How to Get a Small Business Loan in Australia

If you want to start a business or to have funds for your venture, then learning how to get a small business loan in Australia might be the best option. Of course, this is easier said than done. You need to follow a process and consider a number of things before you get a loan. If this is your first time, then this article will serve as your guide. This should improve your chances of getting approved.

Consider How Much You Need For Your Business

Starting and keeping a business is exciting and liberating. However, it will require a decent amount of money to sustain your operations. If you want to apply for a loan, it is essential that you know how much you need. The cost will depend on the size of your business and the industry. But generally, you have to consider the following:

  • Equipment
  • Inventory
  • Permits and other licenses
  • Office supplies
  • Furniture for the office
  • Employee payroll
  • Taxes
  • Rent
  • Electric bills

The above is just a partial list and you might need more to identify how much you should ask for a loan for your small business in Australia.

Prepare a Detailed Business Plan

You need to create a detailed business plan for your small business. Financial institutions or lenders would like to see if your business will potentially grow or if you are capable to pay them back. This might take some time to finish but doing so will be worth it.

How Should You Write Your Small Business Plan to Get a Loan in Australia

When writing a business plan, you need to take into consideration the following:

Make it as short as possible

Yes, we want you to include the most important business details in the plan but remember that no one would read a 100-page proposal. Be succinct and direct to the point.

Choose the right words for your audience

We know that different industries have their own language and jargons. But if you are talking to a financial institution or lender, make sure to use appropriate words. Let them understand your proposal. Bear in mind that they don’t have the time to study every word.

What You Need to Include in Your Business Plan for a Small Loan in Australia?

Executive Summary

This is the part of your business proposal where you introduce your company. It gives an overview of what you do or provide to the market. You need to make it clear because it is the core of your entire business plan. If you are not clear with the your services or products, then how can you explain it to lenders or financial institutions? This is usually one or two pages long.

Opportunity

When writing your opportunity, it should cover the problem you see, your target market, and your competition.

Execution

This is where you include your methodology to run the business. It should talk about your marketing and sales plan. Ideally, you should clearly describe the operations and your measures for success.

Your Team

When creating a business plan, it is also important that you include your team, most especially the leadership. If you are still looking for more team members, you might want to include what exactly you are looking for.

Financial Plan

Usually, your financial plan includes your monthly sales projections for the first year. It must also cover your projections for the next three years. Other lenders will require five years but generally, three years should suffice.

You also need to cover the cost for paying your employees. You should not forget about the insurance and taxes that an employee incurs every month. Similarly, you have to provide your profit and loss statement. This is, of course, applicable if you already have a running business.

There are still more items which you need in your financial plan and creating it can be overwhelming. We suggest you ask help from professionals to see if you are on the right track.

Appendix

If there are images and other details which you think might help you with proposal, then add this to your appendix.

Register Your Small Business to Get a Loan in Australia

Another step that you should not miss if you want your loan to be granted is to register your business. You need to secure necessary permits and licenses to ensure that your business is legal.

Business Documents You Have to Prepare

You have to prepare necessary documents if you want to speed up the process of your small business loan application. It depends on the lender or financial institution but generally you need the following:

  • Bank statements
  • Income statements
  • Personal tax returns
  • Resume
  • Financial projections

Last Reminders When Getting a Small Business Loan in Australia

  • Your personal credit score is also important if you want to secure a loan for your business. If necessary, improve it first before asking for a loan.
  • Always review the entire cost or price of the loan. Check for the hidden charges and other costs.
  • Take note of your payment schedule and the actual interest rate.

If you are looking for more information on how you can get a small business loan in Australia, you can reach out to Materials Handling Finance Pty Ltd (MHF) to provide you with professional guidance.