A Guide to Start-up Business Loans from Private Lenders

On 24 Oct., 2021

Ashley had recently launched her business, a start-up that developed quirky apps for business clients.

A Guide to Start-up Business Loans from Private Lenders

Ashley had recently launched her business, a start-up that developed quirky apps for business clients. But the initial hurdle that she was facing, as any business venture usually does, is funding. She was strapped for cash and capital. So, she reached out to the banks with her meticulous business plan and projections to apply for a start-up business loan

But nothing panned out; the conventional ways of getting a loan from traditional financial institutions was not working for her business to bridge the cash-flow gap. On the verge of almost giving up, something came to her mind; “why not get quick business loans from private lenders through a reliable finance broker in Australia?”

Types of Loans Considered Suitable for Start-ups

Unlike established enterprises, start-ups are new businesses that typically lack experience, fully developed infrastructure, business model, a customer base, and most importantly capital reserve for business development. That’s why they often require quick business loans to fill the gaps in the company finances. Ironically, the above-mentioned shortcomings are the very reasons cited by banks to deny the loans. It is precisely at such a juncture that a start-up can benefit by reaching out to private lenders for loans. 

So, what kind of loans can these businesses apply for?

  • Secured business loans
  • Unsecured business loans

Secured Business Loans

Extremely popular with start-ups and new businesses secured business loans are backed by collateral, usually in the form of real estate property. These are considered low-risk loans by lenders, which allow start-ups to acquire loan amounts with a flexible repayment term. 

Eligibility for Secured Loans

  • Asset as collateral.
  • Active ABN.
  • Trading history of 6 months (not mandatory for all business loan products).
  • Average income – up to $5000 per month (not mandatory for all business loan products).

Unsecured Business Loans

If a new business or start-up does not have collateral to back the loan, it can apply for an unsecured business loan. The lender assesses the business cash flow and credit score of the borrower. 

Eligibility for Unsecured Loans

  • Minimum operational tenure of 6 months.
  • Active ABN.
  • The minimum monthly average income of $5000.

How to Apply for the Start-up Business Loans

  • Contact a reliable finance broker in Australia.
  • Choose an option between secured and unsecured loans.
  • Check the eligibility (as mentioned above or consult with the finance broker).
  • Submission of loan application with other necessary documents. Secured business loans require ID proof, security details, exit strategy, and other essential documents. Unsecured loans generally just require an ID proof, bank statement for last 6 months. 

Once the loan application is submitted to the finance broker, he matches the loan requirement with a suitable private lender with flexible terms. Generally, it takes between 24-48 hours to get an approval after the customer submits all the documents.

Conclusion

Like Ashley, several other budding entrepreneurs in Australia aspiring to start their venture often get their plans stalled due to financial constraints. In that case, the way out is extending the options from traditional financial institutions like banks to private lenders. Nevertheless, instead of directly reaching out to a lender for start-up business loans, it’s wiser to go through a finance broker, because the latter can offer multiple loan options from a network of private lenders, diversifying the possibilities for the borrower.  

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