How to get a business loan comes down to four things lenders check: how long your business has been trading, what your financials show, your credit history, and whether you can offer security. Most banks want at least two years of trading and full financials. Specialist lenders can work with six to twelve months of trading, often using bank statements instead.
The right loan depends on what the money is for. Buying equipment, covering a cash flow gap, and expanding into new premises each suit a different structure and a different type of lender. This guide covers what lenders look for, the documents you’ll need, the main loan types, and the steps from enquiry to funds.
Key points
- Most banks want two years of trading history and full financials. Specialist and non-bank lenders often accept six to twelve months.
- Secured loans use an asset, such as property or equipment, to back the loan. Unsecured loans make up less than 5% of small business credit in Australia, according to the Reserve Bank.
- Unsecured business loans almost always need a personal guarantee from the business owner or directors.
- The RBA reports that around one in five small and medium businesses has had trouble getting finance.
- Business loans used mainly for business purposes generally sit outside the consumer protections that apply to home loans.
What is a business loan?
A business loan is finance borrowed to fund a business purpose, such as buying equipment, managing cash flow, purchasing stock, or expanding. It’s repaid over an agreed term, usually with regular repayments. The loan can be secured against an asset or unsecured, depending on the lender and the amount.
Business loans cover a wide range of products. A $20,000 line of credit for a café’s quiet months and a $500,000 term loan to buy out a business partner are both business loans, but they’re assessed very differently. The loan’s purpose, size, and security decide which lenders will consider it.
What do lenders look for before approving a business loan?
Lenders look at your trading history, revenue and profit, credit history, existing debts, and any security you can offer. Together, these tell the lender whether your business can afford the repayments and what happens if it can’t.
Here’s what each one means in practice:
- Trading history. How long your ABN has been active and the business has been operating. Banks typically want two years. Specialist lenders may accept six to twelve months.
- Revenue and cash flow. Lenders check whether your income can cover the repayments, usually through financial statements or business bank statements.
- Profitability. A business with strong turnover but thin profit can still struggle to borrow. Lenders look at what’s left after costs.
- Credit history. Both your business credit file and your personal credit file. Defaults, overdue tax debts, or a pattern of late payments weigh heavily.
- Existing debts. Other business loans, leases, credit cards, and ATO payment plans all count against your capacity to borrow.
- Security. An asset the lender can claim if the loan isn’t repaid. This can be property, equipment, vehicles, or in some cases the business’s own assets.
GST registration also matters to many lenders, because it usually indicates the business turns over at least $75,000 a year. Some lenders treat it as a minimum requirement for larger loans.
“The first thing I look at is how the business actually runs, before I look at any lender,” says Rajeev Vij, founder and broker at LendWise. “A tradie with twelve months of steady bank statements and a café owner with two years of up-and-down months are both borrowable. They just suit completely different lenders.”
What documents do you need to apply for a business loan?
The documents depend on whether you apply with full documentation or low documentation. Full doc applications give lenders the complete picture and usually open up the widest choice of lenders. Low doc applications rely on fewer documents and suit self-employed borrowers whose tax returns are behind or don’t reflect current income.
Full doc business loan documents
- Two years of business tax returns and financial statements (profit and loss, balance sheet)
- Two years of personal tax returns for owners or directors
- Recent business bank statements, usually three to six months
- Recent BAS statements
- Details of existing debts and leases
- ID for all owners, directors, and guarantors
- Company or trust documents, if relevant
Low doc business loan documents
- Six to twelve months of business bank statements
- Recent BAS statements
- An accountant’s letter or declaration of income, with some lenders
- ID and ABN details
Low doc loans usually come with stricter terms, such as a lower maximum loan amount or more security required, because the lender has less information to work with.
| Full doc | Low doc | |
| Main evidence of income | Tax returns and financial statements | Bank statements and BAS |
| Typical trading history | Two years or more | Often six to twelve months |
| Lender choice | Widest, including major banks | Mainly specialist and non-bank lenders |
| Loan terms | Generally more favourable | Generally stricter |
Secured vs unsecured: which business loan should you choose?
A secured business loan uses an asset, such as property, equipment, or a vehicle, as backing for the loan. An unsecured loan has no specific asset attached. Secured loans generally allow larger amounts and longer terms. Unsecured loans are faster to arrange but usually smaller, shorter, and more expensive.
Unsecured lending is a small part of the market. The Reserve Bank’s October 2025 Bulletin found that unsecured loans have stayed below 5% of small and medium business credit in recent years. About half of smaller business loans are secured by assets other than residential property, like vehicles and equipment. The rest are secured by residential property, which often means the owner’s home.
That last point deserves attention. Using your home as security can unlock a larger loan or better terms, but it puts the home on the line if the business can’t repay.
“Unsecured doesn’t mean nothing is at risk,” says Rajeev Vij. “Almost every unsecured business loan I see needs a personal guarantee from the owner. If the business can’t pay, the lender can come to you personally. I make sure every client understands that before they sign.”
