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Understanding ABN loans and how to get one

Understanding ABN loans and how to get one can help you secure the financing you need to grow your business. They also come with some tax benefits, so can be lower cost than other kinds of loan. 

In this guide, you'll learn how to get an ABN loan, what you'll need to apply, and the process involved.

What are Australian business number (ABN) loans?

An Australian business number (ABN) loan lets ABN holders secure finance to expand their businesses, cover cash shortfalls, buy equipment and more.

How do ABN loans work? 

ABN loans work like other business loans and can offer ABN holders finance where other lenders may not, sometimes extremely quickly. Lenders will look into your business finances, such as bank statements and tax returns, to assess your ability to repay the loan.

You can apply for an ABN loan from a variety of lenders, who'll set varying eligibility criteria, interest rates and repayment terms. Because the loan is to your ABN business, it may offer benefits such as GST credits and other tax breaks.

Who can get an ABN loan? 

If your business is registered in Australia and operates under an ABN, you may be eligible to apply for an ABN loan. If your company is based offshore, you're still eligible if it also operates in Australia under an ABN.

How much can you borrow with an ABN loan?

How much you can borrow with an ABN loan will depend on various factors. Lenders will determine the size of debt your business can repay, including interest. Loan brokers may help you canvas the different options on offer.

The amount you can borrow will also depend on how you're planning to use the money and if the loan will be secured against assets like vehicles or property. ABN loans available without a credit check can range between AUD$1,000 – $15,000.

What are the types of ABN loans available? 

There are many ABN loans available. You can use your financing for almost any business purpose, but here are the most common types of loan:

Car loan 

If you need a car or other vehicle to operate your business, you could choose to buy it with an ABN loan. If you're registered for GST, you can claim back the GST portion of the purchase price immediately. That'll reduce your GST bill and, in some cases, means you get a refund.

The instant asset write-off of the purchase will also count against your income, reducing the amount of tax you pay in the financial year. Car loans are generally secured against the value of the vehicle. This lowers the risk for lenders so they can offer more favourable interest rates and terms than other kinds of loans.  

Small business loan 

You can use an ABN small business loan to help with business expenses like buying new equipment, stocking up on inventory or fitting out new premises. If you use it to purchase assets like equipment or inventory, your loan may be secured against these items. If you intend to smooth out your cash flow or hire new staff, the loan will be unsecured, and the interest rates will likely be higher than on a secured loan. 

Line of credit

Also called an overdraft, an ABN line of credit lets you withdraw funds as needed, up to a certain limit. You'll only pay interest on the amount you've borrowed, and in many cases, you can pay the loan back whenever you choose without incurring fees.

ABN loan requirements 

ABN loan requirements will vary from lender to lender, but you'll typically need to supply personal and financial information, proof that you're over 18 and that your business has a valid ABN. 

ABN loan application process

The ABN loan application process depends on the lender, but generally, you can expect these steps: 

Credit checks 

Your lender may want to look at your credit history and credit score. 

Financial history

To confirm that you can pay back the loan, lenders will look at your financial performance and financial forecast. They may ask for documents like tax returns, bank statements and business profit-and-loss statements. They'll examine your operating costs, annual turnover, profit margins and more. 

Approvals and rates 

To approve the loan, lenders may want to know how you intend to use the money and will confirm the amount you want to borrow. This will help them decide whether to approve the loan and then set the terms, including interest rates.

Where can you get an ABN loan?

Many institutions offer ABN loans, including banks, credit unions and private finance companies. To find the lender that best suits your business, compare the fees, interest rates and other terms and conditions of different lenders. Your financial advisor or accountant can also help you choose.

ABN loan FAQs

Can you get an ABN loan as a sole trader?

Yes, you can apply for an ABN loan if you're a sole trader operating under an ABN. Lenders may have different eligibility criteria and terms. 

Who are the main ABN loan providers? 

The major Australian banks, such as Commonwealth Bank, Westpac, ANZ, and NAB, offer ABN loans. However, there are several private finance companies and specialist lenders, so it's important to compare your options and seek financial advice. 

Can a New Zealand business get an ABN Loan?

If your New Zealand-based business also operates in Australia under an ABN, you can apply for an ABN loan. 

Can I get an ABN Loan with bad credit?

Getting an ABN loan is possible if you have bad credit, but it may be more challenging. Because some lenders won't lend to people with bad credit, your options will be limited. You may find your interest rates and fees are higher than borrowers with good credit. You may also be asked to secure the loan against an asset or offer a personal guarantee.

ABN loan requirements 

If you need help financing business growth, covering cash shortfalls, buying equipment and more, an ABN loan could be a good option because it can reduce your tax and give you GST credits. Because fees, interest rates and other terms and conditions can vary, it's important to research different lenders and seek advice from your financial advisor or accountant. 

While the application process will vary, most lenders must review your financial history – and MYOB makes that simple. Our accounting software will give you fast and easy access to the reports you'll need, along with forecasting tools that'll help you show your capacity to repay your loan. 

Need an ABN loan? Get ready with MYOB. Check out our plans and pricing now.

Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.

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