Zip Business Review (2021)

Zip Business offers a short-term business loan and line of credit hybrid. This loan works like a credit card, Zip Business gives your business a pool of funds, that you can access unlimited times in the first 3 months of the agreement. Each drawdown is a separate loan with its own repayment plan, which can be from 1 to 36 months.

Credit lines with Zip Business only apply interest costs on the loan facilities you use. This can mean significant savings over a business term loan, which has interest costs on the full loan amount from the start.

A line of credit is a business finance arrangement giving you flexible access to funds you can borrow as a loan. Your application is assessed thoroughly and if a line of credit is approved, funds are made available for you to drawdown. You need only borrow what you require, as it is needed.

Your line of credit typically has a term of between one and three months, with the ongoing possibility to renew. During this term, you can repayable in weekly, fortnightly or monthly instalments, usually spread over 6 to 36 months.

When the initial line of credit term of up to one month is completed, you continue to repay, in monthly, fortnightly or weekly instalment, the funds you borrowed. Interest is only charged on the amounts you drawdown, not on the total value of the credit line.

Zip Business does require business has been in operations for at least 18 months. This is longer than some other lenders which only have a 6 month requirement. This requirement also makes them unsuitable for startups and new businesses, as you will need to have a history of bank statements showing cash flow.

Zip Business has a minimum credit score of 300 (400 for construction) so Zip can be a good option for business with weak credit history. Zip Business consider recent business performance, risk profile and cash flows when assessing any borrowers qualification.

The Fintech lender only charges origination and interest fees on the amount you draw, this means that if you do not end up using the loan, you will not need to pay any fees.

Each drawdown is a new loan with its own repayment schedule. So if you make multiple drawdowns, you could pay each loan at different times. These loans work on an amortisation schedule, you pay the principal and interest over the loan term. You pay a higher amount of interest at the start and less towards the end which means the payable amount remains the same through the life of the loan.

Zip business does not advertise their interest rates so it is hard to know what the cost will be but the loan provider is transparent with their costs.  Small business owners will be presented the Total Interest Percentage/cost (TIP) and Annualised Percentage Rate (APR) in both their conditional and unconditional approvals. In unconditional approvals, Zip includes a SMART Box statement which is a tool for standardising pricing disclosure. This tool provides multiple pricing metrics to help you better understand and assess the cost of your small business loan and compare Zip with other lenders.

Zip Business platform allows you to complete your business loan application in only 5 minutes.

One point to note is that if you applying for a loan under $150,000, then you may not need to provide financial documentation. You simply need to answer the following questions:

• What was your business revenue (sales) in the last 12 months?
• What was your business revenue (sales) in the last 3 months?
• What was your business net profit in the last 12 months?
• Do you have an overdraft, line of credit or business credit card? If yes, provide limit and limit used
• Does your business have any outstanding borrowings? If so, provide total outstanding borrowings amount and total monthly payments
• Does your business have ATO debt outstanding? If so, is this on a payment plan?

When you provide your accounting product, you can choose from the following:

• MYOB AccoutEdge
• MYOB Essential
• Intuit  Quickbooks
• Reckon
• SAASU
• SAGE
• Xero
• Reckon

Should you not wish to provide your banking details, you can provide a PDF or CSV of the bank statement for the last 12 months. If you do this, Zip business can only provide you with a conditional credit line offer as the lender will need to connect to your bank for final approval.

In 2019, Zip co financial services took over Spotcap Australia and New Zealand. Now known as Zip Business, clients should expect the same experience that was provided by Spotcap given Zip Business have the same loan policies, products and platform, the Rocket Internet backed Spotcap offered Australian SME since 2015. This means you should expect the same experience the Berlin, Germany headquartered provider offers lending markets such as the UK, the Netherland and Spain.

Zip Co is known to many for their ‘Buy Now, Pay Later’ products such as Zip Pay, Zip Money and Zip Biz.  Zip Business being an extension of these products for clients needing significantly larger amounts.