How To Get a Business Loan Approved

Q: Can I get a small business loan with bad credit?

Yes, you can apply for a . It works like an unsecured loan but with higher interest rates. You may initially be able to only borrow up to $50,000 until you build up your credit score. The minimum credit score for business lending is generally 400.

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Checklist: Business loan requirements in Australia

Are you an Australian citizen or permanent resident?
Are you the owner or director of the company applying for the loan?
Do you have a current ABN/ACN?
Is your business registered for GST?
Has your business been operating for at least 6-12 months?
Is your business turnover at least $10,000 per month?
Do you have a good credit score?
Can you provide business financials (bank statements, profit and loss statements, balance sheet)?
Can you provide security for the loan (e.g. residential property or other asset) or a personal guarantee?

The good news is that if you answered yes to all of these questions, there’s a good chance you will be approved for a business loan. Even if you answered no to any of the last few, you may still qualify with certain lenders.

Questions your lender will ask when you apply for a business loan

How much do you want to borrow?

Lenders will need to know how much you want to borrow, when you can start making repayments on the loan and the duration of the loan term. In 2025, the median loan amount requested is $30,000, according to Lend borrower data. Just remember, it’s the lender who decides how much you can borrow ultimately, based on an assessment of your business cashflow.

What’s the purpose of the loan?

Lenders will want a breakdown of how you plan to spend your borrowed funds. Be as specific as you can. For example, what percentage of the money is going towards vendor and staff costs, and the rest on marketing? Or are you planning to use the entire loan amount on a refurbishment?

What’s your business history?

Lenders will want to know 'who' your business is. They will ask how long you've been trading, if you've owned previous companies, what your experience is in your industry, if you've previously declared insolvency, and so on. More than 90% of the businesses who come to Lend have been trading for more than 12 months.

What’s your business structure?

Your business ownership structure will affect how lenders will process your loan application. For example, a business with multiple partners must provide information about all parties with a stake. If you've established a business under a trust, you'll need to give information about the beneficiaries. The more complex your business structure, the more complex the application process will be and the higher the fees on the loan, to reflect the lender’s higher processing costs.

Are you asset backed?

The lender will want to know you own a residential property and what it’s valued at. If you’re an asset backed borrower, you’ll generally qualify for more favourable loan terms.

What’s your preferred repayment schedule?

Most working capital lenders have weekly repayment schedules, but you can always try to negotiate a repayment plan that works with your cashflow. Secured loans generally have more flexible repayment options than unsecured loans. Depending on your situation, you can negotiate the loan terms, repayment schedule, and interest rate.

Understanding your eligibility for a business loan

Lenders all have a different tolerance to risk, but they use a similar process to assess loan applications. There are five criteria, known as the ‘five Cs’ of credit, against which your business will be evaluated when it applied for small business finance.

‘The five Cs’ of lending

1. Capacity

This is your ability to meet your repayment obligations, and it’s the most important part of the assessment criteria. You’ll need to prove your business is generating enough clear profit to service your loan. If your income is seasonal and your capacity fluctuates, you can set a repayment schedule to match your cashflow.

4. Character:

Are you and your business reputable? Are you known for paying your bills on time and keeping your commitments? A weak credit rating is the most significant indicator of poor financial character, but some lenders will also investigate your reputation with suppliers, customers and other creditors. They may also look at factors like the condition of your industry as a whole and your place within it, the knowledge and experience of your leadership team, and the size and diversity of your customer base.

5. Conditions

Lenders set their own terms and conditions, but there’s always room for negotiation. Provided you meet the capacity requirement, banks may be willing to take a risk on everything else, for the right price. If your application is rejected initially, you may still be able to secure finance provided you’re willing to pay a higher interest rate or agree to conditions that protect the lender (for example, that you won’t take out any additional loans, or you won’t offer credit terms to your customers).

It’s typically easier to secure finance through non-bank lenders as they have more flexible criteria. On the flip side, banks have stringent standards for business lending and prefer to deal with businesses with a higher minimum turnover and security to offer for the loan. It's best to speak with a business loans broker if you’re unsure about your eligibility.

Collateral requirements for a business loan

About half of small business loans are collateralised with a residential mortgage, according to the Reserve Bank of Australia (RBA). This is known as a secured business loan where an asset — usually property — is used as security for the loan.

You can sometimes use other business assets as collateral. This reduces the risk to the lender and the interest rates for the borrower (you), but it means the lender can repossess your assets if you default on the loan.

