How does a small business loan work?

How does a small business loan work?

Published on 2021-12-14

Category: Small Business Finance, Small Business Owners

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Small businesses are agile and constantly looking to grow. As such, they are also in constant need of funds – either for stocks, hiring new manpower, renovation or expanding their business into new markets. Since all these actions require huge capital investment, small businesses look up to banks or other financial lenders for access to funds. Banks often ask for a collateral or personal guarantee to disburse loans to businesses, unless the business is fairly large and has a steady turnover for a few years. In most cases, small businesses do not have the revenue requirements set forth by large banks.

So how does a small business loan work?

A small business loan is given to small businesses who are looking to secure quick funds to meet their immediate business needs. There are various types of small business loans available from multiple non-bank lenders in the market. The most popular type of small business loan is an unsecured business loan. In this type of loan, a small business which has been in business for over 6 months is eligible to receive funds from $5,000 to $500,000 based on their average monthly business turnover. The funds are often available on the same or next day and there is no need for any collateral or security against these funds.

In order to secure a small business loan, you can approach a lender or a business loan broker like Capital Boost by providing some basic information about your requirement and your contact details. Once you do this, a lending specialist will get in touch with you to understand your requirement and help you with the application process.

What are the documents required for a small business loan?

Typically, you need to provide a copy of your driving license and last 6 months bank statement for the lenders to ascertain the loan eligibility for your business. Once that is done, a credit check is done with prior approval from you before the loan is approved or rejected. At times, the lenders might need some other documents related to your business like your ATO documents which they will request you to submit. The entire process is online and seamless. Once the loan is approved, you will have the funds in your account in a matter of a few hours.

What can I use a small business loan for?

Typically, small business loans are used to buy stock or new equipment, hire additional staff during peak seasons, renovate office spaces or retail outlets, marketing efforts to boost business or simply for cash flow purposes. Since these loans are available quickly without any collateral or security, most business owners prefer these loans. There is usually no restriction on how you can use a business loan, but it is important that you have a clear business plan in place before you apply for one. This will help you use the funds effectively to grow your business and manage your repayments too.

Small business loans work well for businesses that are looking for quick funds to manage their cashflow or other critical business spends. Since most large banks will demand a collateral or security for a loan, small business owners often prefer loans from non-bank lenders to meet their funding requirements.

At Capital Boost, we help small business owners with multiple loan options they can choose from to ensure they get the best loans on the right terms. We are tied up with most of the leading lenders in Australia viz.,Prospa, Capify, Moula, Lumi, OnDeck, GetCapital, and many more. Our experience in this industry for over 5 years helps us match your requirement with the right lender and secure the loan on the best possible terms. Fill in our application form if you are looking for a loan and our lending specialist will get back to you soon.


Tags: Small business loan, Small business loan process, How small business loan work?, Business loans, Multiple business loan options, Secure a loan, Get loan Approved, Business loan approvals

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