What types of business loans are there?
The main types of business loans are term loans, lines of credit, overdrafts, equipment finance, and invoice finance. Each suits a different purpose, so matching the loan type to what the money is for matters as much as finding a lender.
- Term loans provide a lump sum repaid over a fixed period. They suit one-off costs like a fit-out, an expansion, or buying a business.
- Business lines of credit let you draw funds up to a limit and repay as you go. They suit ongoing cash flow needs, such as seasonal dips or paying suppliers before customers pay you.
- Business overdrafts attach to your transaction account and cover short-term gaps.
- Equipment finance funds vehicles, machinery, and tools, with the equipment itself usually acting as security.
- Invoice finance advances money against unpaid customer invoices, so you’re not waiting 30 to 90 days to get paid.
If the goal is to buy the premises your business trades from, that’s a different product again. A commercial property loan has its own deposit, LVR, and lease rules, and it’s assessed differently from working capital finance.
How do you get a business loan, step by step?
Getting a business loan usually follows five steps: work out what the money is for, check your eligibility, prepare your documents, choose the right lender, and apply. Doing the first three before you approach a lender saves time and avoids unnecessary credit enquiries.
- Define the purpose and amount. Lenders want a clear reason and a realistic figure. “Working capital” is vague. “A $60,000 van and fit-out to take on a second crew” is clear.
- Check where you stand. Review your trading history, recent profit, credit files, and existing debts. Fix anything you can, such as overdue BAS lodgements or an unpaid tax debt.
- Get your documents ready. Decide whether you’re applying full doc or low doc, then gather the paperwork listed above.
- Choose the right lender for the deal. Banks, specialist lenders, and non-bank lenders all have different appetites. The RBA notes that non-bank lenders’ share of small business lending has grown strongly since 2022, particularly for smaller loans.
- Apply and respond to questions. Expect follow-up questions about your financials or the loan’s purpose. Answering them clearly and quickly keeps the application moving.
Submitting applications to several lenders at once is worth avoiding. Each one can create an enquiry on your credit file, and a cluster of enquiries can make the next lender more cautious.
Are business loans regulated like personal loans and home loans?
Generally, no. Under the National Consumer Credit Protection Act 2009, the National Credit Code applies to credit used wholly or predominantly for personal, domestic, or household purposes. A loan used mainly for business purposes generally falls outside it.
In practice, the responsible lending checks that apply to a home loan or personal loan usually don’t apply to a business loan. Lenders often ask you to sign a business purpose declaration confirming how the money will be used. That declaration needs to be accurate, because a loan that’s really for personal use shouldn’t be treated as a business loan.
None of this makes business loans unsafe. It does mean the contract terms, fees, default clauses, and any personal guarantee deserve a careful read before you sign, ideally with your accountant or solicitor.
A business loan broker in Sydney can compare bank and specialist lenders, explain the terms of each option, and point out the conditions that matter for your situation.
Frequently asked questions
How long does a business loan take to get approved?
It depends on the loan and the lender. Smaller unsecured loans from specialist lenders can move quickly when the documents are complete. Larger secured loans, especially those involving property, take longer because they need valuations and more detailed assessment. Having your documents ready before you apply is the most reliable way to avoid delays.
Can I get a business loan for a new business?
Yes, though options are narrower. Most banks want two years of trading history, so new businesses usually rely on specialist lenders, equipment finance where the asset is the security, or loans secured against property. A clear business plan and the owner’s own financial position carry more weight when trading history is short.
Can I get a business loan with bad credit?
It’s possible, but it limits your options. Some specialist lenders consider applicants with past credit issues, usually with more security, a smaller loan amount, or higher costs. The reason behind the credit issue matters, and so does what’s happened since. Lenders look more favourably on a past problem that’s been resolved than on one that’s ongoing.
Do I need a deposit for a business loan?
Not always. Many business loans don’t need a deposit in the way a home loan does. Equipment finance can sometimes cover the full cost of the equipment. Larger loans, or loans to buy a business or property, often need a contribution from the borrower or additional security.
Is a business loan better than a personal loan for my business?
Usually, yes, if the money is genuinely for the business. Business loans are designed around business cash flow and can be structured with security, terms, and repayment options that suit how a business earns. Using a personal loan for business purposes can also complicate your tax position, so check with your accountant.
Do sole traders qualify for business loans?
Yes. Sole traders can apply for business loans using their ABN, though lenders assess the owner’s personal finances closely because the business and the person aren’t legally separate. Low doc options can suit sole traders whose tax returns don’t yet reflect their current income.
Conclusion
Getting a business loan is mostly about preparation and fit. Lenders want to see a clear purpose, a business that can carry the repayments, and documents that back it up. Matching your situation to the right loan type and the right lender matters as much as the application itself. LendWise compares business loans across bank and specialist lenders, so you can see which ones suit how your business actually runs. Get in touch to talk through what you need the funds for.