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Demystifying lending for small business

3-minute read

It can be easy to make assumptions about business lending. We’ve tackled the most common small business lending myths to help you make sense of lending options and understand what your business may need.

Download Demystifying lending for small business infographic (PDF 51KB)

Key take-outs
  • Business loans are often used to fund growth and bridge cash gaps
  • You don’t need assets to obtain a business loan
  • Be clear on your business objectives before you apply for a loan

Common business lending myths

We’ve broken down the myths and requirements surrounding small business lending.

Myth #1: Only failing businesses need loans


Many successful small businesses have limited or varying working capital. A business loan can provide temporary cash flow relief and more freedom to invest in growth.

Myth #2: You can only borrow a large sum of money


Business lending options like lines of credit and overdrafts allow you to only borrow the money you need, when you need it.

Myth #3: You have to secure a business loan with an asset


Options for unsecured business overdrafts, unsecured business loans and business credit cards don’t require physical assets as securities.

Myth #4: Business loans take a long time to get assessed


Depending on your circumstances, and the provider you choose, the outcome of an application can be determined and the loan paid out in a matter of hours. 


So if you think your business needs to borrow money to move to the next level, here are the steps you need to take before applying.

1. Know why you’re applying

Understanding the purpose of borrowing is the first step to choosing the right business lending option. Take time to analyse your finances to decide if you need help with any of the following:


2. Know how much you need

Before applying, you’ll need to know:


  • How much you’ll need to fulfil your goals
  • How much you can afford to repay
  • What your repayment schedule looks like
  • How your repayment schedule will affect your cash flow

3. Know your type of loan

A business loan might be the right option if you need to make a major purchase or to support a growth phase. An overdraft or credit card could be good for smaller expenses and cash flow management.


Not sure whether you need a loan, overdraft or credit card? Read our helpful guide.

4. Know your options

When you’re planning a loan, consider the following:



If you’re unsure what’s involved with unsecured options, the below is a good rule of thumb:


  • Generally used for smaller amounts of cash
  • Often used to get quick access to funds
  • Lender does not require assets as security
  • Interest rates are usually higher than secured options


In contrast secured options typically involve the following:


  • Generally used when requiring large amounts of cash
  • Paid back over a longer period of time
  • Lender requires assets and proof of ownership as security
  • Takes longer to approve
  • Usually able to offer lower interest rates than unsecured options


Not sure what type of loan you need? Our Business Loan Finder can help you find and compare business loans.

5. Know your paperwork

When applying for a loan, you may need to provide the following information:


  • Financial statements
  • Proof of individual income
  • Bank statements
  • Identification for owners and partners

Choosing a loan for your business often simply comes down to understanding your options and matching them to your objectives. 

Read more

What’s the difference between a business loan, credit card and overdraft?

Not all business lending options are the same. We walk you through the differences and benefits of each.

Avoid these 3 common mistakes with credit cards

Mixing business and personal finance is an easy mistake to make. Here’s some helpful advice on avoiding the common issues.

What's the difference between a secured and unsecured overdraft?

Know the difference between types of overdrafts so you can work out what’s best for your business.

Things you should know

Westpac’s products are subject to terms, conditions, fees and charges. Any application for finance is subject to Westpac’s normal lending criteria. 


This information does not take into account your personal circumstances and is general. It is an overview only and should not be considered a comprehensive statement on any matter or relied upon. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this article, including when considering tax and finance options for your business.