Small Business Loans for Sole Traders

Small Business Loans for Sole Traders

Published on 2022-07-26

Category: Small Business Owners, Small Business Finance

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Grow Faster with Instant Small Business Loans for Sole Traders


Roughly 50% of all small businesses in Australia are sole traders. Being self-employed, it is easy to run into cash flow problems - especially if invoices are delayed or when business is generally slow. There are multiple small business loans for sole traders available. However, not every provider might be willing to offer terms that may suit the needs of your business. How can you be sure you’re making the right choice? Let’s find out.

The challenges of getting small business loans for sole traders:

Sole traders are personally responsible for any business debts they owe.So, they are not required to maintain books of accounts. However, some traditional lenders will ask for bank statements and financial statements for approving small business loans for sole traders. If you have bad credit, you may also have to provide collateral. That said, there are alternative lenders with flexible requirements. If you need a loan of $150,000 or less, you may be able to apply without providing any collateral or security.

How to decide which loan to take?

Interest rates and features are two of the top factors that sole traders look for when applying for small business loans:

Interest rates:

Business loans typically have interest rates compared to other forms of financing. However, it is important to check if the lender is calculating interest on a weekly, bi-weekly or monthly basis. This can have a major bearing on your monthly repayments and ultimately your business cash flow.

Loan approval time:

The best lenders in Australia process and approve small business loan applications in less than 24 hours leading upto a couple of days. The application process is only 10-15 minutes. This can be crucial if you need immediate funds.

Early Repayments:

Does the lender allow you to repay more than the amount due? If yes, you could save a sizeable amount in interest.

Customised repayment period:

Non-bank lenders are known to offer customised repayment schedules based on the cash flow of your business. For example, you  may be given grace periods provided you make up the difference in due course.

Fees and Charges:

In addition to the turnaround time and interest rate, a small business loan typically also comes with for extra costs:

  • Application fees: 

Most lenders will charge a one-time, non-refundable application fee upfront. These fees may either be fixed or charged as a percentage of the loan amount.

  • Service fees:

Depending on the type of loan, service fees may be payable at fixed intervals throughout the repayment period.

  • Early payment fees:

Some lenders charge a fee for paying off your loan ahead of schedule.

  • Bounced payment fees:

A penalty may be charged every time a repayment is declined due to insufficient funds

  • Late payment fees:

Typically, there’s also a penalty for late payments.


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