- Having up-to-date financials, clear business plans, and understanding your loan needs improves your chances of approval and speeds up the process.
- Lenders consider trading history, cash flow, business potential, and collateral in addition to credit score, so even SMEs with minor credit bumps can access funding.
- Working with a broker like Valiant helps you compare lenders, avoid common pitfalls, and navigate the application process with confidence, saving time and reducing stress.
Running an SME often means juggling cash flow, growth plans, and unexpected expenses. And sometimes, a business loan is just the boost you need. However, the application process can feel overwhelming if you’re unsure where to start or what half the words in the application form mean.
Well, Valiant’s got you covered. Whether you’re a first-time borrower or looking to refinance, our article will give you the clarity and confidence to navigate business finance with ease.
What types of business loans can I apply for?
At Valiant, we can help you access the following types of business loans:
- Business term loans
- Business lines of credit
- Equipment finance
- Business car loans
- Invoice finance
- Business acquisition loans
- Secured term loans
- Trade finance
- Lease agreements
- Merchant cash advances
Choosing the right option for you will depend on how much funding you need and what for (like buying a new ute or expanding your operations to a second location), as well as your current financial situation and repayment capacity.
An experienced broker can help you compare lenders and loan products to find the best fit for your goals. At Valiant, we handle the whole process, from comparing options and gathering paperwork to managing the application and settlement. Easy as.
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Am I eligible for a business loan?
Eligibility for business loans in Australia usually depends on a few key factors:
- A trading history of 6-12 months minimum
- An ABN (GST registration isn’t mandatory but can help)
- A healthy credit score
- Up-to-date paperwork to show that your business is stable or growing and that your cash flow is strong enough to make repayments comfortably
Do I need a good credit score to get funding?
A strong credit score isn’t always a strict requirement. Yes, it can lead to easier approvals and give you access to better terms, too.
But many alternative lenders tailor to business with a few bumps in their credit, focusing on other factors like your cash flow, business potential, and collateral.
What do lenders look at before approving a loan?
When looking at your loan application, lenders want to make sure you’ll be able to repay it. They typically use the 5 C’s model and assess:
- Character: Lenders want to know if you have a solid track record of repaying debt, so they'll check previous and current lending history, as well as repayment patterns.
- Collateral: You may pledge an asset, like a vehicle or property, to work as collateral. This gives lenders peace of mind knowing that if you default on your loan, they have a way to recoup losses.
- Capital: Your access to cash and other resources is one of the main indicators of your ability to meet repayments.
- Capacity: This is your ability to repay a loan, which lenders measure by comparing your income against recurring debts, and calculating available funds and debt-to-income ratio.
- Conditions: This includes the purpose of the loan and market conditions (think economic climate and interest rates).
What documents do I need to apply for business finance?
Document requirements will vary from lender to lender, but generally, you can expect them to ask for:
- Personal identification (personal ID, proof of address)
- Business identification (ABN/ACN, certificate of incorporation)
- Business bank statements
- Profit & loss statements
- Balance sheets
- Cash flow statements
- Tax returns
- Business activity statements (BAS)
You may also need to present a business plan, details of existing debt, any long-term supplier/client contracts, and proof of collateral.
Do lenders ask for director’s guarantees?
Some lenders may ask for a director’s guarantee; a personal promise that if your business defaults on the loan, you will need to pay off the loan using your personal savings. This usually happens when the lender risk is higher—for example, when borrowing to a startup or a business with minimal assets, or when the loan amount is substantial.
How do I apply for a business loan?
- Determine your business needs. Based on this, decide what type of loan you’re going for and how much you need to borrow.
- Confirm you’re eligible. Before you jump into the application, make sure you meet the eligibility criteria.
- Check your credit. Have a look at your credit profile, check for any errors, and get them amended ASAP.
- Gather your financial statements. Make sure everything's ready and up to date.
- Compare lender options. Pay close attention to loan terms, interest rates, extra features, and hidden fees.
- Prepare and submit your application. Different lenders have different criteria, so make sure your paperwork is tailored to their requirements. Submit everything accurately to avoid delays.
- Inspect the loan terms. Review the loan agreement carefully to avoid surprises down the track.
- Formalise the agreement. Once you're happy with the terms, sign the agreement and receive the funds.
Can I apply for a loan online?
Yes! With Valiant, you can complete your business loan application online, quickly and securely. No need to visit a branch.
Can I apply by myself?
You can apply on your own, but consider whether you have the time and know-how to do it. Between deciphering lender jargon, preparing multiple applications, and following up with different lenders, DIY’ing your business finance can quickly become overwhelming.
Working with a broker, on the other hand, helps streamline the process and improves your chances of approval.
How long does the process take?
With Valiant, you can get funding in as little as 24 hours. If you choose to apply on your own, the process may take longer, since each lender has their own approval timelines.
What mistakes should I avoid?
Knowing common pitfalls to avoid can make the application process a lot smoother. Key mistakes to watch out for include:
- Submitting outdated, incomplete, or inconsistent documents
- Not providing all the information and paperwork the lender asked for
- Trying to hide existing debts or previous financial issues
- Not having a solid, well-thought out business plan
- Applying for the wrong business loan type and/or amount
- Applying for the first lender you find without comparing options
- Waiting until you’re desperate for cash and having to rush the process
- Not getting professional advice from a broker or accountant
What if my business loan application gets rejected?
Business loan applications may get declined for several reasons, including limited trading history, poor credit score, low cash flow, and incomplete paperwork.
If that happens, your next step should be to work on weak areas. This means addressing whatever led the lender to say “no”—like building up your business credit score, improving your cash flow, or providing more up-to-date documents.
Can I reapply if I was declined before?
Yes, you can. Getting one “no” doesn’t mean you’ll never be able to get a loan, but some lenders ask for a 3-6 month waiting period before you can reapply.
Take this time to work on those weak areas and do more research on alternative lenders and/or loan types.
FAQs
Can I apply for multiple loans at once?
You can apply for multiple loans, but it’s not usually a good idea, especially within a short period. It can lead to multiple credit inquiries and, as a result, lower your credit score.
Plus, applying for several loans at once may make you appear desperate or financially unstable, which will raise red flags with lenders and reduce your chances of approval.
What fees should I look out for?
Common business loan fees include origination fees, break fees, late payment fees, banking fees, maintenance fees, settlement fees, and ‘third-party’ fees.
How much can I borrow?
Your borrowing power depends on factors like your revenue and cash flow, time in business, credit history, loan type and purpose, industry risk profile, existing debt, and collateral.
What happens if my financial situation changes during the loan?
If your financial situation changes, it’s important you speak to your lender as soon as possible, especially if your repayment ability has been affected. They may be able to adjust repayment terms or provide temporary relief solutions.
