How much can I borrow for a business loan? What lenders check

"How much can I borrow for a business loan?" is usually the first question a business owner asks, and the honest answer is that it depends on the type of loan as much as on the business. A lender will offer a very different amount for an unsecured loan, an equipment purchase or a loan backed by property. This guide sets out the typical ranges, what lenders check and what moves the number.

The short answer by loan type

These are the typical ranges across our lender panel. They are a guide, not an offer.

• Unsecured business loan: around $5,000 to roughly $500,000, over 3 to 36 months.
• Business line of credit: limits commonly from $10,000 to $500,000 unsecured, with larger limits when security is offered.
• Low-doc business loan: $5,000 to $400,000.
• Equipment finance: from about $5,000 to $5 million or more, usually at 100 per cent of the purchase price for an established business.
• Secured business loan: $50,000 to $5,000,000, over 12 to 180 months.
• Fit-out finance: commonly $20,000 to $1.5 million.
• Buying a business: lenders commonly fund 50 to 70 per cent of the purchase price, and sometimes 90 to 100 per cent for a strong buyer with property security. Select lenders go as high as $20 million.

The actual figure depends on your trading history, cash flow, existing commitments and credit profile. No amount is certain until a lender approves it.

How lenders size an unsecured loan

Most unsecured business lenders size a loan against turnover rather than assets, commonly to a share of monthly or annual revenue. They read your recent business bank statements to see how much comes in and how consistent it is.

For an established business that does not own property, the amount is typically up to around $250,000 to $500,000 with strong bank statements. Newer businesses are offered less.

An unsecured business loan can still require a personal or director's guarantee. A guarantee may make you personally responsible if the business cannot repay the loan.

A business line of credit is sized the same way. Lenders usually set the limit as a proportion of monthly turnover and the consistency of deposits. Most look for an active ABN, at least 6 to 12 months of trading and monthly turnover typically above $10,000.

How security changes the answer

Security lowers the lender's risk, so the amounts are larger, the rates are lower and the terms are longer.

A secured business loan is backed by an asset you pledge. That is usually residential or commercial property, but sometimes equipment or a general security agreement over the business. The trade-off is time. Allow two to six weeks including valuation, so it does not suit funding needed this week.

Borrowing for equipment and vehicles

If the money is for a vehicle or a machine, use equipment finance and not an unsecured loan. The equipment itself is the security, so lenders will go further.

Most lenders will fund 100 per cent of the purchase price for an established business. Many include delivery, installation and extended warranty in the amount financed. Low-doc approvals commonly go up to $400,000, and larger amounts need financials. The resale value of the asset influences the maximum term and whether a deposit is asked for.

See equipment loans for how this works. An unsecured loan is not suited to long-term purchases of vehicles, machinery or property, where secured finance is cheaper.

What lenders check

Whatever the loan type, lenders come back to the same points.

• Trading history. Many unsecured lenders want at least six to twelve months of trading. A short ABN history is not an automatic decline, but it narrows the panel and usually affects the rate and structure offered.
• Turnover and consistency. Regular deposits matter as much as the total.
• Existing commitments. Repayments you already make reduce what a lender will add.
• Credit history. Some lenders will consider businesses with past defaults if trading is strong.
• Tax position. Lenders in most industries want to see tax up to date.
• Security and guarantees. Guarantees are commonly required regardless of whether the business is a sole trader, partnership, company or trust.

If your financial statements are not current, a low-doc business loan is assessed on bank statements, ABN history and credit record instead. Low-doc does not mean no documents or automatic approval.

Five ways to lift the amount

1. Match the loan to the purpose. Finance equipment against the equipment and keep unsecured borrowing for working capital. Each part then sits on terms that suit it.
2. Offer security if you have it. Property or unencumbered assets increase the amount and lower the rate.
3. Reduce existing commitments first. Clearing or consolidating small debts frees up capacity.
4. Keep your bank account conduct clean. Lenders read statements for dishonours and long periods overdrawn without approval.
5. Use a broker to pick the lender. Lenders weigh turnover, industry and credit history differently. Approaching only the lenders likely to approve avoids wasted applications.

Get a rough figure in two minutes

Our borrowing capacity estimator gives a rough guide to how much unsecured business funding lenders may consider, based on monthly turnover and existing repayments. The repayment calculator then shows what that amount would cost each week, fortnight or month.

Neither is an approval. They are a starting point for a conversation.

Frequently asked questions

How much can my business borrow without security?

Unsecured facilities on our panel generally run from around $5,000 to roughly $500,000. Larger amounts usually require security or stronger financials. Lenders size the loan against turnover.

Can a new business get a business loan?

It depends on the lender and the product. Many unsecured business lenders want at least six to twelve months of trading. Some asset finance lenders will consider a new ABN where the director has industry experience, a clean credit file and often property ownership or a deposit.

Can a sole trader apply?

Yes. Sole traders, partnerships, companies and trusts can all be considered. A sole trader is assessed largely on personal credit alongside business performance.

Does an unsecured loan mean no personal guarantee?

No. An unsecured business loan can still require a personal or director's guarantee. The lender's security and guarantee requirements should be explained to you before you decide.

How fast can I get the money?

Unsecured business loans typically settle 24 to 72 hours after documents are received. Secured loans take two to six weeks including valuation.

Next step

Tell us what the money is for and roughly what the business turns over. Lyft Money will tell you the realistic range for your business across our lender panel before any application is submitted.

This article is general information, not financial or tax advice. Lending is subject to each lender's assessment and approval.