A step-by-step guide to getting a business loan

It might seem scary or stressful to apply for a business loan, but you’re not alone. In 2025, small and medium-sized businesses were driving close to 50% of all business lending across Australia, according to data from the Reserve Bank of Australia.

Need to grow your business, upgrade equipment, or expand? A business loan could be the solution. But just like any other type of loan, there are a few key steps you’ll need to take to bag a business loan successfully.

A guide to getting a business loan

Before you can start buying supplies or hiring new employees, you’ll need to secure your funds. Let’s go over the seven steps you should take before applying for a business loan.

1. Figure out your finances

Before you figure out how much you need to borrow, figure out your current financial situation, and from there, you can determine how much you are going to need for your business venture.

Make sure to have a clear picture of your finances. That includes income, expenses, profit and future projections - ideally by preparing a cashflow statement, which outlines the money coming into and going out of your business.

You should also be clear on the purpose of the loan, whether it’s to manage cash flow, fund growth, or purchase business vehicles or equipment.

You also need to take a look at your own personal finances. Most lenders will check your credit score and ask for business activity statements (BAS), which is an indication of your reliability as a borrower.

2. Determine how much you need to borrow

From here, work out exactly how much you need to borrow by breaking down all the costs tied to your plans. This may include upfront expenses, ongoing costs, and a buffer for unexpected spend, with the level of detail depending on what you’re looking to fund.

In the same breath, only apply for what you can afford. When assessing your application, your lender will do its due diligence to make sure you can afford your monthly repayments, which you can do too. There are plenty of online repayment calculator tools you can use to work out whether the amount you’re applying for is going to be manageable.

3. Determine if you want a secured or unsecured business loan

Before you start researching your options (step five), it might be helpful to first figure out what kind of loan you’re going to apply for: a secured or unsecured business loan. In a nutshell, secured loans require an asset as security, while unsecured loans don’t.

With an asset attached, secured loans often come with lower interest rates, but you’d need an asset to offer up as collateral. They come with an added layer of risk, as if you were unable to make your repayments, the lender could repossess your business asset. As a trade-off, secured loans often come with much lower interest rates.

4. Choose between a fixed or variable interest rate

Another way to narrow down your search criteria is the interest rate you want for your loan. A fixed interest rate is ‘fixed’, and doesn’t go up or down for a set period of time. This can be helpful for certainty and cashflow purposes, as you’ll know exactly how much you’ll be paying each month.

On the other hand, variable-rate loans typically fluctuate in line with the market. Meaning if interest rates are going up, it will likely go up. But if interest rates are falling, your lender might cut your interest rate. Variable rate loans can sometimes come with other attractive features, like a redraw facility or unlimited extra repayments to help you pay off your loan faster.

5. Research lenders

Now that you’ve gotten the basic stuff down pat, it’s time to find yourself the best fit for your business.

Do some research into different lenders, their products and so on. If you do all of your banking through one financial institution, it might be convenient to get your business loan through them too. But it won't hurt to shop around for a competitive online lender with attractive fees and features either. Regardless, make sure you’ve scouted your options, vetted the lender, and fully understand the product offering.

6. Understand any fees and charges

When researching your options, it’s important to understand and keep watch for any sneaky fees and charges on the loan. While an interest rate may seem enticingly low, it’s not all that matters. The comparison rate encompasses the interest rate, as well as any other fees and charges you’ll be paying, so it’s important to pay attention to this.

Fees and charges you could be looking at include:

• Establishment or application fees
• Monthly account keeping fees
• Early repayment fees
• Exit or break fees
• Valuation fees (if you opt for a secured loan)

7. Have all your paperwork ready

If you’ve found a business loan you’re happy with, make sure you compile all of your supporting documentation. This will make things easier when filling out your application.

While the documentation needed can vary from lender to lender, you can expect to be required to apply the following:

• Proof of identification (driver's licence, passport, etc)
• Your Australian Business Number (ABN) or Australian Company Number (ACN)
• Your business plan
• Your business' financial reports for the past three years
• Bank statements
• Any financial forecasts
• Your personal financial information

What can you use a business loan for?

There are a number of reasons you might need a business loan. To give you some ideas, you could need funding to cover:

• Start-up costs
• Capital investments
• Property or asset acquisition/development
• Refinancing other lending
• Business expansion
• A new work vehicle
• Buying equipment

Or any other reason you need a cash splash for your business. All you’ll need to do is prove that it’s a legitimate business expense, and your lender should consider it.

How to apply for a business loan

If you’ve completed the first seven steps and you’re all set to get started, you may be wondering… what now? Let’s say you’ve got your business plan and financials, an asset ready to be offered, and you know what your credit score is. From here, it’s time to apply for a business loan.

Most business loan applications are pretty straightforward. If you’ve ever applied for a personal loan in the past, you may find that the process is pretty similar. Of course, you’ll need to supply your additional information, the reason for applying is likely different and so on.

If you run into trouble with your application, be sure to contact your lender directly. They should be able to give you a helping hand along the way.

When filling out your application, be sure to look out for the “five Cs”: character, collateral, capacity, capital and conditions.

• Character: your integrity, reputation and ability to pay your debts (credit score, bank statements, other financial history)
• Collateral: your security on the loan
• Capacity: your business' ability to repay the loan
• Capital: your business and personal assets and liabilities
• Conditions: the loan’s repayment schedule, fees and charges, and other conditions

Alternatives to a business loan

If you don’t feel that a business loan is right for you, there are other credit options you could look to to get the job done. This will also depend on your financial situation, your business needs and what you’re looking to buy.

Business credit card

A business credit card, issued under your ABN, can be a handy way to cover day-to-day expenses or short-term cashflow gaps, especially with multiple cards for staff, but it’s generally less suitable for large one-off purchases due to credit limits and higher interest charges.

Personal loan

If you need a few supplies but don’t want to put the expense on your business, you could look into a personal loan. Personal loans are pretty similar to business loans - you’ll just need to apply under your own name rather than your business. Eligibility requirements, loan structures and fees may be different, so be sure to weigh up your options when looking into personal loans.

Car loan

If you’re looking at taking out a business loan to buy a vehicle, you could look at a car loan instead. There may even be business car loans you could look into. Car loans often have lower interest rates than personal loans, but be sure to compare your options. Car loans are also often secured loans (with the car being security), which can be helpful in snagging a lower interest rate.

Cash

Alternatively, you could look at digging into your savings. But this may be difficult depending on what you’re looking to buying. If you need $30,000, using cash may not be the best option. But if you need a few hundred dollars, you could look at digging into your personal savings or business' petty cash.

1. Savings.com.au's two cents

Ultimately, whether you choose to apply for a business loan is up to you. You may find that a business loan is the best option at your disposal, or you may decide that a credit card or car loan is better.

Either way, always be sure to read over your contracts carefully, do your research and understand exactly what you’re signing up for. If you’re not sure whether your business can handle a big debt on its back, do some calculations and see whether it’s realistic. You may also want to consider speaking to a financial adviser.