Complete guide on business start up loans in 2025

New businesses need capital. If you’re a business owner or looking to establish a startup, securing a loan from a lender can help you to achieve your goals and put your enterprise on a sound financial footing for the future.

Around a third of startups in Australia fail due to a lack of funds¹. An injection of money at just the right time can make all the difference, securing day-to-day operations while empowering you to target growth, scalability, and business expansion.

Let us dive deeper into things to consider before applying for a business loan, discuss how you can make the most of it, and give a general guide on the application process.

Table of contents
Factors to consider Ways to utilize your business loan Getting a startup business loan in Australia FAQs

Factors to consider before getting a business start up loan

A business loan is a form of debt. Before applying for a loan, you should clearly define what the funds would be used for and how they will help your business. A loan should improve your financial situation, not restrict cash flow or put a strain on business operations.

Here are some essential factors to consider, research, and prep before applying for a business startup loan:

Business plan

You’ll need to put together a business plan and prepare financial statements to outline your current situation and demonstrate your ability to pay back a loan². Lenders will want to know start up costs, operating expenses and budgeting including a profit and loss forecast and cash flow statement.

👆Click here to get a FREE business plan template

Loan eligibility criteria

Financial statements are usually one of the main loan eligibility requirements. Without these, lenders won’t be able to determine if you can meet repayments. The other criteria for loans will differ by lender. For small business loans, you commonly require:

• An active Australian Business Number (ABN) or Australian Company Numbers (ACN)
• Registration for goods and services tax (GST)
• Minimum trading history — usually at least 6 months
• A good credit rating

Loan type and repayment terms

There are two common types of loans: unsecured and secured. Unsecured loans are similar to personal loans. You will have to repay the amount you borrowed plus interest over a specific time frame agreed with the lender. Secured loans follow the same pattern, but also include collateral — an asset that acts as security and can be seized if you default on payments.

You’ll also need to carefully assess the repayment terms: duration, payment schedule, interest rate, and fees. Make sure you understand the specific need for a business loan and how it can fit into your operations. This gives you a basis to research and understand the type of loan that would be suitable and effective for you.

Credit score

Lenders check both your personal and business scores when assessing your loan application. A strong credit profile is preferable as you are likely to qualify for loans at better interest rates. Your business credit score is calculated on a range of factors including payment history and outstanding debt. It is best practice to check your credit ratings before applying for a loan.

Interest rates and fees

The interest rate is usually the main cost involved in business loan financing. They vary for business loans to start a business, but typically fall between 5% to 15% per annum, and can be either fixed or variable.

Factors that influence interest rates include the loan type, your credit rating, current market conditions, and the lender’s policies. An unsecured business loan for a startup typically has a higher interest rate. You should also be aware of other fees, such as one-time charges for processing and early repayment charges.

Financial management strategies

Getting a loan is one thing, but wielding it effectively is another. Refer back to your business plan when looking to allocate and manage potential funds.

While it is not strictly required to have a business bank account when applying for a business loan, having one can be highly beneficial. A dedicated business bank account helps maintain clear financial statements and cash flow records. Keeping your personal and business finances separate also gives a clear view of your business's financial health, which can make the loan application process much smoother and more efficient.

The Wise Business account can be used to pay and manage cash flow, especially if there are international transactions involved. You can integrate Wise business with your accountant or accounting software which helps save time on manual admin and makes it easier to manage cash flow.

With Wise business, your international transfers will benefit from mid-market exchange rate with low and transparent fees. This makes it much cheaper to send money through a Wise business account and saving costs which can be directed towards other business growth initiatives.

Sign up for the Wise Business account! 🚀

Ways to utilize your business start up loan

For startups, business loans provide essential capital to support short-term stability — cash flow, inventory, training staff and emergency funds — while fuelling long-term growth in areas such as product development and marketing. A well-managed loan also boosts creditworthiness so you can access better financing options in the future.

There are lots of ways to use the funds you have just secured. While you might want to focus on areas that can deliver returns that exceed the loan interest rate, don’t overlook the essentials.