An unsecured business loan is not backed by collateral, which increases the risk to the lender and, therefore, your interest rate. If you have an unsecured loan, some lenders may ask that you provide a personal guarantee. It allows them to recover any outstanding debts from the guarantor if you can't make your repayments.

Deposit requirements for a business loan

It’s generally not a requirement to contribute a deposit in order to have a business loan application approved. But if your application is weaker than it might otherwise be (e.g. you have defaults in your credit history), putting a deposit forward may be the difference between being approved and not.

A Lend business finance broker can help you understand how much of a deposit, if any, you need to contribute.

What can you use a business loan for?

You can use a business loan for any genuine business activity. According to proprietary Lend data, the most common purposes small businesses apply for finance are:

Working capital: 25%
Buy vehicles or transport: 24%
Buy machinery and equipment: 21%
Expansion: 8%
Other (e.g. marketing, inventory, hiring staff, etc.): 6%
New fit-out or renovations: 4%

Documents you will need to provide

Lenders will want to assess your cashflow and business revenue to determine your ability to repay the loan. They will ask to see business bank statements (last 6- 12 months), business registration and tax info, plus proof of ID.

If you’re looking to borrow more than $150,000, or your business has been trading for less than 12 months, you may be asked to provide extra info, including a profit and loss (P&L) statement, balance sheet, business plan and financial projections.

Lenders will first want proof of your ownership of the business. Then, they will look at your business trading history and experience to ascertain the viability of your business and its future performance, based on its structure, industry and location.

Your lender will verify proof of ownership of your home or asset(s) by conducting a title search on the Personal Property Securities Register (PPSR), the national online register managed by the Australian government.

Why might a lender decline your business loan application?

Here are some of the common reasons why we see lenders decline applications for business finance:

Insufficient trading history: Startups and companies that have been trading for less than a year don't typically generate stable, regular income and can find it difficult to secure finance, unless they have provided collateral or a guarantee for the loan. Most lenders will not lend to very new businesses. A lender is generally likely to offer finance for an existing business.

Inability to service the loan: Your financials indicate your business turnover will not be sufficient to enable you to meet the repayment obligations under the loan contract.

Too many liabilities on balance sheet: Your business already owes money to third-party creditors or suppliers or has too many other outstanding obligations.

Your industry is considered too high risk: Lenders tend to steer clear from lending money to businesses in industries that have a poor outlook or that are considered risky like gambling, adult entertainment, tobacco, etc. Some lenders prefer to work with businesses in specific industries, or with particular business models (those that make high volumes of credit card sales, for example)

Your business is seasonal: Lenders don’t usually like to deal with businesses with cyclical downtimes. But this will be assessed on a case-by-case basis. For example, hot air balloon operators can make enough revenue in the cooler months to cover shortfalls in the warmer months when they might need some cashflow finance as a fallback..

Concentration risk: Your revenue must be diversified and your business should have multiple suppliers or contractors on the books before you can be approved for finance.

The business owner or director has bad credit: If you have a poor personal or business credit rating, you may not qualify for a standard business loan.

Having problematic spending on bank statements: The lenders credit assessment team will be looking closely for concerning spending patterns like regular large cash withdrawals, gambling (e.g. spending at a casino) or other spending that could indicate a lack of financial discipline.

Lack of preparation: Assuming that getting a business loan is easy is a mistake. Not having a business plan, providing incomplete paperwork or incorrect information can see your application denied.

Q & A on business loans approvals with Lend’s SME experts

FAQs

Online applications can take just a few minutes, provided you have your supporting documents ready. With some lenders you’ll get an instant assessment on the spot, while others will follow up with a phone call to collect more information. You can often have approval within hours and the funds in your account within days.

Yes, lenders may look at your personal and business credit rating if you don’t have a well-established business history or if you’re taking out a loan to buy an existing business.

Yes, you can apply for a bad credit business loan. It works like an unsecured loan but with higher interest rates. You may initially be able to only borrow up to $50,000 until you build up your credit score. The minimum credit score for business lending is generally 400.

If you don’t have the standard financial documentation lenders usually ask for, it may still be possible to get access credit through what’s known as a low-doc loan. This process relies on alternative ways to demonstrate your capacity to repay the loan, including the likes of personal guarantees and contracts for future work.

Talk to a Lend business finance specialist to understand your chances of approval and how to get started today.

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