Most mainstream lenders want two years of lodged financials before they'll look at a business loan. At the major banks and second-tier banks, that's a hard rule in their credit policy. A business that registered its ABN six months ago doesn't have the track record they lend against.
That doesn't mean the answer is always no. There are fewer lenders, they're different lenders, rates are higher, and the director's personal finances count for more than they would in an established business. This guide covers what you can get in year one and how to be in a stronger position by month twelve.
What lenders look at when you don't have financials yet
Without business financial statements, lenders look at other things.
How long you've had your ABN and GST registration
Some lenders want your ABN to be at least twelve months old. Others accept six. A few will look at businesses from day one, but only if other parts of the deal are strong. GST registration matters too. It shows you're actually trading and opens up some lender products that ABN-only businesses can't get.
BAS history
Even one or two quarters of lodged BAS gives a lender a way to check the revenue you say you're making. Lodge on time, every time, from the day you register for GST.
Bank statements
For lenders that skip formal financials, three to six months of business bank statements become the main document they assess. Clean statements with regular deposits, no bounced payments (dishonours) and no unexplained large withdrawals show you can manage money, even before you can prove you make it.
Director's personal credit
Early on, the director is the business as far as credit goes. A clean personal credit file (no defaults, no court judgements, no heavy personal debt) opens up far more options. A black mark here can shut doors that the business's own numbers might have opened.
Security available
If the director offers property they own as security, a borderline startup deal becomes one that many more lenders will fund.
The products you can get in year one
Asset and equipment finance
This is the easiest option for most new businesses, because the asset you're buying is the security. A lender funding a new service vehicle or a machine doesn't need two years of financial statements. It needs to know the director can make the repayments and that the asset would sell for a fair price.
The usual structure is a chattel mortgage. You own the asset from day one, and the lender registers a security interest on the PPSR until the loan is repaid. Directors with clean personal credit can often get this from day one. Low-doc versions, assessed on bank statements or a signed income declaration instead of full financials, open up once you've had your ABN for six to twelve months. If you're weighing up owning against flexibility, see how a chattel mortgage compares to an operating lease.
Most asset finance deals fund within three to seven business days of signed documents. Aurelius Capital arranges equipment finance with a panel that includes dedicated asset-finance lenders who are keen to lend to new ABN holders.
Business loans secured by property
If the director has equity in a home or commercial property, the risk of a startup deal changes. With property as security, the lender has a clear way out if the business doesn't work, and that's the risk they're worried about.
Loans secured by director property can be set up as term loans or lines of credit. The loan size, rate and LVR limit depend on the property type, the lender and what the money is for. If you own property, this is one of the few ways to borrow a decent amount in year one without two years of business financials.
Cash-flow lending on bank statements
This is a smaller category, but it exists. Some non-bank lenders assess new businesses on six months of business bank statements instead of formal financials. They look at how steady your revenue is, not your accounting history. Loans are usually small, often set as a multiple of your average monthly deposits. Rates are higher because of the short trading history, and loans usually run six to twenty-four months. Personal guarantees from all directors are standard. There's more on the cashflow finance page.
What you can't get yet, and why
Large unsecured loans are off the table in year one. The lenders behind those products price them on a known cashflow history. Without one, they can't measure the risk, so the product isn't offered to new businesses.
You won't get bank pricing either. The major banks lend to businesses at tight margins, backed by strong financials, long relationships and plenty of security. New businesses pay more. The higher rate is the cost of the lender knowing less about you, and it comes down as your trading record builds.
Expect personal guarantees on everything. No lender will lend to a business with under twenty-four months of trading without being able to chase the directors personally. That stays the case until the business has its own track record.
How the director's position carries the deal
In year one, the director's personal finances often decide whether a deal can happen at all. Lenders want to know:
- Is your personal credit file clean?
- Do you have personal assets, such as property equity or savings, that could be security or show you're financially stable?
- Do you have income to repay the loan from outside the new business?
A director with clean credit, equity in a property and a personal income they can prove can get decent finance from day one. A director with bad credit, no assets and no income outside the new business will find it much harder. The deal doesn't vanish, but the options shrink to the most expensive end of the market.
A 12-month plan to build your borrowing profile
The businesses that get the best terms at month twelve treat year one as a chance to build their credit record.
Months 1 to 3
Register for an ABN and GST from the start, even if your turnover is below the level where GST is compulsory. The age of both registrations counts towards lender minimums. Open a separate business account straight away and keep it clean: pay yourself separately, keep personal spending out, and keep a steady positive balance.
Months 3 to 6
Lodge your first BAS on time. One lodged BAS shows you're trading. A run of on-time lodgements builds a record a lender can check. If you need equipment or vehicles, now is the time to look at asset finance. Most equipment lenders will work with three to six months of ABN history if the asset suits and the director's credit is clean.
Months 6 to 12
A steady bank statement pattern (regular deposits, no bounced payments, predictable account activity) now opens up bank-statement lenders. Pay everything on time: trade accounts, supplier credit and any loans you already have. Fully separate your personal and business finances if you haven't already. Ask a broker to work out what a property-backed loan could look like, so you're ready to move when a chance to grow comes up.
A business with twelve months of clean bank statements, lodged BAS and no credit problems looks very different to a lender than a day-one ABN. See the six categories of business lenders in Australia to see where you'll fit at each stage.
Why a broker matters more when you're starting out
Most lenders don't publish which products are open to new ABN holders. It's a small part of their book, and the rules change when they review their credit policy. A broker who knows the current panel can find the lenders that actually want your kind of deal, not the ones whose marketing says yes while their credit team says no.
A broker also protects your personal credit file. Lots of lender enquiries in a short time pull your credit score down. With a broker, you usually go to the right lender first, with a well-prepared application that shows the director's position as strongly as the facts allow. See how commercial finance brokers get paid. There are no upfront fees on most deals.
If you've just started and want to know what finance you can get now, and what a deal would look like (rate, structure and likely security), the application form is below. Most enquiries get a reply within four business hours.