The Essential Checklist For Meeting Business Loan Requirements In Australia

A business loan can be a practical funding option for small businesses in Australia that need to grow, pivot, or keep operations running. As business loan requirements can vary between lenders, it’s important that brokers help their clients prepare properly.

This checklist can help your clients apply for a business loan, making the process smoother and increasing their chances of approval, whether they choose a bank or a fintech lender.

What SMEs Will Need Before Filing A Business Loan Application

Before your SME clients apply for a business loan, they must demonstrate to potential lenders that they’re financially healthy, operationally stable, and capable of repaying the loan. Here are the business loan requirements that brokers can advise clients to prepare.

Financial Statements

Lenders want a clear picture of the business’s financial situation. Encourage clients to prepare digital and hard copies of financial statements from the last 12 months.

Depending on the lender, clients may have to prepare records going back at least two to three years.

Consistent, professionally presented financial statements may work in the applicant’s favour. These statements should show:

• Loan purpose and requested amount
• Proof of individual income
• Business income statements
• Up-to-date cash flow statements
• Cash flow projection
• Banking

Recent Tax Statements

Tax documents prove compliance and can give lenders insight into a company’s ongoing financial obligations.

Lenders will typically want to see that your client’s business is on top of its tax responsibilities and doesn’t have outstanding issues with the ATO. 

Consider preparing the following:

• ATO Notice of Assessment
• Business Activity Statements (BAS)
• Additional tax records

Lenders may request other tax-related documents to verify financial stability further. These may include:

• PAYG Payment Summaries to verify wages paid to employees
• Fringe Benefits Tax (FBT) returns if the business offers different benefits to its employees
• Tax agent correspondence or accountant letters that explain any unique tax positions or confirm overall compliance

Having these business loan requirements ready, even if they’re not initially requested, may lead to faster processing and show that the business is well-organised and transparent.

Valid Identification

Identification documents are essential for verifying the borrower’s identity, especially if they are dealing with a new lender.

While existing customers of a bank or lending institution might be exempt, any new client relationship typically requires the submission of personal identification.

Commonly accepted forms of ID include:

• Driver’s license
• Australian passport
• Medicare card (as secondary ID)

For businesses that are run by multiple directors or partners, each individual may need to submit their identification documents. Some lenders may also request proof of address, such as utility bills or bank statements, to confirm residency.

It’s typically best to provide original documents or certified copies if requested.

For streamlined approvals, ensure that any ID document names precisely match those listed on the business application and official registrations like the ABN or ACN.

ABN/ ACN

These registrations confirm the business is legally established in Australia and operating under the correct structure. 

Lenders may request the ABN or ACN as business loan requirements to perform due diligence checks and verify that the business is active and compliant with regulatory bodies.

Business Plan

A detailed business plan can demonstrate the strategic thinking behind a loan request.

While some lenders may not require it for small, short-term loans, having one can add weight to the application, especially for unsecured finance or smaller businesses.

Brokers can work with clients to tailor the plan to the specific lender and loan type. 

A stronger business case may be more likely to win business lending support with favourable loan terms and a higher loan amount.

Collateral (If Available)

Collateral is an asset pledged to secure the loan.

Not every loan requires it, but offering collateral can help clients access larger loan amounts, longer terms, or lower interest rates.

Common forms include:

• Commercial property/real estate
• Business assets like vehicles and machinery
• Other assets like inventory and equipment
• Term deposits or savings

Before putting up collateral, brokers may want to assist clients in getting a value assessment of these physical assets and checking that they are unencumbered (i.e., not already pledged elsewhere).

Proof Of Capacity To Repay The Loan

Proof of repayment capacity assures lenders that the business has ongoing, reliable income to meet loan obligations.

Lenders will want to see that your client isn’t just profitable but also has stable cash flow and customer commitments.

This assessment goes beyond past performance. Business finance lenders will typically look at both historical data and future earning potential to see how your client can make existing and proposed repayments on time.

The following could serve as proof for your business clients:

• Contracts: Signed contracts or service agreements can demonstrate a pipeline of secured revenue. These are especially important for businesses in project-based industries like construction, consulting, or professional services.
• Invoices: Historical and outstanding invoices are another way lenders can see how a business manages its cash flow. Lenders often prefer seeing invoices alongside bank statements or accounting system exports to verify when the payments were received.

Additional Tips For A Stronger Application

Even with all the documentation in place, a few strategic extras can help your clients apply for a business loan.

1. Check The Different Business Loan Types Before Applying

Unsecured loans, equipment finance, invoice factoring, business lines of credit, etc. all tend to have different eligibility rules. Each has pros and cons depending on business goals, repayment capacity, and urgency. 

Some loans may offer variable interest rates with longer terms, while others offer a fixed interest rate but a shorter term.

Educating your client on the range of options can lead to a smarter, more targeted loan application.

2. Monitor Credit Scores And Fix Errors

Consider encouraging clients to address small unpaid business expenses, outstanding debts, or reporting errors before applying.

A clean credit history can boost approval chances and lead to better interest rates.

3. Use Accounting Software To Stay Loan-Ready

Tools like MYOB or QuickBooks can keep books tidy and generate overview reports to help lenders see more at a glance.

These tools can produce real-time financials, automate BAS reporting, and help business owners quickly respond to lender queries.

4. Prequalify Or Pre-Assess Before Applying

Some lenders offer tools that can help your clients see if they’re eligible without doing a hard credit check.

These tools may reduce the risk of hurting their score and can give clients more confidence before submitting a formal application.

6. Encourage Early Discussions

The earlier, the better. Planning finance ahead of peak seasons or planned growth can give your SME clients more time to correct any documentation issues or address weak spots in their profiles.

7. Use Government Tools To Assess Loan Readiness

The Australian government offers helpful resources and checklists, which are a solid starting point for borrowers unsure of where to begin.

These tools can help businesses self-assess before speaking with lenders, which can streamline the process significantly.

Conclusion

A solid loan application process starts with thoughtful preparation.

As brokers, you can make a real difference in helping clients understand what’s needed, compile the proper paperwork, and choose the right loan type. 

Looking for a fast, flexible business loan for your client? Check out Lumi’s Small Business Loan options to get started.