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How to get a business loan for your small business

To buy a home you just need a home loan. Pretty straightforward.

But borrowing for your business is a different kettle of fish.

There are heaps of different options for you to consider: unsecured or secured, business loan or business overdraft, equipment finance or invoice finance?

Comparing business loans and choosing the right option for your business is just the start. There’s plenty to know about the application process too.

This article is all about the basics of business finance; What is a business loan? What do you need to know before you apply? And what documents do you need to provide?

What is a business loan and what’s it for?

Like a home loan, a business loan is a financial arrangement between you and a lender. They give you money, you repay it over time with interest. This money can be used for all kinds of business purposes including:

Working capital

Great for covering cashflow issues or seasonal expenses. A Business+ Unsecured Overdraft or short-term Business+ Unsecured Loan can help bridge the gap between paying suppliers and receiving payments from customers.

Business Growth & Expansion

When you’re ready to grow your business, whether by opening new locations or diversifying your products or services, a business loan can help fund your expansion plans.

Marketing

It’s great to have a great product, but if no one knows about it, what’s the point? Savvy small business owners often borrow to fund their search and social media marketing campaigns.

Equipment financing

If your business relies on specific equipment or machinery, a small business loan can be used to buy or upgrade these assets.

Just in case

Unexpected expenses, like repairs, stock issues, or a sudden drop in revenue, can cripple a small business. A Business+ Unsecured Overdraft can be a lifeline during tough times.

What you need to know before applying for a business loan

Know your why

Before diving into the business loan application, work out what you’re trying to achieve with the money you’re borrowing. Without a water-tight plan, those funds can flow out of your account, soaked up by business running costs.

Knowing why you need the money also helps you and your lender to choose the best product for your plan and how much you need to borrow. Speaking of plans…

Have a plan

Having a well-documented business plan that outlines your goals, strategies, and financial projections will impress lenders. It demonstrates your commitment to your business. It doesn’t need to be as thick as a phone book (if they’re even a thing anymore), it just needs to show how you’re preparing for success.

You can also develop a repayment plan that includes details on how you'll make loan payments without breaking your cashflow. Lenders want assurance that you can meet your obligations. Use a business loan calculator to work out what your repayments might be.

Have history

Most lenders will need to see how your business has performed for at least two years before a loan is offered. Make sure you keep up to date records of all your important business documents and account statements.

Credit score

Lenders assess your personal and business credit scores. A good credit score can make securing a loan easier and you may get a lower rate. An unpaid bill, even for a small amount, can have a negative impact on your credit score and can prevent you from securing finance. So, it's important to check your credit reports and address any issues early.

Business loan application documents

When you're ready to apply for a business loan, you'll need to gather various documents to support your application. The specific requirements may vary depending on the lender, and the loan amount you request but here's a general list of documents you might need:

Personal and business financial statements

These typically include your bank account statements, balance sheet and profit and loss statement.

You'll also need to submit both personal and business tax returns for the past couple of years. To avoid an administrative headache, make sure you keep your personal and business transactions separate. If you don’t have a dedicated business account, consider a Business+ Account as a brilliant place to start.

Other debt

A common debt for small business owners is money owed to the Australian Taxation Office (ATO). Before applying for business finance, make sure you’re up to date with your obligations. A good repayment history goes a long way to proving you’re worth the risk.

Personal ID

You’ll need to provide proof of identity. The standard documents such as a driver's license, passport or Medicare card.

Apply for a Business+ Loan or Overdraft

Securing a small business loan can be a great way to grow your business or just keep it running smoothly.

Great Southern Bank’s Business app can speed up the business finance process with no paperwork from start to finish. Every step is done in-app so it’s ideal for busy small business owners.

You won’t need to show a business plan or dig up a stack of old bank statements. And when you sign the contract (digitally of course), you’ll have your money the same day.

With so much on your plate, applying for a small business loan needs to be fast and simple. Download the Business app and you’re halfway there.

Remember to check out our Business Hub. You’ll find heaps of free resources and plenty of helpful information to keep your business humming.

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BUSINESS APP

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General Advice Warning

The information provided here is general advice only. We haven’t considered your financial circumstances, needs or objectives. You should ask your Tax Advisor or Accountant before you decide about products mentioned in this article. All care has been taken to prepare this content, but no warranty is given for the information provided. Neither Great Southern Bank or its related entities, employees or agents are liable for the decisions or actions you take because of this information.

Business+ Loan is only available to approved applicants for business purposes. Lending criteria, limits, conditions, and fees apply. Applications are subject to credit approval