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Everything You Need To Know About Getting A Commercial Loan For Your Business

When you're looking to secure additional capital for a business, in order to either sustain it or grow it, a commercial loan can be a valid strategy to consider.

With a substantial injection of cash into the business bank account you can finally open the door to taking any current or planned business endeavours to the next level, backed by a steady flow of financial support that’s guaranteed to be in place as and when you need it, for an extended period of time.

As you’ve no doubt experienced, or witnessed when following the trajectory of other businesses within your industry, the power of positioning a business this way is priceless. Particularly in the current climate when staying relevant and being seen and heard in a crowded marketplace are the pivotal deciding factors in whether a business sinks or flies.

At Lumi we advocate for rigorous research, and a thorough analysis of all the options available to you. First, we suggest you take a step back and consider the entire process of successfully procuring a commercial loan, from the initial decision to look into it in more detail, to the funds landing in your account and the completion of the first transaction this funding enables.

Ask yourself key questions - about the loan amount required, the length of the loan that best fits with your plans and projections, where the funds will be allocated, and the desired result of this spending.

You may find it gives clarity to write this information down, and to dig a little deeper into what a commercial loan arrangement would look like for your business, in both the short and long term.

In response to the many questions we see raised about commercial loans, and how often we see them answered incorrectly, we’ve laid out a detailed roadmap of the decision making journey below. This will leave you in no doubt as to the right next steps for your business, and the appropriate finance solution to fulfil the plans you’ve made for its future growth.

Commercial Loan Benefits

When you strip away the buzzwords, a commercial loan is simply a funding arrangement between a lender and a business. It would typically be used to cover major expenses and financial costs, and can be either short or long term, secured or unsecured, depending on the circumstances of the business and the terms of the final loan agreement.

One of the benefits of longer length commercial loan repayment periods, and the often significantly higher loan amounts associated with them, are more affordable interest rates - compared to other more short term finance options available to you.

When compared with other options for boosting cash flow and lifting a business to the next level, a commercial loan can give access to a large lump sum that’s readily available once the loan application has been approved.

This means access to critical funding, with a loan term that can span anywhere between a few months to years. An extended repayment period that allows for the debt to be repaid while the business evolves and grows concurrently, in tandem with the repayment plan.

Secured v Unsecured Loans

In finance the terms secured and unsecured refer to lenders’ requirement for collateral to be put against a commercial loan, offsetting the potential risk of missed repayments or defaulting on the loan.

Unsecured loans can be obtained without providing collateral. Meaning without offering up assets as insurance for repayments that will be made on a loan. Instead, unsecured business loans are approved based purely on the borrower's creditworthiness, which eliminates the possibility of lenders seeking repayment by calling in your assets. At Lumi this option is available for loans of up to $150,000.

Beyond that amount, secured loans typically require that significant assets are used to procure and ‘secure’ the loan. Traditionally the family home and/or vehicle, or property and equipment connected to the business have been used for this purpose. More recently a degree of flexibility has meant that savings, unpaid invoices, inventory and other similar assets have also been deemed suitable collateral in some cases. The benefit for borrowers is that providing collateral up front often means a lower interest rate can be approved for the repayment period.

For a clearer picture we suggest you try out the Lumi commercial loan repayment & affordability calculator to get a real time snapshot of exactly what each finance arrangement would look like for your business.

Alternative Loans On The Market

There’s an ever increasing number of finance options available to businesses looking to secure funding and whether you’re a kid in a candy shop or a deer in the headlights, information is important and knowledge gives you the power to choose a winning finance strategy for the good of your business.

Reasons To Secure A Commercial Loan

A commercial loan is an effective, industry standard way to cover any operational or unexpected costs associated with running a business. Better than leaning on your own personal funds, commercial loan finance allows for a significant amount to be borrowed, with repayment terms that are structured to work with you and adapt to your requirements as a business owner.

Ongoing operational costs that might necessitate a commercial loan include purchasing new stock, property, vehicles or machinery for the business. Whereas unforeseen operational costs tend to arise in the form of tax bills, regulatory hurdles, opportunities to grow the business and, particularly in the context of 2020 and the global pandemic, necessary tactics and acquisitions to pivot, maintain, stay afloat and thrive.

If your business is established and in a position to make a strong case for funding in a commercial loan application, the benefits of affordable interest rates and flexible repayment cycles discussed above could be a great fit with what you have planned long term for the business.

The Commercial Loan Application Process

With your in depth research of the various loan arrangements available to you now complete, the logical next step is to scope out the requirements for submitting a comprehensive and successful application.

The good news is: the old school of thought that applying for a commercial loan requires reams of paperwork and a stressful search for countless supporting documents is now defunct.

At Lumi the process is simple, accessible and fast. Accessible because of the ability to apply online, then edit and update that application as necessary, is game changing tech for potentially overwhelmed business owners striving for less tasks to complete, not more. Fast because we provide you with an application outcome within a few hours and funding on the same business day is also possible.

We’re proud to have designed a commercial loan application process that saves time - and therefore money - which can both be better spent on initiatives that support the growth of the business.

If you’re ready to apply for a commercial loan it’s now time to pull together the supporting documents that will allow you to present your application in the best possible light. At Lumi these include:

So, now that you’ve read everything you need to know about getting a commercial loan for your business, let’s get you on the road to taking that business to the next level.

Let's Get Started

Min 6 months in business
Active ABN or ACN
Min $5,000 monthly revenue

Enter your desired loan amount

$

Choose a repayment period

months

Finally, choose the annual interest rate

Our interest rate can vary from 9% - 24% simple interest per annum, depending on the borrowers credit and risk profile.
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24
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Your Monthly Payment

Loan amount is estimated based on your weekly repayment affordability, % Simple Interest Per Annum for a term of months, including an origination fee of 2.5% of the total loan amount.
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Total Interest

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Total Repayment