A financial guide to your online business loan application
If you’re currently considering applying for a small business loan with an online lender, you’re probably wondering what documents are required for your online business loan application and also what criteria your business will be assessed on.
First, it’s important to decide what type of loan you would like to apply for. For instance, one of the key differences lies between a secured and unsecured business loan. Here’s a quick overview of what these differences are. Bear in mind that these also vary from lender to lender, but this will give you a generic overview. If you’d like to read more about both finance options, check out this handy article here.
Unsecured Business Loan
Secured Business Loan
|Collateral||Not needed||Requires collateral for security such as property|
|Loan amount||Smaller amounts between $5K and $500K||Larger amounts from $150K to $50M|
|Loan terms||Shorter terms from 3 to 18 months||Longer terms from 12 months to 30 years|
|Interest rate||Usually interest rates are a bit higher because of the increased risk that’s associated with the flexible conditions and fast turnaround of this type of business funding. The interest rate usually ranges between 7% and 30%.||More affordable interest rates since secured business loans are assessed as less risky because of the collateral that’s provided as security. Rates can range from 2.5% to 13%.|
|Approval times||If the applicant provides all the required information, the application can be approved within a few hours and funding on the same business day is also possible.||Can take up to a few weeks because the application assessment is more strict and therefore more time consuming.|
|Loan purpose||A great business finance solution for businesses looking to get short term funding quickly. For instance, the funding could be used to manage cash flow or seasonal fluctuations as well equipment purchases.
It’s also best for businesses that have been operating for less than 2 years and/ or have a less-than-perfect credit history.
|A secured finance solution is suitable for well established businesses with a good credit history.
Higher loan amounts can potentially be used for business expansion or more expensive renovations for example.
At Lumi, we specialise in unsecured business finance, even though we can also provide secured finance solutions. It all depends on what your business needs and what is recommended for your personal circumstances. We pride ourselves in offering our clients fast and flexible funding solutions that are tailored to you.
What’s special about Lumi’s unsecured business loans?
- We offer unsecured business finance from $5K – $150K.
- Easy 5 min online business loan application. You can apply here.
- Get an outcome within a few hours and funding on the same business day.
- Flexible repayment terms from 3 – 36 months.
- No hidden fees, no hassle. You will know exactly how much the loan will cost your business beforehand. If you’d like to calculate your estimated repayments or get a better understanding of how much you can afford to borrow, use our handy Business Loan Repayment Calculator here.
What key criteria will you be assessed on when applying for an unsecured business loan?
- Turnover: At Lumi we have a minimum requirement of $5K monthly turnover.
- Credit History: Lenders usually look at your credit history and assess both your personal and business credit scores. At Lumi we require a minimum credit score of 350.
- Time in business: To further assess your business’s eligibility, a lender also looks at how long your business has been operating for. At Lumi, we require a time in business of at least 6 months in order to qualify. Basically, the longer your business has been operating for and the more data you can show to prove your ability to repay the loan, the better your chances of getting the loan approved.
- Loan amount & purpose: The amount you’re requesting to borrow and the reason for borrowing the money are important to a lender. It shows a business’s understanding of their financial situation and their ability to make loan repayments. A lender assesses a loan amount in the direct context of the criteria mentioned above, but mainly on a business’s annual or monthly turnover. For instance, if a business wants to borrow a large amount but does not have an adequate annual turnover to be able to make the repayments, then they won’t get a loan approval.
Bear in mind that each lender has their own assessment criteria, but this gives you a good idea about what they generally consider when assessing an online business loan application.
Now, to set you up for success, we’ve put together this handy guide to help you navigate through the process with ease.
What are the documents or information you need for your online business loan application with Lumi?
1. Personal Identification
Valid documents that confirm your identity include Australian Driver’s licence or passport. These identity documents need to include your full name, date of birth and current residential address.
2. Business Identification
Your business must be legally registered in Australia with a valid ABN or ACN. Additionally, it must have also been operating for at least 6 months. Furthermore, it’s also good to provide a short description of your business and what you are aiming to use the funds for.
3. Bank Data
As part of our simple online business loan application process, our system will automatically connect with your bank account and extract up to 12 months of bank data. This will help our team to better understand the context that your business is operating in and therefore the risk associated with lending your business money. Also, note that Lumi will only conduct a credit check once you’ve given us permission to do so.
Thanks to our unique proprietary technology that connects safely with your bank account, the entire online business loan application can be done within minutes. This means no more printing, scanning and uploading of hundreds of pages. Yay!
Last but not least, lenders usually require a business to provide one or more guarantors. This is a way for the lender to ensure that if for whatever reason your business is unable to repay the loan, a guarantor will make the repayments for you. It’s often a more accessible form of providing security to a lender compared to collateral that’s needed for a secured business loan.
Additionally, you will have to provide valid identification documents as well as credit consent for each guarantor that you are nominating as part of your business loan application.
In short, if you would like to apply for an unsecured business loan with Lumi, this is your ultimate checklist before you get started:
- Valid ABN/ACN
- Operating for at least 6 months
- Monthly turnover at least $5K
- Credit score 350+
- 12 months of bank data
- 1-2 Guarantors
- Above $150K we also require 2 years financials, access to ATO portal and collateral.
What additional information can be required for a secured online business loan application?
- Collateral: including the address of the property as well as proof of your mortgage balance
- ATO Integrated Client Account: access to your ATO portal, tax returns etc.
- Other financial statements: E.g. Profit & Loss statement, Balance sheet etc.
- Business Plan: Demonstrating your business model and understanding of how your business will achieve its financial goals.
If you’ve got any questions regarding your online business loan application, feel free to reach out via email at email@example.com or give our team a call on 1300 00 5864. In case you’re ready to get your application in, head to our online application here.
Your Lumi team