How to get a business loan when you're in startup

Getting a business loan when you’re a startup can be a challenge, but there are several options and strategies you may consider. Here are some steps and tips to help you:

1. Government Grants and Support

The Australian Government, as well as state and territory governments, provide support and grants for small businesses. These can be a great source of funding if you qualify. Check out resources like business.gov.au and grantconnect.gov.au for opportunities.

2. Business Plan

Prepare a thorough business plan that outlines your business idea, market research, strategy, financial projections, and how the loan will be used. A strong business plan can increase a lender's confidence in your venture.

3. Build Personal and Business Credit

If you have no money, lenders will look into your creditworthiness. Ensure your personal credit score is good, as this may impact your ability to get a business loan. If you have started trading, maintain a good business credit score as well.

4. Guarantor or Co-Signer

If you lack the funds, having a guarantor or co-signer with a good financial standing can bolster your application. This person agrees to be responsible for the loan if you're unable to repay.

5. Secured Loans

If you have assets, you could use them as collateral for a secured loan. Collateral can be property, vehicles, or equipment.

6. Microloans

Some non-profit organisations and online lenders offer microloans to startup businesses with less stringent requirements.

7. Specialised Lenders and Non-Bank Lenders

Some lenders may be more willing to take a risk on a new business, especially if they can see a clear and convincing business case.

8. Peer-to-Peer Lending

These platforms connect borrowers directly with investors. While still requiring evidence of a solid business plan, they may have more flexible criteria than traditional banks.

9. Government-Backed Loans

Look into loans backed by the Australian government, like those offered by the Australian Small Business and Family Enterprise Ombudsman, which may have more lenient requirements.

10. FinTech Lenders

These lenders often have a more agile approach and may offer unsecured business loans based on the business's cash flow and market potential rather than tangible assets.

11. Bootstrap Your Business

If securing a loan proves difficult, consider starting smaller and using bootstrapping techniques to fund your business operations through internal cash flow and progressive growth.

Always ensure you fully understand the terms and conditions of any loan or financial arrangement. It’s advisable to speak with a financial advisor, accountant, or business advisor before making financial commitments or signing any loan agreements. They can provide personalised advice suited to your business needs and help navigate the various options available to you as a business owner in Australia.