When you need business financing quickly, filling out mountains of paperwork and digging up old income statements to undertake a credit check can feel like an overwhelming obstacle.
This is especially true if you’re just starting to scale up and you don’t have a credit score yet, or you’re a self-employed sole trader without a traditional income. Perhaps you’re simply just too busy to deal with the stringent lending requirements that the bank is insisting on.
What a lot of Australians don’t realise is that all you really need to access business financing is an ABN! Also called a low-doc loan, ABN Loans are a great way to inject some capital into your new business quickly and with very little hassle.
Where can I find an ABN loan? First up, it’s best to use a broker.
ABN loans are offered by a number of lenders across Australia. If you need business financing right away, it’s common to find online lenders who have tailored their services around offering low-doc ABN loans quickly. There are also plenty of larger lenders who may offer it as one of several different options.
Be warned, there’s bound to be plenty of less reputable lenders amongst the fray. To prevent getting burnt, it’s always a good idea to work through a broker. Not sure where to start looking for a good one? Personally, we like to work with the team at Compare Financial Services. They’re our preferred brokers and they’re fantastic at what they do.
Working with a broker definitely has a lot of advantages. They’ll generally help you find financing options that better suit your business, and they can negotiate much better deals than you’re likely to get on your own.
What are the requirements for getting an ABN loan?
Understandably, there are still some requirements. For instance, most lenders will want to see that you’ve had an ABN for at least 2+ years. If your ABN is more recent than that, there are some lenders who will still give you a loan – but you can expect to pay much higher interest rates.
You’ll likely also need to show some proof-of-income documents, but it will be much less than other more traditional loans require. This is what makes ABN loans such a great business financing option for businesses without much of a paper trail, or for those of us who simply don’t have time.
How much can I borrow, and what can I use it for?
The amount that you can borrow under an ABN loan will differ from lender to lender, and it also depends on your circumstances. At a rough estimate, truly simple ABN loans that don’t require a credit check generally range between $1000-15,000.
The SME Recovery Loan Scheme has also made larger loans ($50-500k) more common. However, you’ll likely need to provide a lot more documentation to prove you can actually pay it back. It’s likely to be pretty similar to the amount of work you’d have to undertake to secure more traditional business financing.
What can you use an ABN loan for? Well, this also depends on your lender, as they’ll all have slightly different terms. Some will let you take out financing for pretty much anything related to your business! However, the terms of most ABN Loans are more specific. Generally, it’s limited to purchasing equipment or a work-related vehicle.
You should always seek advice before taking on a loan.
Because low-doc ABN loans are so easy to acquire, it can be tempting to rush in before you’re ready, especially if you need business financing fast. But taking on a debt is a big responsibility, and you need to make sure that you can actually repay it.
That’s why it’s always a good idea to get some solid advice first. If you’re wanting to act fast and you’re only looking for a small loan, try chatting with your tax agent at Ezytaxback to see what they think. We’re here to give you the advice that you need.
But if you’re a sole trader who’s looking to scale your business up in a big way, then it’s probably time to talk to a business advisor instead. Operating as the big brother of Ezytaxback, Rees Group is a business advisory firm that’s been helping our clients grow for over 70 years.
The information in this article is of a general nature. It does not take your specific needs or circumstances into consideration. You should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.