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Have you ever wondered why small Business loans attract low interest rates? type ‘small business loan’ into Google and you’re likely to see dozens of offers with low interest rates. However, the speed with which your small business loan is funded is just as important. After all, a delay in funding could threaten the viability of your business loans rather quickly – usually within 24 hours. However, much depends on the application process and eligibility criteria.
Business Loan Eligibility
For business loans, Australian lenders require applicants to have been trading for a minimum of 6 months. In some cases, the minimum time in business can go up to 2 years. You must first make sure you qualify for your small business loan to come through quickly. Lenders have their specific eligibility requirements as follows:
You should also have a minimum monthly turnover for lenders to approve a small business loan. The exact amount can vary from lender and may also depend on the type of loan. The odds of loan approval are higher if you have a good credit score. Lenders will correlate your business credit score with your personal credit to assess your ability to repay. What’s the loan for? If you need a loan for buying office equipment- a one-time purchase – a business loan is the best option for you. However, if you are looking for a long-term source of funds, a line of credit may be a better option.
Small Business Loan Application Process
Australian business loan providers have simplified their application process over time. It usually takes just 5-10 minutes to apply. However, the following factors come into play for approval. Along with the application form, you will need to provide photocopies of the following document. This information is used to verify your identity and for running a credit check among other things.
- Business financial statements: P&L, cash flow statement, and/or bank statements.
- Driver’s License
- Your Australian Business Number (ABN)
- Business Plan
Type of Loan:
Traditionally, secured loans were approved faster than unsecured ones. They were also comparatively cheaper, came with better interest rates, and lower fees. However, non-bank lenders are generally more flexible though the interest rates may be comparatively higher.
Amount of Loan:
If you need a loan of $150,000 or less, you could get funded in 24 hours. However, if the loan amount is greater, the turnaround time could be up to 72 hours depending on the lender.
What exactly is a bad credit score?
If you have bad credit, you may have to apply with multiple banks only to be rejected. Since the pandemic, banks have been tightening their lending rules. However, many online lenders do offer a range of bad credit loans online for small business owners. “Can you get a loan with extremely bad credit”?
Credit scores in Australia range from 300 to a maximum of 850. if your score is 550 or lower, you are considered to have bad credit. on the other hand, a score of 650 or higher means you have a good credit score. your score is impacted by factors like multiple credit inquiries, and bad repayments among others.
If you have defaulted on repayments in the past, you might still get a bad credit loan. In case of bankruptcy, however, you may have to wait until existing obligations are guaranteed, you can greatly increase the odds of approval by following the recommendations below.
Review your credit report:
The first step is to make a list of any outstanding debts that might appear on your credit report. over time, discrepancies may pop up and continue accruing interest unless testified, ultimately affecting your credit score. for example, any unauthorized credit score or loans appearing on your credit report can be reported as fraud which can improve your credit score.
Negotiate with your existing creditors:
If you are finding it hard to catch up with overdue payments, it’s important that you negotiate a repayment plan with your lenders. This will prevent additional interest and surcharges from piling on.
Prioritize repayments strategically:
Pay down the debts with the highest interest rates first- for example, credit cards or personal loans. if you get a weekly pay cheque, you can stagger your payments across different dates rather than try to repay everything at the end of the month.
How easy is it to get a loan with bad credit?
Your chances of getting much needed funding are much better than before with online lenders. While bad credit loans don’t come with guaranteed approval, certain lenders will lower your interest rate ( refinancing option) as your credit score improves over time. it is important that you do your research to get the best possible deal before you apply. This can help avoid multiple credit inquiries in a short span of time.