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All about business loans


Everything you need to know for your small to medium-sized business.

Whether you’re writing a business plan for a start-up, or looking to grow your current enterprise, you may need a business loan at some stage. And if you’re running a business that needs to finance equipment, premises, or a business vehicle, you’re going to quickly notice some key differences to getting a personal loan. Responsible lenders will ask for important business information to assess your application.


The information you’re asked for when applying for finance could vary across lenders, based on their requirements and your personal circumstances. But small-business owners, sole traders, and medium-sized enterprises will likely need to provide information about your:

  • Credit history
  • Ability to repay a loan
  • Business’s financial position
  • Potential terms of a loan.

Before you apply for a business loan, you may want to use a checklist to help your application progress with minimal delays caused by missing paperwork.

It may be worth bearing in mind the Five C’s of Credit, as you prepare any application. Think of them as common principles to how lenders may assess loan applications. The Five C’s indicate that most lenders look at:

  • Conditions – includes details such as the interest rate, amount and repayment term
  • Collateral – other assets that can be repossessed if you are unable to meet repayments
  • Cash flow – your sources of income and financial position
  • Character – based mostly on your credit history to determine how you are likely to handle credit in the future
  • Capital – your own money or financial assets that could be used to invest in the business

Interest rates

Although interest rates are not the only thing you should base your decision on when choosing a loan, they are a significant factor to be considered in respect to your cash flow and budgeting for your repayments.

What is interest? Interest is calculated as a percentage of the principal loan amount and is the additional money you pay to the lender. While it would be great for simplicity if financial institutions could offer a flat business interest rate across the board for everyone, similar to a home loan rate, different businesses come with different risks. Certain information and risks need to be considered before an indicative interest rate can be provided.

A business in a relatively low risk industry with extensive management experience supported by a strong financial position, up to date data and secured by cash or residential property will generally be able to attain a more competitive rate. On the other hand, a start-up business with lack of financial data, little or no experience or specialised industrial premises offered as security, will be considered a higher risk, which will generally attract a higher interest rate.

Once all of the required information is available, lenders will be able to provide an indicative interest rate that is considered relative to the industry that you are in, the financial information supplied, credit history, your overall time and experience in business and the type of security you provide for the loan.

You are welcome to chat with one of our experienced local Business Relationship Managers who can discuss rates and any other questions you may have in greater detail.

This article is intended to provide general information of an educational nature only. It does not have regard to your objectives, financial situation or needs and must not be relied upon as financial product advice. Before you act on this information, you should consider whether it is appropriate for your circumstances. Information in this article is current as at the date of publication. Applications subject to credit approval and fees and charges are payable. Terms and conditions apply and are available on request.

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