Note: AGR Technology may receive a commission on sales generated by partner links on this page, but this has no influence on our opinions or evaluations and is completely free of charge to you.
Small businesses, recognised as the backbone of the Australian economy, play a pivotal role in innovation, job creation and contributing to local communities. Yet, the challenge of securing financing looms large for small business owners. In this article we have curated and compared some of the best small business loan platforms in Australia and different options to consider when looking to get a loan for your business.
In a landscape where big banks dominate the lending market, many entrepreneurs find themselves struggling to access the capital they need to start or grow their ventures. This is where small business loans in Australia come into play, offering a lifeline for ambitious entrepreneurs looking to turn their dreams into reality.
Pros and Cons of Small Business Loans 💵
Pros of Small Business Loans:
- Access to capital for expansion or startup
- Potential for business growth and increased profitability
- Retaining full business ownership
- Improved cash flow management
- Attractive interest rates
- Opportunity to build and establish credit.
Cons of Small Business Loans:
- Accrued interest and repayment obligations
- Potential for debt-related stress
- Stringent eligibility criteria for approval
- Risk of financial strain if the business faces challenges
Top 7 Small Business Loan Providers in Australia February 2024
Introduction to Lumi
Lumi stands at the forefront of small business financing solutions in Australia, offering a robust platform that prioritizes flexibility and transparency.
With a commitment to empowering businesses, Lumi provides unsecured loans ranging from anywhere from $5,000 to $300,000, helping to simplify the lending process for entrepreneurs.
Lumi Business Loan Application Process
- Quick:Simple online application process to submit your information and the type of loan your after to get started
- Simple: Simply gather your ABN/ACN, driver’s license, and bank details and find out pretty quick if your approved
- Fast: Approval can come as fast as 2 hours, and funding can hit your account within the same business day
Features of Lumi Business Loans
- Loan Amount Flexibility: Borrowers can access loans ranging from $5,000 to $300,000, accommodating diverse business needs
- Speedy Application and Approval: Lumi’s emphasis on quick processing allows applicants to receive funds within the same business day, facilitating timely responses to business opportunities
- Transparent Fee Structure: Lumi sets itself apart with minimal fees, notably a 2.5% establishment fee, providing clarity and predictability for borrowers
- Unsecured Loans: With a focus on inclusivity, Lumi offers unsecured business loans, eliminating the need for collateral for amounts up to $300,000
- Flexible Repayment Options: Weekly repayment frequencies, principal and interest repayment types, and the option for extra repayments contribute to a borrower-friendly repayment structure
- Early Repayment Benefits: Lumi distinguishes itself by allowing borrowers to pay off their loans early without incurring penalties. Early payout options and discounts are available, with principal-only payouts accessible after 6 months
- Eligibility Criteria: Lumi caters to businesses that are at least six months old, with a minimum annual turnover of $50,000, establishing accessibility for a broad range of enterprises
Overview of ebroker
If you’re navigating the realm of small business loans in Australia, ebroker is a name that deserves attention. It’s not just a platform; it’s your ally in securing the right financing for your business. Imagine having access to over 70 lenders, all ready to cater to your business needs. That’s the promise ebroker brings to the table.
The Starting Business Loan Journey with ebroker
Understanding the ebroker business loan process is straightforward. Acting as a broker, eBroker doesn’t directly lend to businesses but serves as a marketplace. Here, potential borrowers can explore diverse business loan options from over 70 lenders, including banks and non-banking institutions.
The platform offers various loan products, accommodating needs like low-doc loans, short-term solutions, and options for those with less-than-ideal credit histories. However, it’s important to note that while ebroker provides access to a range of loan opportunities, there are no guarantees of approval for any specific loan application.
Why Choose ebroker Loans?
Diverse Financing Options: ebroker is your gateway to a myriad of lenders – more than 70 of them. What does this mean for you? Options. You get to compare and choose from a range of lenders, ensuring you find the perfect fit for your business.
Borrowing Flexibility: Starting as low as $5,000, your business can apply for loans with ceilings reaching an impressive $5,000,000. Whether you’re a small startup or a thriving enterprise, ebroker accommodates diverse financing needs.
