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Can You Apply For A Business Loan As A Sole Trader?

Can You Apply For A Business Loan As A Sole Trader? | Financial Information | Tiger Finance

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If you’re a sole trader and are thinking of applying for a business loan, you might be wondering whether or not you qualify. For some lenders, lending to a sole trader may seem like a risky move. However, some lenders are specialists in loans for the self-employed, so it’s important to do your research. For a business loan, there may be a lot of criteria that you need to meet, such as income standards and a good credit score.

Read on below to find out more about getting a business loan as a sole trader. 

Can you apply for a business loan as a sole trader?

In some cases, it may be difficult for you to be approved for a business loan as a sole trader. Some lenders may be hesitant to lend to a sole trader, as own businesses can often be risky. However, that does not mean that you will not be able to get approved for a loan. For instance, you could apply for a self-employed loan, or find a lender that lends to new or small businesses.

When assessing business loans for sole traders, lenders tend to look at your financial history. This would include any savings, your loan repayment history, years in business and your credit score. Your lender will want to be sure that you can to repay debts on time. They will also want to make sure that the stability of your income and cash flow is good, and check if you have previously had defaults or bankruptcies listed against you.

Looking for a business loan as a sole-trader | Financial information | Tiger Finance

How hard is it to get a business loan?

It can be harder to qualify for a business loan than a home loan. This is because it’s much more difficult for your lender to get an understanding of your repayment capacity. That’s because while individuals usually have a fairly consistent income and spending habits, business finance can fluctuate month to month. Because of this, you’ll have to convince your lender that you can pay back a business loan. A lender may request that you supply a detailed business plan, and a profit and loss statement to show that your business is capable of being successful.

Short term loan vs long term loan

The length of the loan should be taken into consideration when choosing a business loan. If you only need funding to cover short-term needs, a short-term business loan could be the best option.

If the loan is going to be used to purchase a commercial property for your business, a long-term loan could be a better choice. The term of your loan will also be determined by your ability to make repayments. Your lender will most likely take into account your projected income, and your profits and losses.

Running a business as a sole-trader | Financial Information | Tiger Finance

Fixed-rate vs variable rate

In the case of a fixed-rate loan, you know what you will be charged over the term of the loan, as the rate does not change. This means that you will pay a set rate until the end of the loan.

With a variable interest rate loan, your repayments are subject to change over the term of the loan.  The rate of the loan can change according to market conditions, so you could potentially end up paying a lower interest rate if the market changes.

The different types of business loans

  • Line of credit – As opposed to a loan, a line of credit is not one singular lump sum payment. Instead, it is an agreed-upon amount of credit from your lender that you can withdraw as you need it. In most cases, you only need to pay interest on the amount you use, instead of paying interest on the total sum.
  • Secured loan – A secured business loan requires you to use an asset that you have, such as property or existing business as collateral against the loan.
  • Unsecured loan – With this type of loan, you are not required to put up any collateral as with a secured loan.
  • Fixed-rate loan – Similar to other types of loans, a business loan can come with either a fixed or variable interest rate. A fixed-rate is set by your lender for a period of time, usually between one and five years.
  • Variable-rate loan – In a variable rate loan, the interest can be changed month by month at the discretion of your lender.

Where does Tiger Finance come in?

With Tiger Finance, we can help to get you a loan in four easy steps. You will have a free consultation with one of our specialists, and we will tailor-make you a loan. We will negotiate with lenders on your behalf before you are approved.

We have helped countless Australians with both good and bad credit ratings to be funded for their business. We understand that lending criteria from other lenders are too strict, and can stop you from achieving your goals. That is wrong, and it should not hold you back.

How we can help

Our finance specialists can help you find the right business loan for your project. Business loans are a complicated topic, but we will find a loan that makes your dream project that much easier.

If you are one of the many Australians finding getting a business loan difficult, Tiger Finance can make the process simple and pain-free. Call and talk to one of our loan specialists today for your free initial consultation.

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