Are you a Centrelink customer looking to launch your own business? Frustrated by getting knocked back by banks because you have poor credit or because you’re receiving benefits? A micro loan might be the solution you’re looking for. The person-to-person nature of these financial solutions means micro loans for Centrelink customers are feasible where more mainstream loans might not be.

What is a micro loan?

Micro loans are person-to-person (P2P) investments typically used to fund a small business. Microlending is often used to fund entrepreneurs in developing countries where other loans are difficult to come by. However, they are also useful for small-business owners in developed countries who have poor credit history or are otherwise unable to get approved for finance with a bank or credit union. This is what makes them suitable for entrepreneurs who are on Centrelink.

How does a micro loan work?

People seeking a micro loan can reach investors via websites such as SocietyOne, MoneyPlace, Harmoney, and Wisr, which act as administrators for microlending arrangements. By doing this, you could get your business needs funded by either a single lender or a group of investors (each lending a portion of your total micro loan). You then pay back the loan to your investor(s) over time with interest, just like a regular loan.

Features and Benefits of Micro Loans

The main benefit of a micro loan is that you can potentially access a lender (or multiple lenders) regardless of your financial circumstances (e.g. bad credit, no credit history, or receiving Centrelink). The downside to this is that micro loans typically come with higher interest rates to account for the high risk that lenders are taking on board.

Microlending also comes with these advantages:

Quick and simple application process
Fewer complications and documentation
Technology makes it possible to access investors all over the world.

Why a Small Business Might Need a Micro Loan

Aside from launching in the first place, an existing small-business owner may need finance at various stages while running and growing their business. Microlending can help you overcome these obstacles if enough lenders trust you and are willing to invest in your business development.

Some scenarios where your small business might need additional financing via a micro loan include:

Expanding or renovating your premises
Growing your online presence (e.g. website, eCommerce, social media, email marketing)
Investing in new equipment
Hiring new staff and expanding your team
Diversifying your business with a new product or service.

How to Apply for a Micro Loan

Seeking a micro loan is similar in some ways to using a crowdfunding platform like Kickstarter. You apply for the loan through a site like SocietyOne or MoneyPlace, and they will attempt to match you with investors who will lend you the money you need. You may need to describe your business and explain how the money will be used in order to persuade potential lenders.

A micro loan isn’t always the most suitable option. If you need quick money for a small business upgrade, you may want to instead consider a cash loan of up to $1,000 with Cigno.

Income management

Income Management is a tool to help people in budgeting their welfare payments. It ensures they get the basic essentials like food, shelter, electricity, and education.

Improved control of finances helps people to stabilise their lives so they can better care for themselves and their family. It can also support them to return to or join the workforce.

Accessing your income managed money

You can access your income managed money in many ways:

BasicsCard — Use your BasicsCard at approved businesses to pay for essential household needs and expenses.

BasicsCard

Direct payment — Ask to set up regular or one off payments to stores, landlords, real estate agents, or other service providers.
Self service — There are self service options you can use to access your income managed money.
Call — Call the Income Management line to get help in accessing your income managed money.

Note: You can’t use your income managed money for: alcoholic products, tobacco products, pornography, gambling products and services, homebrew kits or concentrates.

Managing your Centrelink income

The way you use your money will change during your life. While you look for work, there might be changes with your income. Make a plan to have enough money to pay your bills while income is low. Don’t forget about your regular bills as well as other expenses you have.

To help you manage your money, you have to learn to budget, deal with debt, manage loans and credit, and build savings.

If you think you can’t pay your bills on time, talk to the hardship teams at companies, like your utility providers, your bank, or lender you have loan with. They may want to help you with debt repayments depending on your situation.

Settling a loan or cutting back on debt will enable you to manage your money effectively. Having knowledge about credit and borrowing avoids disappointment at the end.

There are things to consider before taking out a loan. Ask yourself:

Do you really need it right now?
Is it safe and affordable?
Can you make the repayments on time?

Check if you can get a no interest or low interest loans from a financial institution.

If you’re Working or on Centrelink, Cigno Loans will consider your loan application. Cigno believes in treating each person with trust and respect and only ask what they need to in order to assess suitability.

How To Manage Your Centrelink Income?

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Cigno offers Centrelink loans for persons who have a low income and on Centrelink payments. You can also apply for bad credit loans or no credit loans if you need cash while on Centrelink.

If you do apply for a loan or credit, always check the terms and conditions. Enquire about your concerns before signing a contract.