Small business grants are available: The website includes an option for businesses to discover if lenders will consider their application for a grant
Inclusive to All Credit Histories: Have a less-than-perfect credit history? No worries. ebroker opens doors to lenders who may be willing to work with you, without scrutinizing your credit history
Tailored Financing Choices: Your business is unique, and ebroker gets that. The platform offers both secured business loans and unsecured loan options, allowing you to tailor your loan to match your specific needs
Impartial Guidance: What sets ebroker apart? It’s not tied to any single lender. This means you’re getting recommendations based on your needs, not on who has the biggest marketing budget. Unbiased and objective – just what you need
Introduction to Scotpac
For over 30 years, Scotpac has been Australia’s trusted ally for small businesses seeking growth. They offer a diverse range of flexible financing solutions designed to meet your specific needs, from invoice finance to asset finance and traditional business loans. Whether you’re just starting out or looking to expand, Scotpac helps you unlock your potential and achieve your goals.
Scotpac Loan Application Process
- Swift Application: ScotPac boasts a streamlined 10-minute application process, ensuring a quick and hassle-free experience for small businesses
- Same-Day Approval: Eligible businesses can receive approval on the same day they apply, addressing the urgent funding needs of small enterprises
- Fast Funding Access: ScotPac ensures access to funding within as little as 24 hours, allowing businesses to expedite their financial goals
- Minimal Documentation: While specific requirements may vary, the application typically involves submitting 6 months of business bank statements, a photo ID and a complete application form
Benefits of ScotPac Business Loans:
- Flexible Funding Range: ScotPac offers business loans ranging from $10,000 to $500,000, providing flexibility to meet diverse financial needs
- Rapid Funding: Businesses can benefit from same-day approval and access to funding within 24 hours, ensuring quick response to financial challenges or opportunities for your business
- Industry Support: ScotPac stands out by supporting businesses across all industries, recognizing the diverse needs of Australian enterprises
- No Early Payout Penalties: ScotPac’s loan terms come with the advantage of no penalties for early repayment, offering businesses greater financial flexibility and options to pay off ahead of time
- Transparent Fee Structure: With a commitment to simplicity, ScotPac avoids hidden fees and provides a transparent fee structure and has no upfront application fee and interest rates from 14% per annum
Overview of Prospa
Navigating the landscape of small business loans in Australia? Prospa is another solid contender in the market across both Australia and New Zealand. Prospa provides small business owners with a quick and simple way to obtain financing, and it has already assisted thousands of Australian small enterprises. Prospa received the Deloitte Tech Fast 50 in 2015, after increasing by 6071% in three years, making it Australia’s fastest growing technology firm and Asia’s third quickest. Prospa was a Telstra Business Awards finalist in 2015 and ranked 33rd globally as a leading innovator in KPMG’s Fintech 100.
How Prospa Small Business Loans Work
Prospa offers loans from $5,000 up to $500,000 for cash flow or growth. You can apply online in about 10 minutes and often get a decision the same day (with funds possible in 24 hours).
No upfront security is needed for loans under $150,000. Loan interest rates vary based on your business and are calculated upfront. This helps you to know the total cost before you borrow. Early repayment options are available to save on interest.
Benefits of Prospa Business Loan
Choosing Prospa for your business financing needs means opting for a partner who understands the nuances of small Australian businesses.
Simple Application Steps: Prospa ensures a straightforward application process that respects your time and urgency. With an online form that takes around 10 minutes, you’re on your way to financial support without unnecessary delays.
Flexible Loan Uses: Prospa allows you to utilize the loan for various business objectives, from buying supplies to expanding your team or renovating your workspace. Your business, your choices.
Variable Loan Durations: With loan periods ranging from 3 months to 3 years, Prospa caters to different business needs. Whether you want a short-term loan (boost) or a more extended financial support plan, Prospa offers flexibility.
Modular Payment Schedules: Prospa understands that one repayment schedule doesn’t fit all. You have the freedom to schedule repayments based on your business’s cash flow, choosing between weekly and daily payments.
Quick Approval and Funding: Prospa lives up to its promise of being swift. A 10-minute online application, coupled with approval possible within the hour depending on your scenario ensures you don’t miss out on capital.
Get started with the following form:
Overview of OnDeck:
Forget the lengthy and complicated processes typical of many small business loans. OnDeck is another solid player in the Australian market with a straightforward online application for loans up to $250,000. Depending on the quantity of your loan, you can get funds within one business day or as little as two hours.
