As an Australian business owner, you might have likely heard about the term “ABN loan.”
But what exactly does it mean, and how can it help your business?
So we decided to share a blog on various types of ABN loan options available. Plus we will also understand the application process and help you with the knowledge to decide which one is best suited for your business.
What Are ABN Loans?
To put forth simply, an ABN loan is a financing option specifically designed for businesses registered with an Australian Business Number (ABN). An ABN is mandatory for conducting business in Australia, and it simplifies the tax and reporting process.
Types of ABN Loans
ABN loans come in various forms, each for specific business needs. Let’s understand some popular options:
1) ABN Car Loans
One of the business operational processes is the use of vehicles. The ABN car loans are tailored to meet the credit requirements of traders with ABNs who are keen to acquire cars and other company-related vehicles on credit. The good news? If you are GST-registered, you may choose to claim the GST in the purchase price.
Furthermore, the instant asset write-off scheme can enable you to fully deduct the cost of the car from this financial year’s tax. In other words, some banks issue low-doc car loans, and this opens up the avenue for business owners who have had credit problems before.
2) Equipment Loans
Making sure you have everything your business needs on a practical level, be it the right machinery or equipment, is vital for smooth operations. Equipment loans will allow you to finance necessary business assets. Such loans generally employ the very equipment that they cater for (called chattel mortgages).
If your business fails to make timely loan repayments, the lender is allowed to return the equipment to the original owner to obtain the funds back. Much like in the case of ABN car loans, you will be able to reclaim GST on the equipment purchase as well as use them in the year of purchase to write them off.
3) Small Business Loans
This flexible loan type can deal with a broad spectrum of business necessities. It doesn’t matter if you need to buy inventory, pay for staff workers, constantly solve liquidity issues, or launch campaigns, a small business loans is what you might need to improve your finances.
These can be secured (property or assets as collateral) or unsecured types (without collateral). Loan amount, term, and interest rate set the monthly repayment template. Some lenders go to the length of offering same-day ABN loans to businesses that require swift funds.
4) Lines of Credit
A business line of credit functions similarly to a credit card. You’re essentially granted access to a specific credit limit, allowing you to withdraw funds as needed. You only pay interest on the amount you utilise. Lines of credit can help manage ongoing operational expenses or unexpected costs.
Comparison of Popular ABN Loan Options
| Feature | ABN Car Loan | Equipment Loan | Small Business Loan | Line of Credit |
| Purpose | Financing business vehicles | Purchasing business equipment | Financing various business needs (inventory, staff salaries, marketing, etc.) | Ongoing operational expenses or unexpected costs |
| Secured/Unsecured | Can be secured or unsecured | Often secured by the equipment itself | Can be secured or unsecured | Unsecured |
| Interest Rates | May vary depending on creditworthiness and loan term | May vary depending on creditworthiness and loan term | May vary depending on creditworthiness and loan term | Typically higher than other options due to flexibility |
| Repayment Terms | Fixed monthly repayments over a set term | Fixed monthly repayments over a set term | Fixed monthly repayments over a set term | Minimum monthly payments with revolving credit |
| Suitability | Businesses requiring vehicles for operations | Businesses needing to purchase equipment | Businesses with diverse financing needs | Businesses needing ongoing access to funds |
Typical ABN Loan Application Process
The specific application process can vary depending on the lender, but here’s a general overview of what to expect:
- Credit Check: Most lenders will assess your credit history and score to determine your creditworthiness.
- Financial History: You might be required to submit documents such as tax returns, bank statements, and business profit and loss statements to demonstrate your financial health.
- Loan Purpose and Amount: Clearly state the purpose of the loan and the amount you’re seeking.
Real-Life Examples - How ABN Loans Can Be A Game Changer
Let’s think of an example where John, the owner of a small business in the industry of construction, needs finance to buy new equipment that he would use at his construction site. As a holder of an ABN, John considers his possibilities and then opts for a cantabile equipment loan.
Although having a credit score of below par due to his previous financial problems, John receives the loan with minimal paperwork. This enables him to invest in enough equipment and
Looking For A Reliable ABN Loan Provider?
Now that we have understood the various types of ABN Loans and financing options, you can certainly assess your needs, and speak to a professional lender.
Speaking in line with this, you can check out Knote! They offer a variety of Business Loans such as fast business loans, cash flow loans, working capital loans and various other business loans as well. Also, they have an AI-based assessment that will ensure quick funding!
