According to the Australian Bureau of Statistics, new businesses borrowed $346.9 million in 2018, with 22% of that being Small-Medium Enterprises (SMEs).
The most common reason for the loans is for working capital, paying salaries and bills. Expansion, paying off other debt, and buying stock or equipment were the other major reasons.
What is a business loan?
A business loan is an agreement between a business owner and a bank or private lender where money is received for future repayment of the principal with interest. Business loans are specifically intended for business purposes.
What do you need to apply for a business loan?
As a small business owner applying for a loan, you have several places you can look at when seeking a small business loan. Online lenders, banks, peer-to-peer lending sites, and lenders backed by the SBA are just a few of the types of lenders that provide loans.
When you apply for any type of loan, here is some of the documentation a bank or other lender may want to see:
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Information about how the loan will be used
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Business plan: A plan that describes all facets of your business
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Personal background and financial statement: While a lender will likely pull a business credit report, they may also take a look at a personal credit report if you have very little borrowing history.
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Loan application history
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Business financial statements which might include a profit and loss statement, balance sheet, and projected financial statements, for example.
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Income tax returns
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Resumes: A loan application will include a professional resume as a way to give the lender context for the experience you have in the industry you are operating your business in.
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Legal documents: These might include documents like a business certificate or license, commercial leases, and contracts you may have with third parties, for example.
By Lucy Ng, SBC Writer
