Types of Business Loans in Australia

In simple words, a small business loan is an amount of money that is borrowed by a business owner from a lender. Both parties sign an agreement that clearly defines the lent amount with interest that the borrower will pay back after the given period.

Finding better financing options for various kinds of businesses such as small and medium-sized businesses in Australia is not an easy task. There are numerous lenders in Australia; however, every lender offers extremely different options.

Many top tier banks are not willing to loan the amount of money that you required to start your business or to make necessary changes in your existing business.

Many business owners who do not pay attention to carefully research their financing options may get loans with awful interest rates and terrible terms and conditions.

So, engaging and independent business loan broker is the best you can make.

Small Business Loans Types 

The Average Small Business Loan Amount

The average amount of the best small business loans was around $663,000 in 2018. Every type of small business finance has a different average amount. 

Your lender may offer the required amount for your business which ranges from $13,000 to over $1.2 million. 

You can check various types of business loans for small business and their average lending amounts as follows:

Short-Term Business Loans

Short-term business loans are an alternative to bank loans. Short-Term loans are easier to receive as compared to long and medium-term loans.

A short-term loan is a great option for those who have a small idea regarding their business. As the name indicates, they are normally smaller amounts and you can easily repay in a short amount of time.

The average amount for a short-term small business loan is nearly $20,000.

Medium-Term Business Loans

 A medium-term business loan is alike a short-term loan. This type of loan has larger sums of money which you can use for the widened amount of time between 2 to 5 years. 

The main benefit of this loan is that it has a repayment timeline with regular payments. A business owner can get a benefit of $500,000 under the medium-term loan. Your eligibility for this loan depends on your credit, revenue, and other important factors.

The average loan amount for a medium-term business loan is around $110,000.

Business Line of Credit

The business line of credit loan helps business owners to get funds for their business requirements such as a stock purchase. 

The borrower can get more flexible offers with a small business line of credit type as compared to any regular business loan. With this type of business loan, you can borrow a certain amount of money and can pay only interest on what you borrow. This pliability enables you to repay amounts when you want and you can pay only interest on what you use. Realloans’s offers business line of credit for new businesses

The business line of credit is offered by non-bank lenders. The best business line of credit is more attainable than conventional loans. This type of loan is the best for those borrowers who want flexibility with a short-term loan. Apply for business line of credit with Realloans in Australia. 

The average amount of best line of credit for small business is $22,000. 

Key Features

Good credit rating and position are required for better loan terms. New applicants are suggested to pay off the debt quickly in order to build a strong credit profile so that they can get the best loan offers in the future. 

It is very difficult to manage small business finances in this modern world that is why a small business line of credit is the best option that fulfills your goals for growth.

  • Instant Funding
  • Only pay for what you borrow
  • Revolving credit
  • Access more funds automatically
  • No prepayment penalties
  • Transparent pricing

Eligibility

  • You required a personal credit score of around 600.
  • The minimum time in Business is 1 year.
  • $100k business annual gross revenue is required.
  • Your required personal guarantee.

Cash Flow Lending 

Cash flow lending is a kind of unsecured loan for daily business needs. When you are dealing with inconsistent cash flow and late payments then you need extra cash to cover all expenses such as wages, purchasing new equipment, and business investment, so in this case, a cash flow loan is the best option. Maybe some bank loans are not available for you according to your credit history, so you can go for a cash flow loan. However, cash flow loans for small business are measured by your business’s ability to generate cash flow. 

Key Features

  • Immediate Cash Flow
  • Flexibility 
  • Promote Business Growth
  • The process of cash flow loan is very fast applying in minutes and gets a decision on the same day.
  • Less documentation and paperwork as compared to a traditional loan.
  • Daily or weekly repayment options. 
  • Transparency in the total repaid amount and no hidden charges if you are out early.  

Eligibility 

  • Proof that you can repay the amount 
  • Show source of income

Invoice Financing

Invoice Financing is the same however it helps business owners to pay for outstanding business invoices. Nothing is more important than cash in the business, because every business required enough cash to operate. Business owners need to pay their employees, pay rents and bills, purchase equipment, and they also need cash to flourish their business.