Common use cases for loans include:

• Product and service development - You can use your loan to develop and bring your product or service to market. This involves doing market research, and designing, prototyping, and refining your offering so it meets customer needs and is different from the competition.
• Marketing - Investing in marketing is key to brand building. It raises awareness of your business while engaging customers and generating sales. You could use your loan to run advertising campaigns, build a website, and create and manage social media accounts.
• Technology - Purchasing tech including computers, cloud software, CRM systems, and project management tools will support core business operations, reduce running costs and increase productivity.
• Talent acquisition - Building a skilled workforce is key to long-term success. You can use your loan to advertise job openings, cover onboarding expenses, and run courses and certifications to equip employees with everything they need to excel.
• Global expansion - Startups benefit by broadening horizons and targeting global expansion. You can use your loan to conduct market research, create localisation strategies, navigate regulatory challenges, and set up international banking solutions. Such global initiatives can always be supported by solutions like Wise Business, allowing your business to move money across 40+ currencies at the mid-market rate and save on fees that that are usually spent on markups.

Getting a startup business loan in Australia

There are lots of ways to get a business loan to start a business, from traditional banks to government-backed fund and grant programs. The right option will depend on factors including your business goals and the amount you need to achieve them.

Here’s a short overview on what is needed to secure a business loan in Australia:.

1. Understanding business need

Start by taking stock of your current financial situation and deciding how much you are willing to borrow and repay. You can then consider viable loan terms, paying close attention to costs and interest payments.

2. Assess loan options

There are multiple sources for business loans. You can turn to major banks, local mutuals, and online lenders. There are also loans available via programs and initiatives run by the Australian government. You can find loan options that are currently ‘open’ at the business.gov.au website.

The government often provides loans and grants to startups that submit compelling proposals to support ‘priority areas’ in renewables, medical science, and agriculture, among others². These are provided by the National Reconstruction Fund Corporation (NRFC).

3. Prepare and submit an application

Next, you’ll need to prepare your application. Most lenders will request a detailed business plan and some financial forecasts and costs. Make sure you meet all the criteria and requirements for the specific loan that you’re applying for, before submitting your proposal.

If you’re applying for a government loan, you can usually do this online, while for traditional banks you can make a direct enquiry either online or at a physical branch. After that, approval can take anything from a few days to several weeks depending on the lender.

Spend less of your grant money when paying overseas with Wise Business

Securing a business startup loan can play a pivotal role in supporting the early stages of your business, providing the essential capital needed for growth and stability. At the same time, it becomes even more crucial to manage and utilize your loan effectively.

Startup businesses engaged in global transactions—whether with overseas suppliers, foreign payroll, or for goods and services—often incur hefty fees just to convert their money. This is where managing currency conversion costs becomes critical.

Wise offers international transfers at the mid-market exchange rate with low, transparent fees. This cost-effective solution ensures that more of your loan is used for business growth rather than lost to high banking fees. Such savings can then be reinvested into key business areas, whether it’s product development, marketing, or talent acquisition.

Whenever you need to send, spend or exchange foreign currencies, you’ll benefit from the mid-market exchange rate, with low, transparent fees.

You’ll also benefit from all of these features with Wise Business:

• No ongoing fees, minimum balance requirements or foreign transaction fees
• Debit and expense cards for you and your team, which you can use in 150+ countries
• Multi-user access for team members, with ways to control and manage permissions
• Pay up to 1,000 people at once with the Wise batch payments feature
• Integrate with your favourite cloud accounting solutions
• Use the powerful Wise API for automation and streamlining workflow

Opening a Wise Business account gives you the ability to hold and exchange 40+ currencies at once. You can send fast, secure payments to 140+ countries, and get account details to get paid in 8+ currencies like a local.

Sign up for the Wise Business account! 🚀

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FAQs on starting a business loan:

How much deposit do I need for a business loan in Australia?

Deposit requirements vary by lender and loan type, but you don’t usually need one for unsecured business loans. However, lenders may request a percentage of the total loan amount as a deposit if you have been trading for less than a year.

Why can't I get a start-up business loan?

Not every business loan application will be accepted. You might be unable to get one if you don’t have a business plan or poor credit history and limited cash flow. You must meet the lender’s eligibility criteria to secure a business loan.

Do I need a good credit score to get a business startup loan?

No, you don’t always need a good credit score to secure a business loan. However, you are likely to have fewer lenders to choose from and less favourable terms. A good credit score will also enhance your approval chances.

What are unsecured loans?

An unsecured loan is a loan that doesn’t require the borrower to provide security in the form of collateral — an asset such as property, equipment, liquid assets, or cash — to get the funds.

As a student, am I able to get a business startup loan

You can get start up business loans with no income as a student. However, you’ll still need to meet strict eligibility requirements, such as submitting a strong business plan and demonstrating financial stability. There may also be government-funded startup loans available.

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Sources:

1. Barossa Org - Why Startups Fail
2. Business gov au - Apply for a business loan
3. Business gov au - National Reconstruction Fund