Starting your own business is a big leap. That’s why we want to make the jump a bit easier. The steps you need to take to start and grow an Indigenous or Aboriginal owned business are much like running any other business in Australia. Often times, you need extra funding to get started or to help you better manage your cash flow.
Businesses that meet the requirements can apply for a long term or short term loan. If you are just starting out or only need a small boost, your business might be best served by microfinancing. In some situations, additional government support and assistance is also available to Indigenous business owners, so it is important to know your options. It all depends on your business and finance needs.

Indigenous and Aboriginal business loans - where to start?

If you are an Aboriginal or Indigenous business owner, Indigenous Business Australia (IBA) may be able to assist you. IBA is a government organisation that provides workshops, advice, business support programmes and in some cases, business finance, to eligible Indigenous business owners.

Here are a few basics about the types of options that might be available to you via IBA. It is best, however, to contact them directly to discuss your individual circumstances.

  • IBA Business Loan
    Indigenous funding for small businesses may be available for those that qualify. This funding can be used to improve the cash flow of your business, cover gaps or late payments, to invest in new business purchases and more. Loan amounts can vary greatly, depending on the business, ranging from between $10,000 and $5 million. Repayment terms up to 20 years may be available as well as variable interest rates.
  • IBA Procurement Loan
    Businesses that have been awarded a contract through the Indigenous Procurement Policy (IPP) or another government program may be able to qualify for this loan type. Loans up to $100,000 may be issued, with a maximum loan term of two years.
  • Producer Offset Loan
    This loan type is specific to Indigenous-owned production companies looking to finance Australian documentary, film or television projects. Loan amounts can range from $100,000 to $2 million, depending on the business and project. There is also a maximum two year loan term and an establishment fee to be paid, depending on the loan amount.
  • Startup Finance Package
    Indigenous startups may be able to receive up to 30% of a loan as a grant to purchase assets for their business. This funding does not have to be repaid, making it a great headstart for businesses that qualify. Loan amounts up to $100,000 can be awarded with repayment terms of up to seven years.
  • Invoice Financing
    Waiting on late payments can quickly slow down your business. IBA provides invoice financing to help Indigenous-owned businesses cover those gaps. Established businesses with at least 50 per cent Indigenous ownership and a minimum sales requirement may be eligible. Businesses that qualify can request up to 80 percent of the value of invoices bought by IBA within 24 hours of IBA purchasing them.

For more specific information and to find out if your business may qualify for these or other forms of support, you should contact IBA.

Additional funding options for Aboriginal and Indigenous businesses

Aboriginal and Indigenous businesses can also seek funding through traditional banks, online lenders like Lumi or other organisations. Businesses should evaluate which type of funding is best for their situation.

Here are a few examples:

  1. Traditional business loan. If you have been in business successfully for at least six months and can demonstrate profitability, you may quality for a long term or short term loan. Receiving a loan from a traditional bank will also likely require you to have collateral that can be used to secure the loan. Collateral often includes things like property, such as your home or vehicle, your savings, unpaid invoices, inventory and more. This might put your home, car or business equipment at risk if you are unable to make your repayments.
  2. Unsecured business loan. Online lenders may be able to provide you with an unsecured business loan. That means the loan is issued and supported only by the borrower's creditworthiness - not by a form of collateral. It is typically easier to qualify for an unsecured business loan and you can often receive the funds you need more quickly. For lenders, unsecured business loans carry more risk which means there is usually a higher interest rate.
  3. Microloans. Microloans often range anywhere from $100 up to around $50,000 and are typically best suited for new businesses or entrepreneurs. Since the loan amounts are smaller than a traditional long term loan, microloans are generally unsecured and short term - often one year or less.

There are several other types of financing that might be available to your business, so be sure to learn more about them before you decide.

Alternatives to Indigenous business loans: Ideas for funding your Aboriginal or Indigenous startup

The number of Aboriginal and Indigenous startups continues to grow across Australia. That means there are also more funding and business support options available as well. We’re a startup ourselves, which is why we want to support other startups in securing the finance they need to succeed.

In addition to more traditional forms of financing, here are some options that might be available for your startup:

  • Investors - Aboriginal and Indigenous founders can try to seek funding from a professional investor. Investors might operate individually, such as with an angel investor, or as part of a venture capital fund, where a group of investors pools their resources and a fund manager decides where they will invest. With an investor, capital is provided in exchange for equity in the business. Many startups find that it is difficult to secure investors for their business due to the competitiveness of the startup industry.
  • Bootstrapping / Self-funded - One of the top sources of funding for startups is the founder’s personal savings and/or credit card. If you don’t think your business will qualify for a loan or you are not able to secure investment, you may decide to use your own savings, take out a personal loan or use a credit card to get started. These types of debt are common but can be risky. If your business fails, you might lose your savings and/or find yourself in debt. The risk, however, might motivate you to make your business profitable as quickly as possible.
  • Family and friends – Research shows that a large amount of startup funding comes from family and friends, instead of professional investors. If you have a winning business idea and your family and friends have a few dollars to spare, than you might be in luck! Receiving funding from family and friends could provide greater flexibility in how and when you repay the loan. Of course, however, there is the risk that your family and friends could lose their money if your business fails.
  • Crowdfunding – If you think others, aside from your family and friends, would be willing to support your business, you can also try crowdfunding. Crowdfunding uses online platforms to promote a business idea, product or service and asks a large group of people to make small contributions. If you can gain widespread support, you can minimise the risk of one individual or investor losing a lot of money all at once.
  • Accelerators – Startups who are accepted into an accelerator program may also be able to receive funding. An accelerator typically accept a small group, or cohort, of startups for a set period of time and provide workspaces, training and support as well as funding. Accelerators, including those specific to Aboriginal and Indigenous businesses, can help fast track your business while also providing a boost in capital.

Indigenous Business Loans FAQ

How does an Indigenous business loan work?

Indigenous business loans are similar to other types of loans, however their main function is to assist Indigenous business owners to thrive, providing additional financing that gives their small or medium enterprise the cash injection it needs.

What are the benefits of an Indigenous business loan?

Whether secured or unsecured, short-term or long-term, an Indigenous business loan can offer a number of benefits. These include helping your Indigenous business with cashflow, funding expansion plans, managing employees, and more.

I’m interested in applying for an unsecured loan for my Indigenous business. How can I get started?

Thankfully, the process for applying for an unsecured business loan at Lumi is relatively easy. Simply fill in our application form online, before waiting up to two hours to receive your outcome. Once a loan is approved, the funds will be deposited into your nominated business account on the same business day.

What documentation do I need to apply for an Indigenous business loan?

During the loan process, you may need to provide key personal and business information such as a valid form of ID (driver’s license or passport), information about your business (including registration details and ABN), evidence of your financial history, an effective business plan, your recent tax return, and an explanation of the purpose of the loan and how you intend to use the funds. Find out more about what lenders look for in your business loan application by reading our helpful guide.

Not sure if an Indigenous business loan is right for you? Be sure to check out our full list of finance options for startups.

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Here's what you need:
An active ABN or ACN
6+ months in business
$5,000+ in monthly sales

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