This is a type of unsecured loan with high-interest rates. There is not a fast and hard average, even these loan types depend on the cost of the invoice. Your lender can suggest you the best for you according to your requirement.

Key Features 

  • No hidden charges
  • 100% flexible finance 
  • Funding in 24 hours 
  • Easy loan application 
  • High approval rates 
  • Simple and intuitive

Eligibility

  • You have a valid ABN or ACN
  • Valid invoices with Australian businesses
  • Invoice of services and goods have been delivered

Overdraft Loan

Business Overdraft Loans are generally used to provide money to fulfill the daily financial needs of business requirements. It is a pre-agreed limit account that enables an account holder to withdraw or use money. It is directly linked with your business account, so that business owners immediately access overdraft funds. Overdraft business facility is not suitable for every business, it’s only ideal for high turnover businesses.

With an overdraft facility get extra funds instantly into your bank account when you faced any unexpected expenses or manage business cash flow. Overdraft facility is best for those business owners who only receive payments at the end of the month, so they can use this facility to cover the shortfall until they receive monthly payments. 

Following businesses can get benefits from this facility:

  • Retail Businesses
  • Wholesale Businesses
  • Manufacturing Businesses
  • Professional services
  • Food Services
  • Technology Services
  • Automotive Businesses

Key Features

The range of overdraft facilities for business from $25,000 to $500,000 and interest rates between 15%pa to 24.92%pa. This facility enables you to secure funds at any time and only pay interest on the used amount. The loan amount is assessed according to business turnover and approved quickly by non-banker lenders. The process of this application is very easy.

Eligibility 

  • Required a valid Australian Business Number (ABN) and Australia Residential Address  
  • The business has a $250,000 per annum turnover and the business is GST registered. 
  • The business has been in operation for at least 6 months. 
  • You have permanent citizenship in Australia. 
  • You have business bank statements. 

Debtor Financing

If you want to grow your business or required money for other business purposes then choose Debtor Finance which turns your unpaid invoice into quick. The interesting thing about it is that you don’t need to show any property for security purposes. 

Debtor Finance also called Receivables and Invoice Finance offers you quick, painless access to funds. This Finance is for raising finance in the Australian market, and appealing to businesses that produce healthy receivables from customers with solid credit backgrounds.

Key Features

  • Your line of credit grows as your sales grow
  • Get benefit from cash flow by using your accounts receivable 
  • Access cash conveniently and flexibly 
  • Online access to view request funds

Eligibility 

  • Have $2M turnover of goods and services 
  • Have great accounts receivable processes
  • Minimum 12 months in trading 

Trade Finance

Trade Finance simply provides finance to businesses that import things from overseas and buy the product within Australia in order to pay suppliers without spending their own money.

With the help of Trade Finance businesses purchase products such as raw materials and goods from providers from overseas and locally, after that business owners sell those products in Australia to grow their businesses.

You can purchase products from overseas providers receive an invoice from suppliers and send it for payment. Trade Finance pays your supplier’s invoice if you don’t have adequate funds.

Key Features 

  • More flexible than traditional funding
  • Increased buying power
  • No hidden fees
  • An all-in-one solution
  • Access to experts

Eligibility

  • Australian Residency 
  • Minimum turnover around AUD 3 million 
  • Have valid positive balance sheets

Asset Finance or Equipment Financing 

Financing is a boon for those business owners who do have not enough amounts to support their business. It’s very difficult for some businesses to purchase the required equipment they need to run their business, so in this case, equipment loans are very helpful.  

You can receive a heavy loan amount for your expensive business equipment with Business Equipment Financing as it is designed to help business owners with their equipment setup.  Moreover, it covers 100% of equipment cost which you have to pay back with interest within the given period.

Key Features

  • Quick turnaround times
  • Range of finance options
  • Flexible loan products
  • Powering alternative options
  • Competitive interest rates
  • No financials required
  • No deposits or bonds
  • No penalty on early payouts

Eligibility

  • Australian ABN required
  • Minimum 2 years in trading 
  • Minimum Turnover around $250,000

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