Can a new business get a loan?

Why is borrowing harder in year one?

Because lenders predict the future by reading the past, and a new business doesn’t have much past. An unsecured lender sizing a loan on turnover needs turnover to look at. A bank wanting two years of financials can’t get them from a business that’s eight months old.

That’s not a judgement on your idea. It’s a gap in evidence. The job is to fill it with something else.

What fills the gap?

1. Property security. This is the big one. With equity in a home or investment property, a lender can rely on the security and a believable repayment plan rather than trading history. Property-secured business loans run from $20k to $5m and are the most common route for very new businesses that need meaningful funds.

2. Your experience. A chef who ran someone else’s kitchen for ten years opening her own restaurant is a different risk from someone who’s never worked in hospitality. Spell your experience out.

3. Early bank statements. Even three or four months of clean, steady business banking tell a story. Run everything through a dedicated business account from day one.

4. Contracts and orders. Signed contracts, purchase orders or a booked pipeline show money that’s coming.

5. A short, realistic plan. business.gov.au lists a business plan and financial forecasts among the documents to prepare. Lenders don’t want fifty pages; they want to see you’ve done the sums.

What can a new business realistically borrow for?

Need	Realistic route
Fit-out or equipment, owner has property	Property-secured term loan
Working capital in the first months, no property	Limited — small facilities once some statements exist
Buying an existing business	Secured loan, using the business’s past performance
Stock for a confirmed large order	Short loan supported by the order, often secured
Cash flow once trading 6–12 months	Unsecured loan or line of credit sized on turnover

What should I avoid in the early months?

• Mixing personal and business money. It makes your statements unreadable to a lender.
• Lots of credit applications. Each one can leave a mark on your file.
• Missing BAS deadlines. Once your GST turnover reaches $75,000 you must be registered for GST, and lodging on time from the first quarter is one of the strongest signals you can send.
• Borrowing to cover losses with no fix. If the model isn’t working yet, more debt makes it harder to fix.

An illustrative example

A Parramatta physiotherapist leaves a large clinic to open her own practice. Three months in, her bookings are growing and her bank statements are tidy, but she has no financials. She needs $110k for a second treatment room and equipment. An unsecured lender won’t stretch that far on three months’ history. A secured loan over her apartment, with her clinical experience and booking data, does the job. In a year, with a trading record, she may be able to refinance or add an unsecured facility.

How do I build a borrowable record fast?

1. Open a business bank account and use only it.
2. Invoice properly, with your ABN, from the first job.
3. Lodge every BAS on time.
4. Keep your personal credit file clean — directors’ credit matters.
5. Keep a simple monthly profit-and-loss in your accounting software.
6. After 6–12 months, revisit your options; they’ll have widened.

Our guide to getting loan-ready in 90 days is a good plan for this stage. If you don’t own property, read borrowing without property. And if you’re buying an established business rather than starting one, see borrowing to buy a business.

What does a lender want in a start-up plan?

Not a glossy document. One or two pages that answer:

1. What you sell, and to whom. Who are the customers, and how do they find you?
2. What it costs to run. Rent, wages, stock, insurance, your own drawings — monthly.
3. What you expect to bring in, month by month for the first year, with your assumptions written next to the numbers.
4. What the loan is for, itemised.
5. How it gets repaid, and what happens if sales take longer than planned.
6. Who you are — your experience in the industry and in running a team or a budget.

Lenders read optimism every day. What stands out is realism: conservative assumptions, a buffer, and evidence such as signed customers, pre-orders or a lease already agreed.

Is buying a franchise different?

Somewhat. An established franchise system gives lenders more to go on — a known model, typical costs, other outlets’ performance — so some lenders are more comfortable with a new franchisee than with a brand-new independent business. You’ll still need to show your own contribution, experience and a realistic budget for the fit-out and early months. Read the franchise disclosure documents carefully and get advice before you commit.

How soon after starting should I talk to a lender?

Before you need the money, not the week the bills arrive. An early conversation tells you what evidence a lender will want at your stage, so you can collect it from day one: tidy statements, invoices, contracts, BAS. It costs nothing and doesn’t touch your credit file.

New business, real plans?

Mr likes a good start-up story. Tell us yours in about 60 seconds — how long you’ve been trading, your experience, what you need and any property. There’s no credit check to enquire, your details aren’t sprayed across lenders who’ll say “come back in two years”, and a real person will tell you what’s possible now and what will open up later. Honest answers about your trading time help us match you properly. See if you qualify.