How OnDeck Business Loans Work:
Eligibility Check: Start by checking your eligibility through OnDeck’s online tool. This soft credit check won’t affect your credit score
Simple Application: Fill out the online application, providing basic business information and financial documents
Fast Approval: OnDeck’s proprietary Koala Score™ technology expedites the process, offering quick decisions, often within minutes
Funding: Upon approval, funds are electronically deposited into your business account, potentially as soon as the same day
Repayment: Repayments are made through fixed weekly debits from your nominated business bank account
Features of OnDeck Loans:
- Loan amounts: Range from $10,000 to $250,000, catering to diverse business needs
- Terms: Flexible repayment periods between 6 and 24 months
- Speed: The potential to receive capital within 24 hours for smaller loans and potentially the same day for larger ones
- Convenience: Easy online application and quick decision-making process
- No collateral: Unsecured business loans eliminate the need for putting up valuable assets as security
- Transparency: Fixed loan interest rates and clear fees provide predictable costs. With a 3% origination fee for small business loans and a 1.5% renewal fee for existing loans however the rate may be subject to their credit assessment
Introduction to Max Funding
Max Funding emerges as another compelling option in our list ready to empower your business journey. The pre-approval process takes around five minutes is quick and east, and you can often receive funds in a timely manner.
Applying process for Small Company Loan with Max Funding
Step one to get started is showing you’re a responsible borrower with a good credit history and maybe some collateral like a car or other asset. Next, you complete their quick online application which has no application fee
Finally, Max Funding works its magic, zipping through your paperwork verification, often resolving it within the same day. If everything checks out, you can often receive your funds on the same day as your application. Minimal waiting, just speedy disbursement to support your business’s every need.
Key Features of Max Funding Loans
Now, let’s dive into what makes Max Funding stand out in the crowded arena of small business loans:
- Transparent Costs: The interest rate is laid out at the time of application, and there’s no prepayment penalty. Making it simple to know what you’re getting into from the get-go
- Flexible Financing Levels: Your business is unique, and so are its financial needs the platform offers loans ranging from a modest $3,000 up to $30,000. It’s a sweet spot for covering various operating expenses without financial strain
- Business-Friendly Credit Policies: Not every business has a flawless credit history. Max Funding understands this, stepping in where major Australian banks might hesitate. Whether you’re a startup or a seasoned player, there are financial options tailored to your business size and stage
- Adaptable Repayment Plans: The repayment plan is designed to sync with your cash flow and business goals. No need to worry about fitting into rigid payment schedules – flexibility is the name of the game
Overview of Valiant Finance
Feeling lost in the loan jungle? Valiant Finance is another trusted name on our list, guiding you through the dense financial terrain to uncover the perfect small business loan for your specific needs. With over 7 years of expertise and access to 80+ lenders, they are like financial matchmakers, pairing your needs with the ideal funding partner.
Requesting Process of Valiant Finance Loan
Forget the tedious paperwork and step into loaning heaven with Valiant Finance. Start on their website, where a quick online application form guides you through your specific business loan needs. Think of it as building your loan wish list, tailor-made for your company.
Once you hit submit,Valiant’s platform gets to work and scours its network of lenders, picking options that best match your requirements. From here a Valiant rep dives in, chatting with you to understand your needs even better.
If all goes well (don’t worry, Valiant’s experts guide you every step of the way!), approval comes knocking, and boom! Funds between $5,000 and $1 million can land in your account, ready to fuel your business dreams. Plus, the repayment options are flexible, so you can adjust them to your company’s financial situation.
Benefits of Valiant Finance Loan Applications
Choosing Valiant Finance means opting for a partner invested in your business’s success:
- Transparent Financial Journey: No hidden fees or application costs to get going with Valiant
- Diverse Financing Options: With a network of over 70 lenders, including major financial institutions such ANZ, Bank of Queensland, Westpac etc, Valiant Finance offers clients diversity in the choices tailored to different business needs
- New Business Friendly: Startups are welcome, provided they meet certain conditions. A minimum monthly revenue requirement opens the doors for new enterprises with growth ambitions so long as they meet the eligibility requirements, such as monthly turnover.
- Flexible Repayment Options: The repayment schedule isn’t one-size-fits-all. Valiant Finance leaves it to your chosen lender to determine a plan that suits you, offering financial flexibility
- Adjustable Loan Terms and Rates: Recognizing business diversity, Valiant Finance offers adjustable loan terms ranging from 3 months to 5 years to accommodate varying financial situations. Interest rates start at 7.1% per annum and vary depending on the lender. It’s important to understand that Valiant is only a broker and not an actual lender, so the rates will vary depending on the financial institution you choose to take out a loan with.
