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How to Get Online Business Loans for Cafes and Coffee Shops

If you’re considering starting a coffee shop or cafe business, explore your options when it comes to online business loans.

If you’re thinking about starting a coffee shop business, it’s not a question of whether or not you will succeed, but how you’ll be able to fund it. Chances are, you don’t have the start-up capital to rent a space or pay the utilities. Not to mention, you have to fill it with equipment, the proper cafe lounge furnishings, savoury snacks, and employees. Oh yeah, and the coffee.

Of course, when you think of a small business loan, the bank is always the first thing that comes to mind. Banks are perfectly valid options, but they can also be limiting. That’s why we’re going to talk about online business loans in this article. Keep reading to learn more about how they compare to traditional bank loans and how you can get one.

As a small business owner, you’re most likely a risk-taker. But when it comes to protecting your business from the unexpected, it isn’t very wise to risk it.

Using your insurance to safeguard your assets and work-family is making sure you have the best interest of your business at heart. This means being confident in the small business insurance policies you have.

Ask yourself if the current coverage you have includes all the essential protection for your industry, specific business needs and employees. Do you have expensive equipment or stock you work with or use on a daily basis? Do you have employees who need to be covered in the case of an accident? Do you work remotely, or do you work from bricks and mortar office?


Having Broken or Outdated Equipment

It can be extremely stressful to have your business’s equipment or tools break. Even if the equipment isn’t broken yet, you might be working with outdated equipment that isn’t performing as it once did.

By neglecting these repairs or updates, the quality of your service or products may suffer. Due to this, your business would benefit from additional working capital to replace broken equipment or afford regular tune-ups.


Bank Loans vs Online Business Loans For Coffee Shops

It may seem like a lot, but getting loan approval, in general, isn’t as difficult as you may think. You have a lot of options for financial aid to make your coffee shop dreams come true. You also have coffee addiction on your side, with 75% of Australia’s population reaching for at least one cup of Joe a day—if not two or three. It’s safe to say that starting a cafe business is a sure thing.

The best part about coffee shop business loans is that lenders take into consideration more than your profitability. They’re already aware that it takes a while for you become profitable in the coffee business. They’re more interested in your credit score and potential cash flow as well as your debt history. They want to get an idea of how likely you’ll be able to pay back your loan.

Of course, if you don’t have secure credit or much business history to show for yourself, there’s still hope. For example, you may not qualify for a straight forward business loan with flexible terms, but you may be eligible for an equipment loan or other types of financing.

So what are the differences between bank loans and online business loans? Let’s take a closer look:


Getting a Bank Loan

The majority of small business owners turn to the bank when they need to apply for a business loan. It’s important to mention that some banks will only lend to business owners who already use their banking services.

Banks also have often some hefty requirements, which include in-depth paperwork even to be considered for a small business loan. The first chunk of this paperwork is proof that you’ll be able to afford their finance in the first place.

You may require they’ll need copies of your financial records for a minimum of the past two years. Those financial records will have to include copies of your profit and loss reports, tax returns, and balance sheets.

Banks also typically require you to secure your loan with an asset.


You may have to put your property up for collateral. Or another item of high value such as your car or an expensive piece of equipment from your shop. While your loan still has a balance, you won’t be allowed to sell any of the assets you put up as collateral either. If you fail to pay back your loan, the bank will sell the collateral assets to recuperate what they’ve lent you.

In some cases, bank lenders may require a business plan from you as well as competitor reports, contracts you have with your suppliers, and projections for profits and losses.


Your financial history is required by lenders to determine how you’ll be able to make future payments on your loan. It’s also crucial that you have a good credit history without a large amount of outstanding debt.


Some lenders require to include personal history and your professional history.

They’ll want all your credit history dating back to at least five years, and they’ll comb through everything.


Including any overdue accounts and late payments on bills and other loans. The entire process for loan approval can take more than a month, and it’s encouraged that you seek out a professional to help you get your documents in order.


Getting Online Business Loans

The process for getting an online business loan is less intense and more streamlined than that of bank loans. Australian lenders for small online business loans don’t require as much paperwork, which speeds up the application process. The documents they typically ask for include:

  • Your Australian business number—or registration
  • Proof that you’ve been in business for at least nine months. Some lenders will accept newbies and others want you to have more than nine months of business experience under your belt
  • Your credit score

Unlike banks, online lenders don’t determine your eligibility based on your credit score and history. They look at your current cash flow and revenue to determine how you’ll be able to pay back your loan.


Many lenders will approve you for a loan even if you have bad credit. Some don’t require a credit score at all.

As for collateral, that depends on the lender. Not all lenders will require collateral for online business loans.


These “types of loans” are referred to as; unsecured loans. We’ll talk more about those in a bit.

Online lenders also vary in their specialisations. You can find lenders that specialise in small business loans with short repayment terms and others who work with new business owners that need start-up capital. These lenders exist because they understand that especially new businesses need funds to grow and expand. Banks aren’t as lenient and accommodating.

Of course, different online lenders have different requirements and loan amounts that they’ll approve. They also offer different types of loans to fit the various needs of individual business owners. These types of online business loans fall under the unsecured business loan umbrella.


Unsecured Business Loans

As we mentioned before, not all online lenders require collateral for loan approval. In short, an unsecured business loan is based on your ASIC registered business creditworthiness as a borrower.


Some lenders—namely, bank lenders—will require that you begin with a secured business loan to establish a relationship. This relationship will enable you to take out that unsecured loan. With online lenders, however, you have more options for better approval odds:

Long-Term Loans

Unsecured long-term loans are rarer, but they do exist. The unsecured long-term business loans can range from terms of a few years to a few decades, depending on the amount you need to borrow. Since these types of loans for more significant amounts of money and require a longer repayment term, online lenders typically require records of your business’s history.

If you’re starting a coffee shop business, your approval odds for this type of loan will not be in your favour. But remember you would have to be in business for over six months.

Short-Term Loans

Unsecured short-term loans, on the other hand, are much easier to qualify for as a new business owner. Most of these short-term loans have a repayment term of one year or less. They’re the type of loan you take out if you need new equipment, are going through a slow season, pay unexpected expenses, are expanding, or for other short-term reasons.

Short-term unsecured loans are best for small business owners, and they don’t necessarily require records of your professional history.

Merchant Cash Advances

Merchant Cash Advances (MCAs) are another type of unsecured business loans that are ideal for businesses that deal with a lot of credit or debit card sales.

The repayment terms of this loan are determined by a percentage of your daily credit and debit card transactions. In other words, the agreed-upon percentage between you and your lender is taken out of those daily credit and debit card sales to pay back the loan.

There are no fixed payments required for a Merchant Cash Advance, which is a great convenience. Of course, upon deciding if an MCA is right for you, you’ll want to take a close look at the loan’s interest rate and the required percentage of sales offered by your lender.

If you only qualify for MCA terms with high-interest rates and a large percentage of daily sales, this option may not be as beneficial for you as having a fixed payment.  


Finding Online Business Loans

If starting a cafe is your dream, then online business loans are your best bet in getting the funding you’ll need. If you’d like to find out more about unsecured loans for small businesses you can check out our website or contact us with any questions. Let us worry about the money while you worry about the coffee.


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