Commercial finance · Business lending
Business loans, matched to the actual problem.
Most business borrowing goes wrong at the first decision, not the last one — a three-year term loan taken out to cover a cash-flow gap that lasts six weeks, or an overdraft funding a machine that will still be earning in a decade. Before we talk about lenders, we work out which shape of facility your situation calls for. Sometimes the answer is that you don't need one yet.
Start here
Secured or unsecured is the first fork in the road.
Every business facility sits on one side of this line, and it drives almost everything downstream — what it costs, how much you can raise, how long the paperwork takes and what happens if trading turns bad.
Secured lending is backed by an asset the lender can realise if the loan isn't repaid. Usually that means property, sometimes the equipment being purchased, sometimes a general security agreement over the assets of the business as a whole. Because the lender's downside is covered, secured facilities are generally priced more keenly, can be written for longer terms and support larger amounts. The cost is that you have pledged something real, and that registering the security takes time — valuations, searches, and often a solicitor.
Unsecured lending is backed by nothing but the trading performance of the business and the standing of the people behind it. It is faster to arrange and it doesn't tie up the family home. The trade-off is that unsecured money is more expensive than secured money, in every market and at every lender, and the amounts available are smaller relative to turnover. That isn't a lender being difficult — it's the price of them carrying the risk unsupported.
A great many small business owners tell us they want unsecured finance, and what they usually mean is that they don't want the house on the line. That is a reasonable instinct, and it is worth saying that the distinction is less clean than it sounds: most unsecured business lending still involves a director's personal guarantee, which is a personal obligation even though no specific asset has been pledged. More on that below, because it is the part people skim.
Ask what the borrowing is buying. Money spent on something that will produce income for years — a fitout, a truck, a plant upgrade — can sensibly be repaid over years. Money covering a gap between an invoice going out and being paid should be repaid in weeks, from that invoice. Matching the life of the facility to the life of the thing it funds is the single most useful discipline in commercial finance, and it is where a broker earns their keep long before any rate is discussed.
Compare
Four products, four quite different problems.
"Business loan" is a category, not a product. In practice, most requests that come to us are best served by one of four structures — and picking the wrong one is expensive in a way that no amount of shopping around for pricing can fix.
| Structure | What it is | The problem it solves | Where it bites |
|---|---|---|---|
| Term loan | A set amount, drawn once, repaid over a fixed term with a scheduled repayment. Secured or unsecured. | A defined, one-off spend: buying into a business, a fitout, a stock build for a known season, consolidating messy short-term facilities into one repayment. | Inflexible by design. Repay it early and you may face break costs; find you needed more and you're back for a second application. |
| Overdraft or line of credit | A revolving limit you draw and repay as you like, with interest generally charged only on the balance actually used. | Working capital and timing mismatches — payroll landing before the debtor run clears, a quiet month in a seasonal trade, wages during a long project. | Limits are typically reviewed periodically and may be repayable on demand. Easy to treat a revolving limit as permanent capital, then never get it back to zero. |
| Invoice finance | Funding advanced against unpaid invoices you have already issued. The debtor book itself is the security. | A growing business selling to other businesses on payment terms, where the constraint is genuinely that customers pay slowly rather than that trading is unprofitable. | Only works with commercial debtors and clean invoicing. Costs are structured as fees on drawn funds rather than a simple rate, so compare it on total cost, not headline pricing. |
| Equipment finance | Finance for a specific asset — vehicle, machine, plant — secured by that asset. Written as a chattel mortgage, hire purchase, lease or rental. | Buying anything that earns its keep over several years. Almost always cheaper than funding the same purchase from an unsecured facility. | The structure you choose has real accounting and tax consequences, and a balloon or residual at the end needs a plan before you sign, not after. |
Plenty of businesses end up with two of these running side by side, and that is often the right answer: equipment finance for the assets so that the cheapest available security is doing the work, and a modest overdraft kept clear for timing. What we see far too often is a single expensive unsecured facility being asked to do all four jobs at once.
The assessment
What lenders generally look at.
