Getting a Short-Term Business Loan Approved Fast: What Non-Bank Lenders Check and the Documents You'll Need

The main reason to use a non-bank lender for short-term cash flow finance is speed. Approval in a day or two, funds in a few days. But that only happens if your application is complete and clean the first time. Missing documents, unexplained transactions or a surprise on the credit file can turn a two-day approval into two weeks, or a decline.

This article covers what lenders look at, what to have ready, and the security they'll ask for.

What Lenders Check

• Bank statements. The most important document. Usually 6 to 12 months of business account statements, often accessed through a secure online link rather than PDFs. Lenders look at deposit levels and consistency, average balances, days in overdraft, dishonoured payments, and repayments to other lenders.
• Trading history. Most short-term lenders want at least six to twelve months of trading. More for larger amounts.
• Turnover. Lenders often size a loan as a proportion of monthly turnover. A business turning over $150,000 a month will typically be offered less than one month's turnover on an unsecured basis.
• ATO position. Your integrated client account and lodgement status. A tax debt on an agreed payment plan, with lodgements up to date, is usually acceptable. An unmanaged debt, or a director penalty notice, is a serious problem.
• Credit files. For the business and every director. Defaults, court actions and a large number of recent credit enquiries all count against you.
• Existing debt. Other short-term loans, especially ones taken recently. Several at once, known as stacking, is one of the most common reasons for decline.

Documents to Have Ready

For smaller unsecured loans:

• Driver's licence or other ID for each director
• ABN, ACN and business details
• Access to 6 to 12 months of business bank statements
• A short explanation of what the funds are for

For larger facilities, typically above about $250,000, add:

• The last two years of financial statements and tax returns
• Year-to-date management accounts, ideally a profit and loss and balance sheet
• Recent BAS lodgements and an ATO integrated client account statement
• Aged debtors and creditors reports
• Details of existing loans, leases and their repayments
• A cash flow forecast showing how the loan will be repaid

The single most useful thing you can provide is a clear, one-page explanation of why you need the money and how it gets repaid. A lender who understands the story approves faster, and often on better terms.

Security and Guarantees

"Unsecured" rarely means no security at all. Expect some or all of the following:

• Director guarantees. Almost universal. Each director personally guarantees the loan, so if the business can't pay, the lender can pursue them.
• General security agreement (GSA). A charge over all the business's assets, registered on the Personal Property Securities Register (PPSR). It gives the lender priority over those assets ahead of unsecured creditors. If your bank already holds a GSA, the non-bank may need to rank behind it, or ask the bank to agree.
• Specific asset security. A registration over particular equipment, vehicles or receivables.
• Caveat or second mortgage. For larger amounts, some lenders lodge a caveat over a director's property, or take a second mortgage behind the home loan. Understand exactly what's being registered and how it gets removed when the loan is repaid.

Before you sign, check what's being registered, against which entity or property, and what it will take to have it released. Security registered by a short-term lender can delay a later refinance if it isn't cleared properly.

Common Reasons for Decline

• Recent dishonours. Bounced payments in the last few months suggest the business is already short of cash.
• Too many lenders. Repayments to two or more other short-term lenders.
• Falling deposits. Turnover trending down over the statement period.
• Unmanaged ATO debt. Especially with recent lodgement gaps.
• Gambling or unexplained transfers. Lenders scrutinise personal-looking transactions on business accounts.
• Too many applications. Applying to several lenders at once leaves multiple credit enquiries on your file, which itself can lead to declines.

How to Get Approved Quickly, Without Overpaying

• Get your ATO position in order first. Lodge any outstanding BAS and set up a payment plan if needed.
• Explain anything unusual. A large one-off deposit, a refund or a period of low trading. Explaining it up front avoids questions later.
• Ask for what you need, not the maximum. Borrowing more than you need increases cost, and can push you into a more expensive product.
• Don't shotgun applications. Use a broker to approach the right lenders in one go, without multiple credit enquiries.
• Compare the real cost. Speed shouldn't stop you from checking the effective annual rate and early repayment terms. See the true cost of short-term business loans.

How We Help

We know which lenders will approve which situations, so we match your application to the right lender the first time, with the right documents and a clear explanation. We can usually run a short-term application in parallel with a longer-term solution, so the expensive money is replaced as soon as possible. See non-bank lending and cash flow finance and refinancing from non-bank back to the bank.

Book a free, no-obligation consultation and we'll tell you what you're likely to be approved for, and by whom.