10 Common Types of Small Business Loans
Navigating the world of small business loans can be overwhelming. Here’s a breakdown of 10 common types of business finance to help you find the best fit:
General Purpose Loans:
- Term Loan: A one-time lump sum with fixed repayments over a set period. Ideal for fixed price investments like equipment or expanding inventory
- Business Line of Credit: Similar to a credit card, it offers flexible access to funds up to a set limit, with interest only paid on used amounts. Repays are ongoing as you use and replenish the credit. Great for covering fluctuating expenses
Specific Purpose Loans:
- Equipment Loans: Covers the cost of purchasing or leasing essential equipment, often with repayment tied to the equipment’s depreciation
- Commercial Real Estate Loan: Finances the purchase or renovation of commercial property, with repayment terms longer than traditional mortgages
- Microloan: Provides small amounts (typically under $50,000) for microbusinesses and startups, often through specialized lenders or nonprofit organizations
Alternative Financing Options:
- Invoice Finance: Invoice finance enables businesses to access the value of invoices sent to customers but not yet paid. There are various types of invoice financing available on the market, including invoice factoring and invoice discounting. Invoice factoring is the process of selling unpaid bills to a third party that then collects the outstanding amounts. This tool is used to outsource debt collection and receive quick funding for delinquent invoices. However, it gives up a portion of the invoice and loses control of customer connections. Invoice discounting entails collecting accounts receivable, with lending institutions giving funding based on the unpaid bills filed, less a loan fee.
- Accounts Receivable Financing: Borrow against your outstanding receivables, with repayments based on collected invoices
- Merchant Cash Advance: Sell a portion of future credit card sales in exchange for an upfront lump sum, with repayment through daily deductions from credit card transactions. Consider the high costs involved
Other Types of Loans You Can Get for Small Business
When kickstarting a new venture, dipping into your own savings or leveraging personal assets is a classic move. It gives you the freedom to run your business your way without owing anyone.
Friends and Family:
Sometimes, the bank of family and friends is the best source. Borrowing from your inner circle can be convenient, but it’s crucial to establish clear terms to prevent any arguments or misunderstanding.
Funding for regional enterprises:
Some areas roll out the red carpet for local businesses. Regional funding programs might offer grants, low-interest loans, or other perks to boost economic growth in a specific area. It’s worth checking if your local council has any grants available or even if there are state Government grants available for your specific industry. Other ideas might be research and development grants such as those found on this Australian Government website.
- Don’t go it alone! Consultants and advisors can help you navigate the funding landscape and make informed choices
- A solid business plan is a very valuable document. Make it clear, concise, and include the potential of your business to share with lenders
- Don’t put all your eggs in one basket. Combining different funding sources can reduce risk and creates a more stable foundation for your business
- Building relationships with investors, grant providers, and fellow entrepreneurs can open doors to other funding opportunities
Quick Tips on how to find the best finance option for your small business
- Consider Non-Bank Lenders such as those mentioned in this article
- Engage with a business loan broker or consultant
- Align types of Business Loans and terms with your business requirements
- Assess your business needs and risks
- Negotiate terms with lenders
- Stay informed about Government programs and potential grant opportunities
How to Apply for a Small Business Loan
When you’re in the process of applying for a secured loan for a small business, lenders take a close look at several factors. Here’s a breakdown of some things to consider:
Your Financial Documents
To evaluate your cash flow and your ability to repay the loan, lenders will need:
- Bank statements covering the last six to 12 months
- Information about your business registration and taxes
- Identification documents
For loans exceeding $150,000, you may also need to provide additional documentation, including profit and loss statements, business balance sheets and a detailed business plan and depending on the lender some collateral or security over an asset.
Your Business Information
Lenders dive into the details of your business, examining its trading history, structure, location and industry. This is done to provide evidence of your operational history and the structure of your business is crucial in this phase
Proof of Collateral and Capital
If your loan requires collateral, you will need to present proof of ownership and value assessments for assets like commercial or residential property, land, or vehicles
These details are recorded in the Personal Property Securities Register (PPSR)
Lenders are keen on understanding how you plan to use the borrowed funds, your repayment strategy and the intended duration of the loan
Strengthening your loan application involves providing a comprehensive business plan along with financial projections. This step adds depth and credibility to your request
What are some popular options according to Reddit.com users (Redditors)
Here are some curated opinions from the popular social networking website reddit.com:
For a 150,000 unsecured company loan I believe you are more likely to look at a second-tier nonbank lender. Typically, you would go through a broker, but they all work directly with customers. Lumi Finance, Shift, and Moula are just a few examples. Interest rates will be higher, ranging from 10% to 30%, depending on your personal credit score, corporate credit score (if you own a business), industry, etc. These lenders typically request bank statements, ato tax balances, financial statements, and so forth.