Trading history and how steady it is
How long the business has traded under its current structure and ABN, and whether revenue is consistent or lumpy. Seasonality isn't a problem when it's explained and evidenced — an unexplained drop in recent months is. Bank statements usually carry more weight than a forecast.
Your position with the ATO
Whether lodgements are up to date, and whether there is tax debt or a payment arrangement in place. Not automatically fatal, but it is one of the first things looked at, and the ATO is able to report certain business tax debts to credit reporting bureaus. Being upfront about it early is far better than it surfacing at assessment.
What you already owe, and who's behind it
Existing facilities, equipment contracts, card limits and any short-term lending already drawn. The directors' own credit conduct is generally assessed too, because on most commercial deals they stand behind the debt personally.
The honest bit
Low-doc lending, and what it actually costs you.
Low-doc and alt-doc facilities exist because a large number of perfectly sound businesses cannot produce two years of finalised financials on demand. The accountant is behind, the last financial year isn't lodged, the business restructured, or the growth is recent enough that historical figures understate it badly.
Instead of full financials, these lenders assess from other evidence: business bank statements, BAS lodgements, an accountant's declaration, or a combination. It is a legitimate part of the market and it solves a genuine problem.
It is also, without exception, a trade. You are asking a lender to form a view with less information, and they price for that uncertainty. Compared with a fully documented application at the same lender, low-doc generally means some combination of a higher cost, a lower amount, a shorter term, or more security required. Anyone presenting it as a free convenience is not being straight with you.
So the practical advice is unglamorous: if your financials are three weeks away from being finalised, it is usually worth waiting three weeks. If they are nine months away and the opportunity is now, low-doc is what it is for — go in with your eyes open, and plan to refinance onto full-doc terms once the paperwork catches up.
Directors' guarantees are normal, and they are real
If you borrow through a company or trust, expect the lender to ask the directors for a personal guarantee. This is standard across commercial lending and it is not a sign that anything is wrong with your application.
What it means is worth stating plainly. Under a personal guarantee you are personally liable for the company's debt. If the business cannot pay, the lender can pursue you as an individual, and that exposure survives the company itself. Where the guarantee is supported by security over property, the property is genuinely at risk.
None of that is a reason to refuse — it is close to unavoidable in this market — but it is a reason to read the document, know which entity is borrowing, know exactly what you have signed, and get your own legal advice before you sign it rather than after. If there is a co-director, or a spouse being asked to sign, they need to understand the same thing.
Read this part
Business lending usually sits outside the National Credit Code.
This is the single most important thing on this page, and it is the thing least often said out loud.
The National Credit Code — Schedule 1 to the National Consumer Credit Protection Act 2009 — is what sits behind the protections most Australians associate with borrowing: responsible lending obligations, prescribed disclosure, the statutory hardship process, the rules around default notices. It applies to credit provided predominantly for personal, domestic or household purposes, and to residential investment property.
Credit provided wholly or predominantly for business purposes is generally excluded. That means when you borrow for the business, the consumer protections you would have on a personal loan may simply not apply to that contract. The terms of your facility, and general law, do more of the work.
In practice this shows up in several ways:
- You will usually be asked to sign a business purpose declaration. Signing one when the funds are not genuinely for business use is a serious matter, not a formality to skim past.
- Contract terms carry more weight. Fees, default provisions, review and demand clauses and enforcement rights are set by the document you sign rather than by a prescribed code.
- Hardship works differently. Many lenders do offer assistance to business borrowers in difficulty, and there are protections for small business elsewhere in the law — but the statutory hardship pathway attached to consumer credit is a different thing.
- Dispute resolution still exists. Small business complaints can generally be taken to the Australian Financial Complaints Authority, subject to AFCA's own rules about who and what it can consider.
Because a borrower who understands that a commercial contract is a commercial contract reads it properly, asks about the demand and review clauses, and takes legal advice on the guarantee. That is a better outcome than discovering the difference during a difficult quarter. We are credit brokers, not solicitors and not accountants — the tax and accounting treatment of any structure is a question for your accountant, and the contract is one for your lawyer.
