Start-up business loans, explained

Every great business was once a brand-new one with no track record at all. The frustrating truth is that many lenders want two years of history before they’ll lend unsecured — which is two years more than a start-up has. The good news: there are well-trodden paths around that, and most of them are about giving the lender something solid to rely on other than the past.

How do start-ups get funded in Australia?

Route	How it works	Suits
Property-backed loan	Founders’ home or investment equity secures the loan	Most start-ups with property, especially service businesses
Equipment finance	The equipment secures itself	Trades, hospitality, manufacturing, health
Vehicle finance	The vehicle secures itself	Couriers, mobile services, trades
Franchise finance	A proven system supports the lender’s view	Franchisees
Founders’ savings and family	Your own stake, sometimes topped up by family	Every start-up, to some degree
Grants and programs	Government support for specific purposes	Eligible industries and regions

Unsecured lending — the “sized on bank statements” kind — generally becomes possible once the business has traded for several months and has deposits flowing through a business account.

Who suits each option?

• Founders who own property have the widest choice — equity can fund fit-out, equipment, stock and working capital in one go.
• Founders without property usually lean on equipment and vehicle finance for the hard assets and fund the rest from savings.
• Franchisees can benefit from the franchisor’s track record; see franchise finance.
• Experienced operators starting their own version of a business they’ve managed elsewhere often impress lenders with that experience.

How does a start-up loan work, step by step?

1. Cost the whole plan — set-up, equipment, fit-out, stock, wages and a buffer for slow early months. Our guide to costing your growth plan can help.
2. Decide your own contribution — cash, assets or equity.
3. Write a plan and forecast. business.gov.au has free business plan templates and a step-by-step guide to starting.
4. Enquire with the plan, the amount and any security. No credit check to enquire.
5. Structure. Often a mix: equipment finance for gear, property-backed or other funding for the rest.
6. Open, trade, then review — after some months of trading, unsecured options open up.

What are the pros and cons of borrowing to start?

Pros	Cons
Lets you open properly rather than half-equipped	Personal property is often on the line
Equipment finance spreads the cost of gear	Repayments start before revenue is steady
Property equity can fund the whole set-up	Forecasts for new businesses are uncertain
A good plan builds confidence for later lending	Unsecured options are limited at the start

What does it look like in practice? (illustrative)

A chef with ten years’ experience running other people’s kitchens opens her own small restaurant in a regional Victorian town. She contributes savings, puts the commercial kitchen equipment on equipment finance, and uses a second mortgage over her home for the fit-out and first months of wages. After a year of trading, she refinances part of the second mortgage to an unsecured loan, reducing how much of her home is tied to the business. Illustrative only.

What makes a start-up application strong?

• Relevant experience — show you know the industry.
• Skin in the game — your own contribution.
• Realistic numbers — conservative revenue, generous costs, a buffer for delays.
• A clear repayment path — how the loan gets repaid even if the first months are slow.
• Clean personal credit — or a frank explanation if not.

If you’d like a real person to pressure-test your plan before you commit, send it to us.

What about grants?

Grants can help, but they’re usually targeted (specific industries, regions, purposes or groups) and competitive, and many reimburse costs after you’ve spent the money. The business.gov.au grants and programs finder is the best place to see what’s currently open. Treat grants as a bonus, not the foundation of your funding.

What are the most common start-up funding mistakes?

• Underestimating the slow start. New businesses almost always take longer to reach steady revenue than the founder expects. Fund a few months of costs, not just the opening day.
• Spending everything on the fit-out. A beautiful shop with no working capital is a fragile shop.
• Using expensive short-term money for long-term assets. Match terms to how long things last.
• Mixing personal and business banking. It makes your first months of trading harder for future lenders to read.
• Skipping professional advice. An accountant can help with structure, GST registration and tax, and the ATO says you must register for GST once your GST turnover reaches $75,000.

What documents will you need?

• Photo ID and ABN or ACN (or registration in progress)
• A business plan and 12-month cash-flow forecast
• Quotes for equipment, fit-out and vehicles
• Lease or agreement for lease if you have premises
• Property details if offering security
• Evidence of your own contribution and relevant experience

What are the alternatives?

• Low-doc business loans — once you have a few months of statements.
• Business acquisition loans — buying an existing business instead of starting from scratch.
• Franchise finance — a system with a track record.

Got a brilliant idea and the drive to build it?

Starting a business is one of the most exciting things you can do — and getting the funding shape right from day one makes everything that follows easier. We’ll help you work out which mix suits your plan and security.

Enquiring won’t touch your credit file — there’s no credit check at that step. Your plan stays with our team, not a carousel of lenders, and a real person calls you. Please be accurate about your experience, contribution, security and costs so we can match you properly. See if you qualify.