What You Need to Know About Startup Business Loans
By far, one of the most frequent questions we get asked is: does Moula offer startup business loans? But the answer isn’t as straightforward as you might think.
In short, the answer is: maybe. It all really depends on what you consider a startup business to be. Because there is no real hard and fast rule as to what constitutes a startup business, determining whether we can lend to startups can get a bit complicated. So, in order to better understand this, we dive into exactly what a startup business is:
Difference Between a Startup and a Small Business
A simple definition for a startup business would be nice, however, it’s unfortunately not that simple. In the world of business, many people consider a ‘startup’ as going beyond a company just getting off the ground. The term is usually associated with businesses that are typically technology-oriented and have a high potential for growth.
This is where a lot of the confusion starts. The difference between a ‘traditional’ small business, like a florist or a tradie running their own business, and a startup usually has to do with the nature of the business, its scalability and the implementation of ‘new technologies’. Startups and small businesses will have different business models and often begin with very different expectations for growth and scale.
When Does a Startup Stop Being a Startup?
So, when does a startup graduate and become another established business? Or do they just keep the ‘startup’ badge indefinitely? Well companies like Facebook, Google and Uber are all still considered by many to be startups – just bigger. This is the same for many other businesses who still consider themselves startups even though they are turning over regular profits and have been trading for several years.
The problem is there are no real metrics to measure how and when a business ticks over from startup territory. Is it based on how old the business is? Total worth? Business size? Or the number of employees? Because of this uncertainty, the term ‘startup’ can almost refer to a type of business rather than a particular stage of a business’ life. Being a startup seems to be more about company culture, work environments and business models rather than how young the business itself is.
Startup Business Finance
With all that in mind, what makes a startup eligible for a loan?
Startups eligible for a loan:
- Have at least 12 months trading history
- Have generated a minimum monthly sales revenue of $5k
- Have an Australian bank account with relevant transaction history
Startups not eligible for a loan:
- Have no trading history
- Are cash-only businesses with no accounting records or transaction history
- Apply for a loan to seed an idea/prototype
- Want funding via a convertible note
At Moula, we assess loans based on historical performance, which means we don’t ask to see a business plan or future projections. We look at the progress you’ve made to date and assess your ability to pay back a loan.
If you’re unsure whether your business will qualify or you have any other questions about startup business loans, give us a call on 1300 88 58 93 or email us at email@example.com.