What's different about Spotcap business loans?
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Spencer is one of many Australian business owners who have used Spotcap to grow. Read more about other aspirational SMEs we have assisted
“Spotcap’s online process was simple and straight-forward and I was approved for finance in no time at all.”
How Spotcap's existing clients have used their business loans to grow
It’s your business, so you choose how to use the funds we make available through a business line of credit for a variety of long, and short term activities:
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Understanding business loans
Information you need to know as a business owner
Why do small businesses find it challenging to access loans?
- In the aftermath of the 2007 financial crisis, SMEs and entrepreneurs suffered a dramatic drop in demand for goods and services, plus and a squeeze in access to credit.
- Lending to small businesses – a historically unprofitable sector for traditional lenders – was tightened drastically. As a result, obtaining a business loan from a traditional lender has become challenging and time-consuming for small businesses.
- This is problematic as limited access to finance is one of the biggest challenges to the creation, survival and continued growth of small and mid-sized businesses – especially businesses that are selling or developing new and innovative products.
- Business loans are often vital sources of working capital for SMEs – money that lets them bridge receivables, buy new stock and upgrade their systems.
Are business loans secured?
- Some are and some aren’t. A secured business loan – the type usually issued by a traditional lender – tends to be tied to an asset, such as a piece of real estate, machinery or a vehicle.
- Security can also be in the form of a director’s guarantee. Security, also known as collateral, offers a lender a degree of protection when they provide a credit facility. An unsecured business loan isn’t tied to an asset.
- Instead, a lender will base the amount of credit and the corresponding interest rate on the performance and creditworthiness of a business. In lieu of collateral, unsecured business loans tend to have higher interest rates.
How much information does a business lender require?
- Practices vary amongst lenders, but a lender may ask for several pieces of information about you and your business.
- Firstly, a lender will want to know how much credit your business needs. From your side, this requires a well-considered budget corroborated by financial projections.
- Secondly, you may be required to disclose what you need the business loan for. This helps the underwriters who will approve or deny the request.
- Thirdly, a lender may ask for a cash flow report and an industry risk report, as well as how long you have been in business. Sometimes, your personal credit score will be considered.
How long does it take to get a business loan?
- This varies between lenders. In the case of traditional lenders like banks or credit unions, applications can be time-consuming and you may wait between four and six weeks for a decision.
- With alternative lenders, the application process tends to be faster. Some alternative lenders can offer a credit facility within one working day.