Business funding
Business funding, by what it's for.
Funding is not one market with one set of rules. The structure that suits a business depends on what the money is for, how the business trades and what it already owes.
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At a glance
Six structures worth knowing.
General information only. It does not take your circumstances into account and is not a recommendation, offer or approval. Funding is subject to lender assessment, eligibility and terms.
- 01Working capitalCash flow support, stock, suppliers and general business expenditure.
- 02Line of creditA reusable facility for businesses that want ongoing access rather than one lump sum.
- 03Business loanA fixed funding amount with structured repayments.
- 04RefinanceReview existing short-term or expensive facilities where another structure may be available.
- 05ATO / tax obligationsFunding structures that may assist where tax obligations are affecting business cash flow.
- 06Secured fundingLarger or longer-term options may be available where suitable security exists.
01
Working capital
Cash flow support, stock, suppliers and general business expenditure.
Working capital describes funding used for the ordinary running of a business rather than a single long-term asset. It can be provided as a lump sum repaid over a set term, or as a revolving limit the business draws on as needed.
Many non-bank lenders offer shorter-term working capital products assessed largely on business bank statements and trading performance. Banks may offer overdrafts or working capital facilities with different documentation requirements.
Often considered when
- Stock needs to be bought ahead of a busy period
- Suppliers or wages fall due before customer payments arrive
- A seasonal dip needs to be bridged
- An unexpected cost would otherwise drain operating cash
02
Line of credit
A reusable facility for businesses that want ongoing access rather than one lump sum.
With a line of credit, a lender approves a maximum limit. The business draws what it needs and, as the balance is repaid, the available limit is generally restored. Interest is usually charged on the amount drawn, although some facilities also carry establishment, account or undrawn-limit fees.
Structures vary. Some lines of credit are unsecured and assessed largely on trading performance; others sit against security. Limits are typically reviewed from time to time.
Often considered when
- Cash flow moves up and down through the month or year
- Stock or supplier purchases recur
- The business wants a buffer available rather than a lump sum sitting idle
- There is a regular gap between invoicing and being paid
03
Business loan
A fixed funding amount with structured repayments.
A business loan provides a set amount up front, repaid through scheduled repayments over an agreed term. Term length, repayment frequency and whether security is required all vary between lenders and products.
Unsecured business loans are usually sized against turnover and trading history. Larger amounts or longer terms may require security.
Often considered when
- There is a defined purpose with a known cost, such as equipment, a fit-out or a one-off purchase
- The business prefers predictable repayments
- An expansion plan has a clear budget
04
Refinance
Review existing short-term or expensive facilities where another structure may be available.
A refinance pays out existing business debt with a new facility. Sometimes that means consolidating several facilities into one. Sometimes it means moving from a short, frequent-repayment product to a longer term.
Whether a refinance improves the position depends on the full picture: payout amounts, any early-repayment costs, the new facility's total cost and how repayments compare with current cash flow.
Often considered when
- Several short-term facilities with daily or weekly repayments have built up
- Repayments take an uncomfortable share of turnover
- A facility is nearing the end of its term with a balance still owing
- Trading has improved since the original facility was written
05
ATO / tax obligations
Funding structures that may assist where tax obligations are affecting business cash flow.
Where tax obligations are putting pressure on cash flow, some businesses look at funding to clear an ATO balance or to support operations while a payment arrangement is in place.
Lenders look closely at the size of the tax debt, whether a payment arrangement exists and is being met, and whether lodgements are up to date. Availability depends heavily on the overall position.
Often considered when
- An ATO debt is affecting day-to-day cash flow
- A payment arrangement is difficult to service alongside other commitments
- The business wants its tax position resolved before seeking other funding
06
Secured funding
Larger or longer-term options may be available where suitable security exists.
Secured funding is backed by an asset, commonly residential or commercial property. Security can make larger amounts or longer terms available.
It also puts the asset at risk if the facility isn't repaid, and valuations and legal work usually add time and cost to the process.
Often considered when
- The amount needed is larger than unsecured options may support
- A longer repayment term would suit the purpose
- The owners have equity in property and are comfortable offering it as security
Funding Check
Know what may fit before you apply.
Tell us about the business. We'll show you the funding structures that may be worth a closer look, then you decide whether to go further.