Get ready
What to have handy.
You don't need all of this to start a conversation — only to finish one. What you can produce quickly often determines whether a full-doc or low-doc path makes sense, which is a decision worth making deliberately.
Common questions
Business finance, answered.
How much can my business borrow?
It is set by what the business can demonstrably service, what security is available and how the lender reads your trading history — not by a published limit. Secured lending generally supports considerably more than unsecured lending against the same business, because the lender's risk is covered differently. Rather than guess, give us the bank statements and the purpose and we'll tell you what the panel is likely to support before anything is lodged.
Do I need to put up property?
Not always. Unsecured facilities and equipment finance both exist precisely so that property doesn't have to be involved. But understand what you're choosing: unsecured money costs more and comes in smaller amounts, and equipment finance is secured by the asset itself. If you have property equity available and are comfortable using it, the pricing difference over the life of a facility can be substantial. That's a decision about risk appetite, and it belongs to you.
What is a director's guarantee, and can I avoid it?
It is a promise by you personally that the company's debt will be repaid. If the business cannot pay, the lender can come after you as an individual. It is close to universal in commercial lending to small companies and trusts, so avoiding it entirely is rarely realistic. What you can do is know exactly what you're signing, understand whether it is capped or unlimited and whether it is supported by security over property, and get legal advice before signing rather than afterwards.
My business is new. Is that a dealbreaker?
It narrows the field rather than closing it. Lenders generally want to see a period of trading under the current structure, and a short history means other things carry more weight — the directors' own credit conduct, industry experience, contracts in hand, security offered, and whether you've bought an established operation or started from nothing. Some lenders are genuinely comfortable with newer businesses and others aren't, and knowing which is which is most of what a broker does.
I have an ATO debt. Should I bother applying?
Usually yes, and you should tell us about it in the first conversation. Tax debt is common and lenders see it constantly. What matters is the context: whether lodgements are current, whether there is a formal payment arrangement and whether you're meeting it, and whether the debt is being paid down or growing. Some facilities can even be used to clear an ATO position. What doesn't work is hoping it won't be found, because it generally is.
Is an overdraft better than a term loan?
Neither is better in the abstract — they answer different questions. If the need is recurring and unpredictable, a revolving limit fits, because you pay for what you draw. If the need is a defined one-off amount, a term loan is usually cheaper and it has the virtue of actually being repaid, which a revolving limit will not be unless you make it happen. A useful test: if you cannot picture the facility sitting at zero at some point in the year, it probably shouldn't be a revolving one.
Can I claim the interest as a tax deduction?
Ask your accountant, and please treat that as a real answer rather than a brush-off. The deductibility of interest, the treatment of GST, and how a chattel mortgage differs from a lease or rental in your books all depend on your structure and circumstances. The Finance Team are credit brokers, not tax advisers, and giving you a confident answer here would be neither accurate nor appropriate. What we will do is make sure your accountant has the loan documents in the form they need.
Does enquiring affect my credit file?
Talking to us doesn't. We assess your position against lender policy before anything is formally lodged, so nothing is recorded while we work out where you fit. This matters more in commercial lending than people realise, because short-term business lenders are easy to apply to and a trail of recent enquiries reads poorly to the better-priced lenders you'd rather end up with.
Let's talk
Tell us the problem. We'll tell you the structure.
No cost, no obligation, and nothing touches your credit file while we work out where you fit. If the right answer is a facility, we'll go to the lenders whose policy actually suits your trading. If the right answer is to fix the debtor terms first and borrow nothing, we'll say that too.
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The online application takes a few minutes and gives a broker enough to work with straight away.
Apply nowThe Finance Team is a trading name of Online Showroom Pty Ltd, a credit broker operating under Australian Credit Licence 551493. We arrange finance through a panel of lenders; we are not the lender. Anything shown on this page is general information and any figures discussed are estimates only — not a quote, not an offer of credit, and not a recommendation about your particular circumstances. All applications are subject to assessment by the lender and to their terms and conditions. Tax and accounting matters are for your accountant.