements enable banks and lenders to get a clearer picture of the applicant’s financial situation. This will include the latest banks statements for the following: 

  • Personal income
  • Business income
  • Savings
  • Liabilities
  • Loans
  • Credit card debts


This is usually applicable if the applicant does not have an existing account or customer details from the bank or the lender. 

Here, the business owner will need to provide two official identifications, such as passports and government IDS. It is important to note that some lenders will also require proof of business ownership or position in the company, such as company registration files.

Step 05: Send applications for small business loans

Now that you have chosen the best small business loans that suit your needs and organised the necessary files, you are almost ready to start applying.

Likewise, there are a couple more ways to increase the success rate of your application. 

  1. Assess the eligibility of your small business. Have someone check if the annual business turnover, business records, and personal records are in good order and have no errors.
  2. Get your credit score in good shape. Pay any existing debts before applying for new business loans.
  3. Identify the financial limits of your small business. Make sure that the business can handle the repayment costs within the given time frame of the loan agreement. 

Step 06: Be patient

The last step when you apply for small business loans is to be patient. Most banks and convention lenders may take a few days or a few weeks to check your application carefully.

We advise you to choose and apply carefully when you need a loan.  There is potential harm if you continue applying and face multiple rejections since these will reflect on the health of your credit score.

It should not deter you from ever applying for a business loan. These can significantly aid the growth of your business and meet your goals. 

So, are you planning to seek financial assistance to start your business? We can help you create the perfect loan application. Consult with Flexilabs today!