How to obtain and repay a small business loan
Looking to give your business a boost or cover essential expenses? Whether you're expanding, buying a work vehicle, purchasing stock, paying suppliers, or managing cash flow - a small business loan is the go-to solution!
Don't worry; you're not alone - every successful business needs a financial helping hand from time to time. And while there are many options to obtain money for business finance, a small business loan could be your best option.
Obtaining and repaying a small business loan is simple with these easy steps.
Gather your supporting documentation
Before you start looking for a lender, make sure you have your supporting information ready. While this may differ from one lender to another, you should expect to be asked to provide the following documents when applying for a small business loan:
- Proof of identification (such as your driver’s license, passport, or any government-issued ID).
- Bank statements
- Your Australian Business Number (ABN) or Australian Company Number (ACN)
- Proof of income / financial statements
- Financial projections
- Proof of citizenship
Find a suitable lender
Once you’ve collected your documents, it’s time to find the lender who will best fit your business needs and your capacity to repay your loan. It’s important to do your due diligence by researching various lenders, what they offer, and what their terms are. If it’s your first time applying for a business loan, make sure you read the reviews that have been posted about them, as well as any positive or negative publicity that might be out there.
Understand the fees and charges
It's important to check what fees, charges and interest apply to a business loan. Some lenders may charge you for application fees, account-keeping fees, early repayment fees, exit fees, break fees, etc. All fees and charges should be clearly stated in the lender's loan documentation.
Apply online
Once everything is ready and you have identified the lender that best suits your needs for business finance, you can now head to their website and apply online. The application process should be easy and straightforward. Make sure to fill out the online form completely and accurately, then submit and wait for approval. If you have supplied all of the required documents and you have a good credit rating, this should occur within 48 hours.
Tips to pay off your loan
Your loan was approved – well done! Now, you have to prepare for some regular repayments. Here’s how:
>> Maintain a healthy cash flow
That finance should be helping your business, and increasing sales is usually pretty high on the priority list for most business owners. If you’ve used that funding to bring some extra cash into your business, make sure you keep an eye on your bank account to ensure the funds are available to meet your repayment schedule. While you’re at it, check your invoicing process, and your payment terms. The quicker you can issue your invoices for the goods or services you provided, and the shorter your payment terms, the faster you’ll get paid.
>> Pay more when you can
“Strike while the iron is hot” is an expression that’s very relevant to making your loan repayments. When business is booming and revenue is looking good, try to make some additional repayments towards your small business loan (if the loan terms and conditions allow it). It will reduce the amount you need to pay over the term of the loan, and enable you to pay the loan off faster.
>> Top up a little
Even if you can’t make any additional payments, you can always add a little extra each month to your loan repayments. If you can stretch to it, round up your repayments to the nearest thousand (or hundred if that’s a bridge too far) and watch your loan balance start to evaporate.
>> Reduce your expenses
One way to leave some extra cash in your bank account each month is to reduce your regular business expenses. From your mortgage and insurance to your mobile phone plan and electricity provider, it’s always a good idea to shop around regularly for a better deal. Sometimes you’ll even get a price reduction if you just call your provider and ask them if there is a better option.
Enjoy your small business
Congratulations on making it this far! Obtaining a small business loan is simpler than it seems when you have the know-how – and repaying it becomes effortless with good cash management. If you need a flexible lender to finance your small business, we’re here to help. Check out our business loans to $10,000 to find out how quick and easy it is to access extra funds. Once a loan is approved, the cash is usually deposited into your bank account within a few hours – so you could give your business a boost in next to no time!