Business loan application checklist for Australia: documents, numbers and questions

To apply for a small business loan in Australia you need to show four things: who the business is (ABN, ACN, structure and owners), what it earns (financial statements and tax returns, or BAS and bank statements for low-doc), what the money is for and how it will be repaid (purpose, quotes and a cash flow forecast), and what backs the loan (security and guarantors). Lenders decline or delay many applications for preventable reasons: an overdue BAS, an unexplained ATO debt, inconsistent figures between documents, or no clear repayment plan. Prepare those first.

This is the overview for the Worked Examples and Checklists section. You can tick items off in the interactive application checklist.

Step 1: business identity and structure

Make sure your ABN details and ASIC records are current. A lender that finds an old registered address or a former director still listed will ask questions, and the delay costs time.

Step 2: financial records

Full-doc applications usually need:

• two years of financial statements (profit and loss, balance sheet);
• two years of business tax returns and, for guarantors, personal tax returns or notices of assessment;
• year-to-date management accounts;
• aged debtors and creditors.

Low-doc or alt-doc applications usually rely on:

• 6 to 12 months of BAS statements;
• 6 to 12 months of business bank statements;
• an accountant's declaration in some cases.

The low-doc guide shows how lenders turn BAS figures into an income estimate.

Step 3: your tax position

Get your ATO integrated client account statement from Online services for business or your tax agent. Lenders check for:

• lodgements up to date (BAS, income tax, superannuation guarantee);
• any tax debt, and whether it is on a payment plan;
• any director penalty notices.

An ATO debt on an agreed payment plan is often acceptable; an unmanaged one is a common reason for a decline. See loan declined: what next.

Step 4: purpose and repayment

Write a one-page summary:

1. Purpose: what the money will buy, with quotes or contracts attached.
2. Amount: including any GST you must pay before claiming it back.
3. Repayment source: which income stream repays the loan.
4. Forecast: 12 months of cash flow with repayments included and a buffer for a slow month.

Lenders will test whether earnings comfortably cover repayments. The borrowing capacity example shows the debt service cover calculation most use.

Step 5: security and guarantees

List the assets you could offer and any existing loans or security registrations against them. Search the PPSR for registrations against your business; old registrations from finished leases sometimes remain and should be removed. Decide in advance which assets you will not offer.

Every guarantor needs to understand what they are signing. See personal guarantees.

Worked example: preparing a $150,000 fit-out loan

A physiotherapy clinic trading for three years wants $150,000 for a second site fit-out (illustrative):

• Quotes: builder $118,000 + equipment $32,000 = $150,000 (ex-GST). GST of $15,000 must be paid to suppliers and claimed back in the next BAS, so the clinic plans $15,000 of cash for the gap.
• Earnings: EBITDA last year $210,000; existing equipment finance repayments $24,000 a year.
• New loan: $150,000 over 5 years at an illustrative 9.5% is about $3,150 a month, or $37,800 a year.
• Debt service cover: $210,000 ÷ ($24,000 + $37,800) = 3.4 times, comfortably above the 1.25–1.5 times many lenders look for.
• Forecast: the second site is expected to break even after nine months; the forecast shows the first site's earnings carrying repayments in the meantime.

With complete records and a clear plan, the application is about the clinic's strength, not missing paperwork. The repayment calculator gives the repayment figure.

Step 6: compare offers before accepting

Once offers arrive, compare them on total cost and conditions using the three-offer worked comparison. If an offer is quoted as a factor rate, convert it with the factor rate guide. Consider fixed versus variable pricing, and if you are replacing existing debt, run the refinancing example. New businesses should read start-up finance options.

Questions to ask every lender

• What is the total interest over the term and every fee in dollars?
• Is the rate fixed or variable, and what reference rate does it follow?
• What security and guarantees are required?
• What covenants, reporting obligations and review dates apply?
• What does it cost to repay early?
• Which industry code does the lender follow, and is it an AFCA member?

Frequently asked questions

How long does a business loan application take?

It varies from a day or two for small online loans to several weeks for property-secured loans needing valuations and legal documents. Complete documents shorten it.

Will applying affect my credit file?

Credit enquiries can be recorded on the business's commercial credit file and, if you are a guarantor, on your personal file. Many applications in a short period can concern lenders. Ask whether a lender does a preliminary assessment before a formal enquiry.

Should I use a broker?

A broker can save time and access lenders you do not know, but for business credit there is no statutory best interests duty. Ask how they are paid and which lenders they compared.

Do I need an accountant to apply?

Not always, but accountant-prepared financial statements make full-doc applications easier, and some low-doc lenders want an accountant's declaration.

Sources

• ATO — integrated client account, payment plans and lodgement status
• ASIC — company register and directors' details
• ABN Lookup — check your ABN record
• PPSR — search registrations against your business
• business.gov.au — preparing for finance