Business loans for self employed people are loans to sole traders, contractors and owner-operators who work for themselves. There is no payslip to show, so a lender reads your bank statements, your tax return or the property you offer instead. This page explains how each route works, what to bring and how to avoid the mistakes that slow a self employed file.
How many Australians are self employed in business?
A very large share of Australian businesses are one-person operations. At June 2026 the Australian Bureau of Statistics showed 1,729,478 non-employing businesses, out of 2,814,778 actively trading. Sole proprietors alone numbered 848,300, around 30 per cent of all businesses, up 3.1 per cent on the year.
That is a huge market, and lenders know it. The difference between a lender that fits you and one that does not usually comes down to whether it reads self employed records properly or expects a salaried profile.
How do lenders assess a self employed borrower?
Lenders assess the business’s real earnings and the borrower’s assets, because there is no employer to verify income. The ATO explains that a sole trader reports all business income in their individual tax return, using the business items section. Legally you and the business are one, which is why the loan is personal to you.
The business.gov.au sole trader page makes the same point from the risk side: sole traders have unlimited liability and their personal assets are at risk if things go wrong. For a lender, that is a plus, because your home or investment property can sit behind the loan. For you, it means a business loan is a personal debt.
What a lender wants to see, in rough order of importance:
- A bank account that shows steady business takings.
- An ABN, and a GST registration if you pass the threshold of $75,000 annual GST turnover.
- Tax returns, notices of assessment or BAS lodgements, where available.
- Any security you can offer.
- A clear purpose and a way to repay.
What can I borrow without property?
Without property you can usually borrow unsecured, typically from $5,000 to $500,000, with the amount sized on turnover. The lender looks at average monthly deposits over recent months, so consistent takings in a business account do most of the work. Our page on unsecured business loans goes deeper on how sizing works.
The RBA’s October 2025 bulletin notes that unsecured credit has remained below 5 per cent of SME lending, which tells you it is a narrower product than property-secured lending. Smaller sums and tighter assessment come with the territory. If you need more than your takings can support, property is usually the lever.
What can I borrow with property security?
With property you can borrow far more and lean less on your records. Against residential or commercial property, funding often reaches into the millions, and private mortgage options may not need business cash-flow records at first assessment. The lender looks at the equity, the title and the exit.
For a sole trader who owns a home, this is often the fastest route to a larger sum. A second mortgage sits behind your existing bank loan, as described on our second mortgages page. Where records are thin or tidy-up is needed, the security carries the file.
| Route | Sizes | Leans on | Records needed | Best when |
|---|---|---|---|---|
| Unsecured loan | $5,000 to $500,000 | Bank statements, turnover | Bank statements, ABN, ID | Consistent takings, no property |
| Property-secured loan | $20,000 to $5,000,000 | Property equity, exit | ID, title details, exit evidence | Larger sums, thin records, urgency |
| Bank loan | Wide range | Tax returns, credit file | Full financials | Time to spare and clean records |
Is a low-doc loan the same as no documents?
No. Low-doc means fewer documents than a bank asks for, not none. You will still be asked for identification, details of the borrowing entity and either bank statements or security information. What you can often skip is two years of accounts and formal forecasts.
Our page on no doc business loans explains what is still needed and when bank statements come into play. The business.gov.au guidance lists what banks typically want, including financial reports, forecasts and personal financial information, and it is a useful baseline for seeing what a lower-document path leaves out.
Illustrative example: a self employed electrician and a tax bill
Illustrative example: a sole-trader electrician has a $60,000 tax debt from two years of under-set-aside income and a payment plan he cannot meet. His takings are good, but his accounts are a year behind. He owns his home with $300,000 in equity.
A second mortgage for $65,000 clears the ATO debt and covers the costs, using his title details and a short plan for repayment, such as the next two quarters of invoicing and a refinance after his returns are lodged. He does not need current financial statements to start.
The numbers are round and invented, but the pattern is common: records are behind, equity is there, and the loan buys time to tidy up. The tax debt loans page covers this in more depth.
What does a lender actually do with your bank statements?
A lender reads statements for pattern, not perfection. It looks at how much money arrives each month, how steady that is, and whether the account shows the business trading or just personal spending. A contractor whose takings jump from one month to the next is not a problem if the average holds; a business whose statements are mostly transfers between personal accounts is.
Most self employed borrowers can improve the picture quickly. Bank customer payments in the week you receive them, keep business expenses on the business account, and avoid large unexplained transfers in the months before you apply. If a month looks odd, add a line explaining it: a seasonal quiet spell, a one-off purchase or a big job paid late. A lender that understands a pattern prices it better than one left guessing.
What mistakes slow a self employed application?
A handful of avoidable issues cause most of the delay:
- Mixed accounts. Personal and business transactions in one account blur the picture. Open a separate business account and use it consistently.
- Missing lodgements. Overdue returns or BAS make lenders ask more questions.
- Cash not banked. Income that never reaches an account is invisible to an unsecured assessment.
- Unclear purpose. “Cash flow” is not a purpose. “Pay two suppliers before a contract starts” is.
- No exit. Name how the loan is repaid.
Fixing these before you apply takes an afternoon and often changes the answer, and you can apply for your loan the same day. Our guide on documents needed for a business loan lists what each product asks for.
Should I borrow as a sole trader or through a company?
Ask your accountant, because the right answer depends on your tax position and risks. As a sole trader you borrow personally. Through a company, the company is the borrower, though directors are commonly asked to guarantee, which brings personal exposure back in. Moneysmart’s guidance on guarantors explains how someone who guarantees a loan can be pursued for the full balance if the borrower defaults.
Switching structure only to get a loan is rarely sensible. A lender can work with whichever structure you already have, and the right product usually matters more than the entity.
What does it cost, and how do I choose?
Private funding costs more than a bank loan, and each loan is priced on your individual circumstances. Choose by working backwards from the deadline: a bank is cheapest if you can wait, unsecured is quick if your statements are strong, and property security handles size and urgency.
If you want to weigh offers properly, use the compare business loans scorecard, and test repayments in the business loan calculator. A quick look at the wider map of options sits on the small business loans page.
Ready to move?
Gather your ABN details, ID and a few months of business statements, and add the property details if you own a home or investment property. Then apply for a self employed business loan in a few minutes. We help match you with the path that fits your records and security, and you can also call 03 4059 1829.