Business loans in Australia come in many forms — and the right one depends entirely on what you need the money for, how quickly, and what your business can show a lender. This guide cuts through the jargon and explains how the system actually works.
The Main Types of Business Finance
| Product | Best For | Typical Term |
|---|---|---|
| Term loan (secured) | Growth, purchase of assets or property | 3–25 years |
| Term loan (unsecured) | Working capital, short-term needs | 6 months–5 years |
| Business line of credit | Ongoing cash flow management | Revolving |
| Equipment finance | Machinery, vehicles, technology | 1–7 years |
| Invoice finance | Unlocking cash tied up in unpaid invoices | Rolling (per invoice) |
| Commercial property loan | Buying business premises | 5–30 years |
| Overdraft | Managing short-term cash gaps | Revolving |
How Lenders Assess a Business Loan Application
Business lending is more complex than a home loan. Lenders assess:
1. Trading History
Most banks want at least 2 years of trading history. Some non-bank lenders will consider 6–12 months for smaller amounts with strong cash flow evidence. ABN registration date is a starting point, but lenders want actual business activity — not just an ABN sitting on paper.
2. Business Revenue and Cash Flow
Lenders look at your business bank statements (typically 6–12 months) to assess real cash flow — how much actually lands in the account and goes out. They care less about your accounting profit than about whether there's consistently enough money to service the loan repayment.
3. Business and Personal Credit
Both your business credit file and your personal credit file are assessed. If you're a sole trader or director of a small company, your personal financial history is considered alongside the business's.
4. Security (Collateral)
Secured loans require an asset — typically property (residential or commercial), equipment, or business assets — as security. Unsecured loans don't require collateral but come at higher rates and lower amounts.
5. Serviceability
Can the business afford the repayments? Lenders apply a buffer rate (usually 2–3% above the loan rate) and stress-test the cash flow against that higher repayment figure.
Secured vs Unsecured Business Loans
| Feature | Secured | Unsecured |
|---|---|---|
| Interest rate | Lower (6–9%) | Higher (9–25%+) |
| Loan amount | Up to $5M+ | Typically up to $500K |
| Approval speed | Slower (valuation required) | Fast (24–72 hours) |
| Risk to borrower | Asset at risk if default | Personal guarantee typically required |
| Best for | Growth, property, large equipment | Short-term cash flow, working capital |
Personal guarantee: Most business loans — even "unsecured" ones — require a personal guarantee from the director(s). This means if the business can't repay, you're personally liable. Always read what you're signing.
What Documents You'll Need
- Last 2 years business tax returns and financial statements
- Last 6–12 months business bank statements
- BAS statements (if GST registered)
- Personal tax returns for directors
- Proof of ABN and business registration
- ID documents
- Details of any existing business debts
Bank vs Non-Bank Business Lenders
Major banks offer the lowest rates but have the tightest criteria. Non-bank and fintech lenders (Prospa, Moula, Capify, OnDeck) approve faster with less documentation — but at significantly higher rates.
For most growing small businesses, a broker can find the best product without you having to approach 6 lenders separately — each of which creates a credit enquiry.
Frequently Asked Questions
Yes — unsecured business loans exist specifically for businesses without significant assets. Lenders focus on your cash flow and credit history instead. Amounts are typically smaller and rates higher than secured options.
Non-bank lenders can approve small unsecured loans in 24–72 hours. Bank term loans with security typically take 2–6 weeks due to valuations and credit assessments. Having your documents ready speeds the process significantly.
For most bank loans, yes. But non-bank lenders and some specialist lenders will consider businesses as young as 6 months if the cash flow is strong. The less history you have, the more the lender relies on personal credit and cash flow evidence.
Generally yes — interest on a business loan used for business purposes is deductible as a business expense. Speak to your accountant about structuring, as the loan purpose and how it's drawn down can affect deductibility.
A business loan provides a lump sum you can use for multiple purposes. Equipment finance is secured specifically against the equipment being purchased — which means lower rates but the lender holds title to the asset until it's paid off.