Centrelink Business Loans

If you’re on Centrelink and looking to take out a loan to establish your own business, you’ve come to the right place! Contrary to popular belief, you can opt for a business loan if you’re on Centrelink and get it approved – as long as you can showcase your business idea’s viability!

 

In this article, we’ll acquaint you with all you need to know about Centrelink business loans to help you determine whether you’re eligible and understand your options.

What Centrelink Business Loans Are There?

For Centrelink benefit recipients, business loan options are quite limited, mainly encompassing the New Enterprise Initiative Scheme (NEIS), aiming to help people start their own businesses and private lenders.

Private Lenders

centrelink business loan

If you’re a Centrelink recipient, the most common business financing option sought by entrepreneurs is a private lender. While it can be challenging to get a business loan approved without a solid business history, and given the fact that you’re on Centrelink, it’s not impossible.

Two popular Australian lenders offering business loans without the criteria of having an established business and even if you’re on Centrelink are MaxFunding and MiFinance. These two lenders will only assess your application based on the viability of your business ideas, your experience, and your personal characteristics (like motivation, passion, drive, and similar).

With MaxFunding, you can get a business loan up to $1,000,000 – even if you’re on bad credit. However, despite this lender’s flexibility, you need to own an asset as collateral to be eligible. If not, they’ll try to meet you halfway and provide you with other criteria to meet.

As for MiFinance, if you have an Australian Business Number (ABN), you can easily borrow up to $1,000 for business purposes. The lender offers relatively short-term bad credit loans Australia guaranteed approval on centrelink to just cover operative costs and enables you to pay them off quickly. Yet, your Centrelink payments can’t make up more than 50% of your income to be eligible.

NEIS

centrelink small business loans

As we’ve briefly mentioned, the NEIS was established primarily to support those on Centrelink and seeking to start and work full-time in their own business ventures or need support refocusing an existing micro-business as a result of the pandemic’s repercussions.

To be eligible, you need to be participating in Jobactive as a volunteer and get admitted to the NEIS assistance program before the end of your service period. 

To be precise, NEIS is considered a Centrelink-approved activity until 13 weeks from your starting date, but your business needs to be lawful and regarded highly. Also, it’s preferable for the business to be a non-profit one.

So, what do you get with this scheme, anyway? Here are some of the benefits:

  • Ongoing, accredited small business support and training
  • Tailored mentoring services from a NEIS provider
  • NEIS allowance for up to 39 weeks
  • NEIS rental assistance for up to 26 weeks, if your business is eligible

Am I Eligible?

To be eligible for participation in the New Business Assistance program, you need to fulfil the following criteria:

  • Be at least 18 years old when launching your startup/business
  • Haven’t participated in the NEIS in the past year or received support for a similar business activity
  • Available to participate in the NEIS training and work the needed hours in your business
  • You can’t be lawfully prohibited from working in Australia
  • You can’t be an overseas visitor or student studying in Australia
  • You can’t be an undischarged bankrupt
  • You can’t convert to an Age Pension prior to or during NEIS

With that said, it’s worth mentioning that the scheme only takes in 6,300 individuals every year, and the competition is pretty fierce. Moreover, there’s a different set of criteria for your business itself, including:

  • Must operate and be located entirely in Australia
  • Must be structured so that you’ll always have a controlling interest over it 
  • It has to be independent upon establishment
  • It has to be legal and capable of withstanding public scrutiny
  • It can’t already be operating on a commercial basis
  • Must be assessed as commercially viable
  • Can’t be based on acquiring an existing business
  • Can’t directly compete with an established business, unless you have a different business model or have sufficient proof that there’s unsatisfied demand in your area

Am I Eligible for a Business Loan?

centrelink small business loan

Apart from the NEIS criteria, general centrelink loans have different criteria, depending on the lender. For instance, many business loans require that the business be established for a specific duration of time or even have a minimum monthly or annual turnover above a particular amount or bracket.

As we’ve also discussed, private lenders or peer-to-peer lenders are generally more flexible, so in most cases, you’ll be eligible. However, the challenging part is always if you have an unstable financial history, bad credit, or a history of unsuccessful businesses. 

So, if you want to increase your chances of getting a business loan approved, here are the criteria:

  • Your business has been running for a long duration
  • You have a strong credit history and are currently debt-free
  • Your business has demonstrated the capability of generating profits
  • Your business has a strong credit history and is currently debt-free

What Fees Should I Expect With a Centrelink Business Loan?

Just like any other business loan, a start up loan centrelink has two main costs associated with it: interest rates and fees, and both depend on the lender.

  • Interest rates: Car loans for centrelink customers are a percentage you pay over the total amount of the loan, and it varies from one lender to the other.
  • Fees: While different lenders set their own fee structures, keep an eye for account setup fees, ongoing monthly fees, late repayment fees, and early repayment fees. It’s also the responsibility of the lender to communicate these with you early on. 

How Long Is the Typical Repayment Period?

business loans

Like any loan, the loan term with loans for single mothers on centrelink with bad credit varies depending on the provider. However, generally, short-term loans have a repayment period of a few weeks, while for bigger loans, the period could be anywhere between 6 months and 5 years.

Will My Repayments Change or Will They Stay the Same?

business loan

Most business loans have fixed repayments, meaning that the amount will remain fixed throughout the loan duration. However, some lenders do offer variable rates – you’ll need to check with your lender.

What Should I Consider Before Applying to Centrelink Small Business Loans?

small business loans

Essentially, before applying for a Centrelink small business loan or a large one, for that matter, you need to be sure you’ll be able to keep up with the repayment plan.

With such loans, the interest rates are usually high since lenders are hesitant to give loans to individuals on Centrelink, so you’ll be paying back significantly more than you initially borrowed. Accordingly, you need to be sure that you’re ready. You don’t ever want to miss repayments; you’ll end up with a damaged credit score, and you’ll pay additional fees.

Moreover, work on your business idea as much as you can. The only way to counterbalance the high interest rates is to have a business idea that no one can say no to – and of course, that entails showcasing the business’ profitability. Also, detail precisely how you plan to spend the centrelink hardship loan money so that the lender feels that the ROI will be high.

In Conclusion

As time passes, more and more lenders are becoming open to the idea of offering Centrelink business loans, and the New Business Assistance scheme with NEIS is proof of that. Fortunately, today, your options are no longer rare when it comes to seeking a white goods loan centrelink to pursue your self-employment dream and start your small business!

However, given the fierce competition when it comes to these business loans, do your very best to tick every box of requirements to increase your chances of getting the loan. And most importantly, make sure to have a calendar of your repayment schedule to make sure you’re able to pay it back.

About the Author

Lucy has over a decade of experience in finance. She is currently the content curator here at Perfect Payday.

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