A business loan is finance provided to a business for business purposes: covering working-capital gaps, buying equipment or vehicles, funding premises or backing expansion. Unlike a home loan, it is assessed mainly on the cash flow of the business rather than a household budget, and it can be secured by property or assets or written unsecured against the strength of the business itself.
For brokers, business lending widens what you can offer existing clients, but it runs on different products, assessment logic and documentation from residential work. This page explains the main structures and what lenders assess, then shows how to prepare files that get approved.
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What a business loan covers
The label covers any credit extended to a business entity, whether that is a sole trader, partnership, company or trust. Typical uses include smoothing cash flow between invoices, funding stock before a busy season, purchasing plant and equipment, fitting out premises or buying the building the business operates from. Because purposes differ so widely, the right product differs just as much.
Where the money comes from
Majors and regionals dominate straightforward secured lending at the sharpest pricing. Beyond them sit specialist and non-bank lenders that trade margin for speed, flexibility on documentation and tolerance for unusual structures, plus private funders for time-critical or outside-policy deals. Matching the funder tier to the urgency and complexity of the need is most of the broking craft in this space.
Secured versus unsecured
A secured facility pledges property, equipment or other assets, which lowers pricing and lifts how much can be borrowed but exposes the asset if the business fails. An unsecured facility relies on cash-flow strength and often a director guarantee: faster to arrange and less paperwork up front, but carrying higher interest rates and lower limits. Choose by asking what security genuinely exists and how fast the money is needed.
What lenders assess
Assessment centres on whether the business generates enough reliable cash to service the debt. Lenders review trading history, typically two years of financials or BAS, bank statements showing actual turnover, the purpose of the funds and available security. The directors’ own credit history is reviewed too, particularly in smaller businesses where the owner’s conduct stands in for corporate track record.
Facilities beyond the standard term loan
Several specialised structures solve specific problems. An overdraft smooths day-to-day swings. Equipment finance ties the loan to the asset it purchases. Invoice finance advances cash against unpaid customer invoices for businesses waiting on slow debtors. Trade finance funds stock purchases ahead of sale. Reaching for the right structure rather than defaulting to a term loan is usually where the saving hides.
Preparing an application that gets approved
Strong files share the same parts: current financials or BAS, recent business bank statements, a clear statement of purpose with amounts, and asset or security details where relevant. Where the business is young or thin, directors should also know their personal credit score, because it will be checked. Confirm each lender’s current lending criteria before submitting rather than assuming last year’s policy still applies.
Advising business clients well
Business owners remember the adviser who talked them out of the wrong facility. Being straight about costs, risks of personal guarantees and realistic timelines is how you build trust that turns into repeat work. Compare the full loan terms, not just the headline rate: fees, early-payout rules and security requirements change the real cost. And keep your knowledge broad across the types of loans available, because the commercial application process rewards brokers who route each need to the product built for it.
If you are adding business lending to your practice this year, start narrow: pick one facility type, learn its top three funders’ current appetite, and run one client need through end to end before expanding the offering.
