Business loan eligibility: a checklist before you apply

Eligibility for a business loan isn’t a single yes or no. It’s a set of checks, and how you score on each decides which loans are open to you. Work through this checklist before you apply and you’ll know which options to pursue, which small fixes are worth making first, and what to explain upfront.

The eight-point checklist

#	Check	What lenders want to see	If you don’t tick it
1	Active ABN	Registered and current	Register or reactivate first
2	Time trading	Several months to years, depending on the loan	Property, deposit or equipment finance
3	Turnover	Enough to carry the repayment	Smaller amount or security
4	Bank conduct	Few or no dishonours, few overdrawn days	Tidy up for a few months, or explain
5	Existing debts	Manageable, disclosed	Consolidate or reduce first
6	Tax position	Lodgements current, any debt on a plan	Lodge and set up a plan
7	Credit history	Clean, or problems explained	Specialist or secured options
8	Security	Optional, but widens options	Unsecured or asset-backed routes

1. Is your ABN active?

Lenders confirm your ABN on the Australian Business Register. If it was cancelled during a quiet period, reactivate it before applying. For companies, the ACN and directors’ details will also be checked.

2. How long have you been trading?

Time trading	Options typically available
Under 6 months	Property-backed, equipment finance with deposit
6 to 12 months	Some unsecured lenders, equipment finance, secured
1 to 2 years	Most unsecured and secured options
2+ years	Widest range, including the cheapest options

3. Does turnover support the loan?

Unsecured lenders size loans on turnover. Work out your average monthly deposits from bank statements and the lowest month. If the repayment would take a large share of a slow month, consider a smaller amount or a longer term.

4. How does the bank account look?

Assessors look for regular deposits, few or no dishonoured payments, limited overdrawn days and business spending kept separate from personal. If your account has a messy patch, a few clean months before applying can make a real difference.

5. What do you already owe?

List every business debt: lender, balance and repayment. Several short-term loans debiting at once is a common reason for declines. Be upfront; undisclosed debts appear in statements anyway.

6. Are your tax affairs in order?

• BAS lodged on time.
• Tax returns current, or a clear timetable.
• Any ATO debt on a payment plan that’s being kept.

If returns are behind but BAS is current, low doc loans may suit.

7. What’s on your credit file?

Check your credit report before applying. Correct errors, settle what you can and prepare a short explanation for anything that remains. Our credit history comparison shows which loan types tolerate which issues.

8. Do you have security to offer?

Property isn’t required, but it widens the options, allows larger amounts and can offset other weaknesses. If you’re considering it, have the address, estimated value, loan balance and the agreement of everyone on the title.

The documents checklist

• ID for each director or owner
• ABN and ACN details
• 6 to 12 months of business bank statements
• Recent BAS
• Tax returns or financial statements (if available)
• List of business debts and repayments
• Quote or invoice for anything being purchased
• Property details, if security is offered
• ATO statement and payment plan details, if relevant
• A short note explaining any credit issues

How do you score yourself?

Ticks out of 8	What it usually means
7 or 8	Most options open; focus on comparing cost
5 or 6	Good options available; fix or explain the gaps
3 or 4	Narrower options; security or a specialist lender helps
0 to 2	Fix the basics first, or rely heavily on security

Illustrative example. A Newcastle electrical contractor scores himself: ABN active, four years trading, strong turnover, but two dishonours last quarter, one other loan, BAS current but last year’s return outstanding, a clean credit file and no property. Six out of eight. He waits two months to show clean banking, asks his accountant to lodge the return, and applies with an explanation of the dishonours. He’s approved for an unsecured loan on better terms than he’d been offered three months earlier.

Quick fixes that make a difference

• Move all business banking into one dedicated account.
• Keep a small buffer to avoid dishonours.
• Lodge any outstanding BAS.
• Pay off or settle small defaults and keep the receipts.
• Get quotes in writing.
• Write the explanation note before you apply.

What if you’re buying a business rather than running one?

Eligibility looks different when the business you’re borrowing for isn’t yours yet. Lenders financing a purchase typically want:

• The target business’s financials for the last two or three years.
• The contract of sale, including what’s included: stock, equipment, goodwill.
• The lease, and confirmation it can be assigned to you.
• Your experience in the industry or in running a business.
• Your contribution, in cash or other security.

business.gov.au’s guide to buying an existing business covers the due diligence steps worth taking alongside the finance. Treat the lender’s checklist as a second set of eyes on the deal rather than an obstacle.

How often should you revisit your eligibility?

Your position changes over time, and so do your options. A quick check once a year, ideally after your tax return is lodged, is worthwhile even if you don’t need finance:

Check	Why revisit it yearly
Credit report	Catch errors early; see older items age
Lodgements	Full-doc options need current returns
Existing loans	Some may be ready to refinance more cheaply
Property equity	Values and balances change
Banking conduct	A clean year strengthens any future application

Owners who do this tend to borrow on better terms, because they apply from a position of strength rather than in a hurry.

What should you not do while preparing?

A few things can undo good preparation in the weeks before you apply:

• Taking on new short-term debt, which shows up in statements and adds to commitments.
• Moving large sums between personal and business accounts without a clear reason.
• Letting a BAS go overdue while you focus on the application.
• Applying elsewhere “just in case”, which adds credit enquiries.

Keep things steady and boring for a month or two. To an assessor, steady and boring reads as low risk.

Find out where you stand

Scoring yourself is a good start; a conversation tells you the rest. Asking doesn’t touch your credit file; a check only comes up once you decide to proceed. Your details aren’t shared around a crowd of lenders. A real person looks at the checklist with you and tells you plainly which options you’re ready for now and which would open up with a small fix.

Please be accurate on the form so the answer reflects your real position. Check your eligibility, or rank loan types for your situation with the comparison tool and then start your enquiry.