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Business Financing in Australia

If you already have a business open in Australia, you may need financing. One of the biggest mistakes business owners make is waiting until they’re desperate before taking out finance. Whilst it can be a great backup for those that run into cash flow problems, finance should be seen as a bigger resource than that. It’s something to be proactive about, not reactive. So, let’s dive into small business financing explained from top to bottom.

When do I take out debt? And how much of it?

Small business loans can be a double-edged sword. You take it out in order to ease cash flow, for example, and you end up with higher monthly outgoings. The timing is important because you have to pick a moment in which the financing can be leveraged for growth. This might mean taking out a loan in the “hot” season of the business, or it may mean getting startup capital from early on.

Of course, too early, and it could spell disaster too. It’s difficult to pinpoint the exact moment when it’s the right time to take out a loan because planning can never be perfect. However, it’s certain that businesses that are more proactive in their planning are much more likely to choose the right time for a loan.

The more reactionary the decision to get financing, the more of a roll at the dice it is. Instead, the money should be purposeful and for very specific reasons. For example, during the beginning of the COVID-19 crisis, a restaurant is looking at rough times ahead. Those that waited, waited, and waited, will be left trying to grab whichever funds they can to stay afloat when cash flow becomes a problem. However, a more visionary and proactive approach may have been to plan a shift in business that would accommodate the times we’re living in. For example, before things got too dry, they may have taken a loan to branch out into a takeaway service or create an online cooking course. You don’t have to be able to predict the future (though it would help); you need to have a plan with specific expectations, goals, strategy and requirements.

The next big decision is “how much to borrow?”. Again, the more proactive borrowers will likely borrow less because they don’t have their backs up against the wall. This isn’t to say it’s a game of borrowing as little as you can get away with — it’s a matter of planning what you need to complete your operation, estimating the returns and cash flow, and factoring in repayments.

In spite of everything written above, borrowing money in a time of desperate need is still a valid option. Of course, staying solvent is the number one goal. Just make sure there’s an expectation to be able to repay the money. Because when you’re in check-mate and with nowhere to go, taking out more debt is futile and only adds more flames to the crash.

The Australian banking system

To put it conservatively, the Australian banking system is not a friend of the small Australian business. This can be evident even when opening a business account in Australia.

Banks aren’t interested in the growth or returns of a business because they have no stake in it, of course. The only thing that concerns them is the risk. Fair enough, it’s their money, after all. But what is frustrating is that they’re so limiting. To lend to a slightly higher-risk borrower is simple, charge them slightly more. A simplified expected return formula will prove the logic of this.

But no, unless you’re a reputable, established business with good cash flow and a clean credit track record, you’re likely not getting approved for a bank loan. Banks in Australia are like this for various reasons. With extremely high revenues, yet a whole bunch of extensive regulation, banks see it as less worth their time to spend hours assessing small loan applications. The returns on them will pale in comparison to the large business loans, so one way to focus on that is to have a higher application standard.

It’s also a case of banks being low risk by nature and small businesses lacking collateral. With small, unstable cash flows and no collateral, they don’t see the small loans worthy of the 2-month application process, including meetings and analysing business plans.

Alternative for SMEs in Australia: Small Business Lenders

As stated above, there is an economic incentive to loan small businesses money. Fortunately, there has been a booming industry in the past few years that are geared directly toward fulfilling his need for small Australian businesses: Small Business Lenders.

The thing with small business finance in Australia is that it’s not worth the time for traditional banking approaches to risk assessment. However, small business lenders encapsulate the true alternative spirit by using technology and automation to fix this issue.

In fact, technology and automation are at the core of small business lenders in every aspect. Instead of having meetings and waiting a month for approval and another week for funds, you receive instantaneous decisions. Approval is often granted within an hour, but certainly within a day, and the same goes for funding.

Interest rates are proportionate to your added risk, but this means you’re not entirely ruled out because of a checkered credit past. The merits of the current business carry the most weight.