As others have said, banks tend to avoid younger enterprises and those that lack property as collateral. The trade-off is that you are viewed as a larger risk, resulting in a higher interest rate and costs. (Paraphrased)
Crowdfunding platforms such as Kickstarter and Indiegogo can help businesses raise capital by presenting their products or services and allowing the public to support their aspirations. Merchant cash advances (MCAs) can be a financial ally for firms with consistent daily credit card sales, providing a lump sum upfront and payback based on a percentage of daily card sales. However, understanding the terminologies, such as factor rate and holdback %, is critical to ensuring a successful operation. MCA Legend is a subreddit that offers important insights and knowledge about small business loans, alternative financing, and other relevant issues. (Paraphrased)
If it’s a product-based business/startup, consider Kickstarter or Shark Tank. Shark Tank provides you with publicity that you may use to promote your Kickstarter campaign. (Paraphrased)
I’d go to your bank first. Otherwise, check Vega or Prospa. I don’t know much about them; they are just the two company loan providers I’ve heard the most about. (Paraphrased)
Final Thoughts of Small Business Loans Australia
Starting a new business, often referred to as a startup, requires financial support to get things off the ground. These small business loans can be used for a range of needs. Whether it’s purchasing equipment, acquiring inventory or covering marketing expenses – those small business loans in Australia provide entrepreneurs with the necessary capital to turn their dreams into reality. We hope you found this article on our blog to be helpful and find some solid options to secure your loan and we hope you have a a bright future ahead with your business venture.
Why Trust AGR Technology?
Alessio Rigoli launched AGR Technology in 2013 with the intention of focusing on YouTube and blogging on technology issues such as Android, Cyber Security, Blockchain, and EdTech. Since then, the business has grown to cover services such as website creation, hosting, software development, and digital marketing. AGR Technology assists companies in a range of industries by providing innovative and high-quality technology solutions to help them thrive.
Note: This is not financial advice and is just designed to provide general information. While we run our own checks and assess each company included on our website, we may not have covered all options. If you decide to apply for a product, you will interact directly with the vendor, not AGR Technology. AGR Technology suggests that you read the appropriate PDS or offer documents before accepting any financial product offer to assess whether the products are suitable for you. Target Market Determinations are available on the provider’s website.
AGR Technology may receive a commission on sales generated by partner links on this page, but this has no influence on our opinions or evaluations and is completely free of charge to you. While we make every attempt to keep our content up-to-date this should not be taken as financial advice, be sure to seek professional advice if required.
Factors considered when writing this article:
We set criteria for picking loan platforms to analyse, such as reputation, services offered, user base, regulatory compliance, types of loans available and the years of operation along with browsing the respective websites to validate they have licences and compliance to operate in Australia, as well as other things like KYC protocols and contacting the companies.
Checked each platform for user-friendly design interfaces to ensure platforms are straightforward for beginners and more experienced customers to grasp. We obtained information about each company by visiting their separate websites, signing up for an account, reading user reviews, and looking for recent news or events related to the platforms.
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Source(s) cited / Bibliography:
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[Online]. Available at: https://www.scotpac.com.au/ (Accessed: 2 February 2024).
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https://www.scotpac.com.au/blog/frequently-asked-questions-about-business-finance/. Accessed February 3, 2024.
“Crunchbase – Prospa” Accessed February 3, 2024. https://www.crunchbase.com/organization/prospa.
[Online]. Available at: https://www.prospa.com/loc-faqs (Accessed: 3 February 2024).
“OnDeck’s credit scoring innovation ‘KOALA’ gives SMEs more access to credit” Australian FinTech, 27 Apr. 2021, australianfintech.com.au/ondecks-credit-scoring-innovation-koala-gives-smes-more-access-to-credit/. Accessed 3 Feb. 2024.
“Crunchbase.com” www.crunchbase.com/organization/max-funding. Accessed 3 Feb. 2024.
“Frequently Asked Question” Max Funding, www.maxfunding.com.au/faqs.html. Accessed 3 Feb. 2024.
What is a Business Line of Credit?, Xero AU https://www.xero.com/au/guides/business-line-of-credit/.
“Find out more about invoice financing”, [Online]. Available: https://www.commbank.com.au/articles/business/invoice-financing-explained.html. [Accessed: 3-Feb.-2024].
Alessio Rigoli is the founder of AGR Technology and got his start working in the IT space originally in Education and then in the private sector helping businesses in various industries. Alessio maintains the blog and is interested in a number of different topics emerging and current such as Digital marketing, Software development, Cryptocurrency/Blockchain, Cyber security, Linux and more.
Alessio Rigoli, AGR Technology