Business Banking & Finance Fintech small business loans

Hi everyone. Hows the landscape for unsecured small business loans these days?

Found a list but not sure which one best suits our needs.
Business Loans - Australian FinTech

We are a small startup searching for cashflow loans. As an online business our expenses are minimal. However we are looking into leasing a 200sqm industrial space after a successful period of trading(from our garage)

Given the current climate how long must we be trading successfully to be considered for a loan? Thanks

 

There is a number of ways to do this so it really depends on your business, financials, etc.

There is debtor financing however being an online business this may not be available to you so you may need to do traditional unsecured business loan. There are a couple of lenders that we regularly use in that list but I have't heard of 95% of the lenders on that list so you need to be careful who you use and you dont want to fry your credit file with numerous credit enquiries.

How much are you looking for? Do you have full financials?

 

How much are you looking at?

In my experience we have never had unsecured debt. Early days we had overdraft up to 400k which was guaranteed by directors, then years later went to St George Cashflow finance (invoice discounting) which is secured by the debtor book and also has directors guarantee behind it. The latter is a good product.

 

we estimate

Were absolutely tiny in comparison. We need 60k for a 6month runway. Much of that would go towards the lease and basic ops. We would love to attain 150K total for R&D (Software development) however we completely understand that would be quite the stretch.

 

Running on a oily rag(6-12months) we need 60k to keep the doors open and lights on. Roughly 30 of that would be for the lease.

We are a online training company. Our setup costs are largely IT related. Equipment cost come in at about 18K

 

Ok thats not a lot of funding so I don't see a major issue with this - the interest rate and loan structuring will be highly dependent on what sort of financials you have and/or if we are relying on BAS statements for servicing or historic years financials.

Either way shouldn't be an issue for that amount.

 

Yip they are more tailored for businesses that scale easily(online only) We will have a brick and mortar component which is considered less appealing. You can almost hear them say "ewwww" over the phone its hilarious

 

Yes. The longer we operate successfully the more appealing we are to lenders. However it would be great to know how long a small business needs to operate before they get a look in using P/L and BAS Statements.

For our first conservative year we are projecting a small turnover 200k in revenue. Costs at the most being 90K for the first year.

Also a large majority of our revenue will most like come exponentially at the end of our year as we gain traction. So i can reasonably only expect lenders to take notice after a full 12 months??

 

Since the funding amount is low you would need at a minimum:

1. Draft financials and/or BAS statements (the more the better)
2. Summary of aged payables and receivables
3. ATO portals to show any ATO debts

 

Thanks Shahin. You mention the more the better. What’s the minimum as we are still unsure how long we must operate for to considered somewhat viable

 

To anwser your question,

12 months trading history will suffice

 

And for start up lending some lenders don't require any trading history

 

Right of the bat one would expect the rates to be sky high but interesting to know, which lenders would those be?

 

Why not approach a broker to find out rather than going direct to one source which may not be the most suited to your needs?

 

You might be surprised by the rates offered, some banks are much more open to this some flat out won't lend to startups. ANZ, for example ,has some good policies for this style of lending but definitely recommend speaking to a broker first to see if they're the best fit for what you need.

 

We tried and the only finance was either secured by assets e.g. plant and equipment or secured by property, and most of the interest rates were in the teens, with some up to 20+%.

We ended up secure with CBA and that was for a measly 15k, after running for 2 years showing a profit. (We scraped the barrel fitting out and leasing a shopfront)