Online lender reviews

Here are some mini-reviews of the 5 best online lenders for small business loans in Australia:

  1. Prospa

    Prospa logo
    • Funding — $5,000 to $300,000
    • 1 – 2 days for a response to an application
    • Unsecured business loans are available
    • 9/5 on Trustpilot

    Prospa is one of the market leaders in the small lender space. This is reflected by their super positive customer reviews, which are near perfect on Trustpilot. The loans themselves have an unsecured option, which isn’t always easy to find for smaller companies, and are between 3 and 24 months in loan term. As for the interest rates — they’re somewhat competitive. You’re looking at between ~10% and ~27% for a small business loan and perhaps a little bit more for a line of credit. In most cases, funds arrive within the same day as you apply.

  2. Capify

    Capify logo
    • Funding — $5,000 to $300,000
    • Fewest documents required
    • Unsecured business loans are available
    • 7/5 on Trustpilot Australia

    Capify is another big hitter, with lots of rewards and some pretty positive customer reviews. Capify is great in that they ask for fewer documents than most of their competitors. They’re not suitable for very young startups, as 6 months of trading is required, but they don’t rule out all bad credit customers. A limitation with Capify, other than the $300,000 max loan amount like Prospa, is that repayments are either daily or weekly. The loans are between 3 and 15 months in loan term, which is another limitation. This can be troubling for cash flow, with no option for monthly repayments. Overall though, Capitfy is an extremely reputable and competitive choice.

  3. OnDeck

    OnDeck logo
    • Funding — $5,000 to $250,000
    • Funding in as little as 3 hours
    • Unsecured business loans are available
    • 8/5 on Trustpilot

    OnDeck was founded in 2007, so it’s a long-time for this new industry. They’ve not been in Australia for long, but they’ve certainly made an impact. OnDeck’s reviews are extremely positive, and they’re relatively cheap in fees compared to others. The loans are between 6 and 24 months in loan term. They are somewhat limiting, though, because not only is $250,000 the maximum you can borrow, but you also have to have both a decent credit rating and to be in business for a minimum of 12 months. There are, however, unsecured loans available though, as well as being flexible on repayments.

  4. GetCapital

    GetCapital logo
    • Funding — $5,000 to $500,000
    • Other products available: Lines of credit, business overdraft
    • Unsecured business loans are available
    • 9/5 on Trustpilot

    GetCapital is a straightforward, easy-to-use lending platform that offers short-term loans for up to 2 years. Client reviews are near-perfect, which is reflected in their great website and emphasis on customer service. The loan amounts are quite versatile, and they offer other products such as lines of credit and a business overdraft. With unsecured business loans also on offer, GetCapital shapes up as one of the best platforms out there. You need to have a $100,000 annual turnover as well as to have been trading for 9 months in order to be accepted.

  5. Max Funding

    Max Funding logo
    • Funding — $5,000 to $1,000,000
    • Accepting of startups
    • Unsecured business loans are available
    • 6/5 on Trustpilot

    Max Funding is a tiny, relatively unknown lending platform. You wouldn’t have thought it through, seeing as their loan amounts are between $5,000 and 1 million. Not only this, but funding arrives on the same day too. Unsecured loans are available, though these are capped at $300,000. It isn’t easy to gauge customer experiences because there aren’t many reviews to go from. So, although the product on offer seems extremely impressive, you may want to be wary of their limited credibility.


Online lenders have come to fill a much-needed desire for small businesses: a chance to ease cash flow or facilitate growth quickly and forgivingly. Of course, interest rates are higher as a result of this, but some companies have a lot of promise despite the owner’s less-than-perfect credit past. An alternative to bank loans was needed for a long time. As the Australian economy depends very much on small businesses, small business lenders will soon be getting praise for helping keep companies solvent under challenging times.

If you’re a dual citizen or considering becoming one, it’s also worth understanding the financial implications of dual citizenship in Australia, as this could impact your financing options.