How to Get a Business Loan in Australia: Step-by-Step Guide

Whether you need capital to launch a new venture, purchase equipment, hire staff, manage cash flow or fund growth, a business loan can provide the financial fuel your business needs. But navigating the application process can be daunting, especially if you have not borrowed before. This guide walks you through everything from eligibility and documentation to choosing the right loan type and maximising your chances of approval.

Step 1: Check Your Eligibility

Before investing time in an application, make sure you meet the basic eligibility criteria that most lenders require:

• ABN registration: Most lenders require your Australian Business Number to have been registered for at least 12 months. Some online lenders accept 6 months for smaller loans.
• Trading history: Banks typically require 2+ years. Non-bank lenders may accept 12-18 months. Some fintech lenders work with businesses as young as 6 months.
• Minimum revenue: This varies widely. Banks often require $100,000+ in annual turnover. Online lenders may accept $50,000+. The minimum usually increases with the loan amount requested.
• GST registration: While not always mandatory, being GST-registered signals a level of business maturity and makes verifying turnover easier for the lender.
• Clean credit history: For the business directors/owners personally. Most lenders require no current bankruptcies and no recent defaults (within 2-5 years, depending on the lender).
• Australian residency: Business owners typically need to be Australian citizens or permanent residents. Some lenders also accept temporary visa holders with specific visa types.

Step 2: Choose the Right Loan Type

Australian businesses can access several types of finance. The right choice depends on what you need the money for, how quickly you need it and how you plan to repay it.

Term Loan

A lump sum borrowed over a fixed period (1-7 years) with regular repayments. Best for one-off purchases, expansion projects or acquisitions. Can be secured or unsecured. Rates range from 5% to 25% p.a. depending on security, loan size and risk profile.

Business Overdraft / Line of Credit

A pre-approved credit limit you can draw on as needed. You only pay interest on the amount drawn, not the full limit. Best for managing cash flow fluctuations, covering short-term expenses or bridging gaps between invoicing and payment. Typically requires property security for larger limits.

Equipment Finance

Purpose-built finance for purchasing business equipment, vehicles or machinery. The asset itself serves as security, so approval is often easier than for an unsecured loan. Structures include chattel mortgage, hire purchase and leasing. Rates are typically competitive (from 5-10% p.a.) because of the security.

Invoice Finance

Unlocks cash tied up in unpaid invoices. The lender advances 80-90% of the invoice value immediately, then collects from your customer and releases the remainder (minus fees). Best for businesses with long payment terms (30-90 days) that need cash flow now. Fees are typically 1-3% of the invoice value.

Unsecured Business Loan

Borrowed without specific collateral, though a director's personal guarantee is almost always required. Faster approval (24-48 hours with online lenders) and less documentation, but higher rates (typically 8-25% p.a.) and lower limits ($5,000-$500,000). Best for short-term needs where speed is a priority.

Step 3: Prepare Your Documentation

Having your documentation organised before you apply dramatically speeds up the process and improves your approval chances. The exact requirements vary by lender type:

For Bank and Traditional Lenders

• Last 2 years of business financial statements (profit and loss, balance sheet)
• Last 2 years of business and personal tax returns
• Last 2 ATO Notice of Assessments
• 6 months of business bank statements
• ATO portal printout showing no outstanding tax debts
• ABN/ACN registration details
• Director ID verification
• Business plan (for newer businesses or larger loans)
• Details of any existing business debts

For Online and Fintech Lenders

• 6 months of business bank statements (often connected via automated bank feeds)
• ABN details
• Director/owner ID
• Basic business information (industry, turnover, purpose of funds)

Step 4: Apply and Negotiate

You can apply directly with a lender, or through a finance broker. A broker adds value by:

• Matching your business profile to the most suitable lender(s) from their panel
• Packaging your application to present your business in the best light
• Negotiating rates and terms on your behalf
• Managing the process and documentation so you can focus on running your business
• Providing access to lenders that do not deal directly with the public

Once you have applied, the lender will review your application, conduct a credit check, verify your documentation and may request additional information. Be responsive — delays in providing information are one of the most common reasons applications stall.

Step 5: Tips to Improve Your Approval Chances

1. Keep your tax affairs up to date: An ATO debt is one of the fastest ways to get declined. Lodge all BAS and tax returns on time, and clear any outstanding ATO debts before applying.
2. Maintain clean business bank accounts: Lenders scrutinise bank statements for signs of financial stress — dishonoured payments, overdrawn accounts and gambling transactions are red flags. Keep your accounts in order in the 6 months before applying.
3. Separate personal and business finances: Running personal expenses through your business account makes it harder for lenders to assess your business cash flow. Use separate accounts.
4. Demonstrate consistent revenue: Lenders want to see stable or growing income. If your revenue is seasonal, be prepared to explain the pattern and show it is normal for your industry.
5. Have a clear purpose: Lenders want to know what the money is for and how it will generate a return. "To grow the business" is vague. "To purchase a $80,000 CNC machine that will increase production capacity by 40%" is compelling.
6. Offer security if possible: Secured loans are easier to obtain and cheaper. If you have equipment, vehicles or property to offer as security, it will improve your chances and rate.
7. Do not over-borrow: Request what you need, not the maximum possible. A request that aligns with your cash flow and business plan is more likely to be approved.

Common Reasons for Decline

• ATO debts or overdue tax lodgements
• Insufficient trading history (less than 12 months)
• Personal credit issues (defaults, judgments, current bankruptcy)
• Inadequate cash flow to service the loan
• Dishonoured payments or overdrawn accounts on bank statements
• Unclear or unjustifiable loan purpose
• Too many recent credit enquiries