Need a business loan? Answer these five questions before you apply

Most people who need a business loan start by comparing lenders. That's the wrong first move. The lender and the rate are the last decision, not the first, and jumping to them is exactly how businesses end up with the wrong product at the wrong price.

Before you look at a single lender, answer five questions. They're the same ones a good finance broker works through with you, and they determine everything that follows: which product fits, which lenders to approach, and how much you should be paying. Ten minutes on these saves you far more than shopping rates ever will.

Question 1: What is the money actually for?

The purpose decides the product. A one-off purchase, a cash-flow gap, an asset, a supplier payment and a tax bill are five different jobs, and each has a product built for it. Funding a temporary gap with a multi-year term loan, or a one-off purchase with a revolving facility, both cost more than they should.

Be specific. Not "working capital", but "stock I'll sell in 90 days" or "a machine that lasts eight years". That specificity is what points you at the right option in the full list of financing options, and it's the difference between a loan that fits and one that just about works. If you're stuck here, start with the job, not the loan.

Question 2: How much do you genuinely need?

Borrow the amount the job requires, not the largest number a lender will offer. Over-borrowing feels like a buffer and behaves like a cost, you pay interest on money sitting idle. Under-borrowing is worse, because going back for a top-up mid-project is slow and sometimes not possible.

Work it out from the purpose in question one. If it's stock, it's the stock cost. If it's a machine, it's the price plus install. If it's a cash-flow gap, it's the size of the gap at its widest, not your annual turnover. A precise number also makes you a stronger applicant, lenders trust a borrower who can explain exactly what the money does.

Question 3: How fast do you actually need it?

This is the question that saves the most money, because speed is the single most overpaid-for feature in business lending. Same-day funding exists, and it's priced accordingly. If you have two weeks, paying a premium for two hours is money set on fire.

Be honest about which row you're in. A genuine emergency justifies the top row. A planned purchase three weeks out does not, and treating it as urgent just hands margin to the lender.

Question 4: What repayments can your cash flow absorb?

The amount you can borrow and the amount you can comfortably repay are different numbers. Lenders check the first. You live with the second. Before you accept anything, work out what repayment your cash flow can carry in a normal month and, more importantly, a slow one.

Look at the repayment as a share of your revenue, and stress-test it against your quietest recent month. A repayment that's comfortable in a good month and crushing in a slow one is a facility that will hurt exactly when you can least afford it. This is where the total repayment and effective annual rate matter far more than the headline rate.

Question 5: Do you have security to offer?

Whether you have an asset to pledge changes both your options and your price. Security (property, or sometimes a specific business asset) lowers the lender's risk and the rate you pay. No security doesn't lock you out, it points you at unsecured lending, invoice finance, or equipment finance where the asset being bought does the securing.

Know your answer before you apply, because it shapes which lenders are worth approaching. If you have property and time, a secured bank facility is the cheapest money. If you don't, non-bank unsecured or an asset-secured product is the realistic path, and the requirements differ accordingly.

Five real scenarios

The urgent tax bill. A BAS or ATO bill is due and cash is short. This is a genuine question-three emergency, so speed is worth paying for, but keep it short-term. Working capital finance for an ATO debt is a clean fit when the alternative is a payment default.

The equipment breakdown. A core machine dies mid-job. Fast and specific, and because there's an asset involved, equipment finance on the replacement is usually cheaper than an emergency unsecured loan.

The growth opportunity. A contract lands that needs staff and stock six weeks before the first payment. Planned, not urgent, which means you have time to compare and shouldn't pay an emergency premium. A line of credit or term loan structured around the payment schedule fits.

Consolidating three facilities. A bakery is juggling three short-term loans with overlapping repayments that are choking its weekly cash flow. The need isn't more money, it's consolidating the existing debt into one manageable repayment. The right answer here is restructuring, not borrowing more.

The slow-paying client. Revenue is fine on paper but locked in 45-day invoices while wages fall due weekly. A term loan adds debt to a business that's actually owed money. Invoice finance is the product that matches the shape of that gap.

What it actually costs

The cost of a business loan comes down to four things: the interest rate or factor rate, any establishment and ongoing fees, the term, and how fast you needed it. The last one is the one you control most and think about least.

Two loans of the same size can differ wildly in total cost because one was structured around a real need and the other around a vague one taken in a hurry. The way to compare offers like for like is the total dollars repaid and the effective annual rate, never the advertised rate alone.

What you need to qualify

For most non-bank lenders: an active ABN, around six or more months of trading, consistent revenue (commonly $10,000+ a month), and clean recent bank statements. Banks ask for more, typically two years plus financials and often security. The full requirements are here, and the complete application process is here.

If your bank has said no

A bank decline is one lender's policy, not a verdict. Non-bank lenders weight recent trading and cash flow over years of history and property, which is why a business a bank declines can be funded by a non-bank lender the same week. Compare the two paths in bank vs non-bank business loans, and see the alternatives after a decline. The trade-off is honest: non-bank pricing sits above bank pricing, so if your bank offers good terms, take them.

Common questions

How quickly can I get a business loan in Australia?

A non-bank lender can give an indication within 24 hours and settle within a few days. A bank typically takes two to six weeks. Same-day funding exists but is priced for the speed, so it's only worth it in a genuine emergency, not for a planned purchase you could wait a week for.

How much deposit do I need for a business loan?

Most unsecured business loans don't require a deposit, they're based on your revenue and trading history, not an upfront contribution. Equipment finance sometimes involves a deposit or a balloon payment depending on the structure, and larger secured facilities can require you to contribute. It varies by product more than by lender.

Should I go to my bank first for a business loan?

If you have time, security and a clean two-year history, your bank is usually the cheapest money and a sensible first stop. If you're newer, need funds quickly, or have already been declined, a non-bank lender or a marketplace will often give you a faster and more flexible answer. It depends which of those describes you.

What if I need a loan urgently to pay the ATO?

Short-term working capital can cover an ATO or BAS bill and is often faster than arranging a payment plan, but keep it short and specific. The goal is to clear the bill and repay quickly, not to carry the debt long-term. Working capital for ATO debt covers how to approach it sensibly.

Does needing money fast mean paying more?

Usually, yes. Speed is priced into business lending, so same-day funding costs more than money you can wait a week or two for. That's exactly why question three matters, being honest about how fast you truly need the funds is one of the easiest ways to lower what you pay.

General information only - it doesn't take your situation into account. Consider whether a product suits your business before acting, and get independent advice where you need it. No credit check to see your options. A credit check only happens if you choose to formally proceed with a lender.