Short answer: Business finance is money a business uses that doesn’t come from today’s sales. Most of it is debt — loans, lines of credit, invoice and equipment finance — which you repay. The rest is equity, where you give up part ownership. For most owners the real decision is simpler: borrow against property, or against cash flow.
What does business finance actually mean?
Business finance is any money a business uses that doesn’t come out of this month’s takings. It pays for the things sales can’t cover in time: a tax bill that lands before the customers pay, a machine that has to be replaced this week, a business that comes up for sale, a payroll run in a slow month.
The government’s own small business site splits it into two families (business.gov.au). Debt finance is money you borrow and repay. You keep full ownership, and the lender usually wants some form of security. Equity finance is money you get in exchange for part of the business. There are no repayments, but you share the profits and the decisions from then on.
Grants sit off to the side. They don’t need repaying, but they fund specific projects on the program’s terms and timeline, not whatever the business needs this week.
For most Australian small businesses, “business finance” means debt. So that’s where most of this guide goes.
The main types of business finance in Australia
Each type is built for a different job. Picking the wrong one is the most common and most expensive mistake we see.
| Type | What you’re really getting | Suits | Watch for |
|---|---|---|---|
| Property-secured loan | A lump sum borrowed against equity in property you own | Bigger, one-off needs: tax debt, buying a business, settlements | Your property is the security |
| Unsecured or cash-flow loan | A lump sum sized to your turnover | Short gaps for a trading business | Shorter terms and frequent repayments |
| Line of credit or overdraft | A limit you draw and repay as you go | Ongoing ups and downs in cash flow | Easy to leave drawn permanently |
| Invoice finance | An advance against invoices your customers owe | Businesses waiting on slow payers | Only as good as your debtors |
| Asset or equipment finance | A loan or lease tied to the equipment or vehicle | Buying machinery, trucks, fit-outs | Funds the asset only, not cash needs |
| Merchant cash advance | A lump sum repaid from a share of card sales | Card-heavy retail and hospitality | The total cost can be hard to see |
| Trade credit | Time to pay a supplier | Buying stock | Suppliers can cut it without warning |
| Equity | Investor money for a share of the business | High-growth businesses | Permanent loss of ownership and control |
| Grants | Money for a defined project | Eligible programs only | Slow, competitive and narrow |
Notice the right-hand column. Every type has a catch, and the catch is usually what makes it cheaper or faster than the others.
Secured or unsecured: the choice that decides almost everything
Underneath all the product names, there are really two ways a lender gets comfortable lending you money.
- Against property. A property-secured business loan is assessed on the equity in residential, commercial or industrial property and on how the loan gets repaid. Because the property carries the risk, it can lend more and ask fewer questions. With us that means $20,000 to $5M, no financials or tax returns, and bad credit, defaults or ATO debt considered. It usually settles as a second mortgage behind your existing lender. In Victoria it can also be done as a caveat loan.
- Against cash flow. An unsecured business loan needs no property, so the lender leans on the business instead: an active ABN, at least six months of trading, and business bank statements shared through a read-only link. The amount is sized to turnover.
If you own property with equity in it, the secured lane nearly always gives you a bigger amount and a longer runway. If you don’t, or the need is small and short, cash flow is the faster path. Some cash-flow loans fund in as little as 2 hours after approval.
Match the finance to the job
The cheapest finance is the one that fits the shape of the problem. A rough guide:
- A short gap you can see the end of. A business line of credit or a short cash-flow loan. See our page on cash flow gaps.
- Customers who pay in 60 days. Invoice finance turns the invoices into cash now.
- Equipment that has to be bought or replaced. Asset finance, so the machine pays for itself over its working life.
- A big, one-off amount. Tax debt, buying a business, a settlement that has to happen. These are what urgent business loans secured by property are built for. See ATO tax debt and buying a business.
- Growth with real risk attached. Equity may suit better than debt, because investors share the downside.
Using a line of credit to fund a five-year asset, or a lump sum to paper over a gap that comes back every quarter, is how good businesses end up with expensive debt.
Where business finance comes from
Banks are still the default, and for a well-documented business with time to wait they can be the cheapest. They also ask for the most: financials, tax returns, often a property, and weeks of back and forth.
Non-bank and private lenders fill the gap. They take on the cases a bank won’t, assess differently, and move faster. Across the 5,626 loans we have funded since 2012, 61% of our borrowers had already been declined somewhere else. If that’s you, our guide to being declined by the bank walks through why it happens and what to try next.
Brokers sit between you and the lenders. A good one saves time. Either way, it pays to know which lane you are in before anyone runs your credit. Our comparison of business lenders sets out who does what.
How to compare offers without being misled
Two offers can look alike and cost very different amounts. Check these, in this order:
- The total cost in dollars. Interest plus every fee, over the time you expect to have the loan. A headline number tells you very little. Our page on business loan costs lists what to ask.
- Funding time, not approval time. Almost every speed claim in this market is an approval time. What matters is when the money lands. Our own medians are 36 hours to funds for property-secured loans and 24 hours for cash-flow loans. Our guide to how fast you can get a business loan covers the rest.
- What happens if you repay early. Some loans charge for it, some don’t.
- Security and guarantees. Know exactly what is at risk if things go wrong.
Two more things. Interest on money borrowed for the business is generally deductible (ATO), which changes the real cost. And an unsolicited message saying you’re “already approved” is, in business.gov.au’s words, almost certainly a scam.
When business finance is the wrong answer
We would rather tell you this than lend you money that makes things worse.
If the business loses money every month, borrowing only moves the problem forward and adds a repayment to it. Fix the margin first. If the repayments would only work in a best-case month, the loan is too big. And if the real problem is a dispute, such as a creditor demanding money you don’t believe you owe, a lawyer is the first call, not a lender.
If your plan is a specific project that a government program might fund, check the grants and programs finder before you borrow. It is slow money, but it is money you don’t pay back.
Find out which kind you qualify for
You don’t need to have picked the product before you ask. Tell us what the money is for, whether you own property, and how long you’ve been trading, and we’ll tell you which lane fits and roughly how much is realistic.
The 60-second eligibility check makes no credit enquiry and costs nothing to apply. If speed is the priority, our fast business loans page shows how quickly each lane can fund. Or call us on 1300 863 711 and talk it through with someone who writes these loans every day.
Frequently asked questions
Is business finance the same as a business loan?
A business loan is one kind of business finance. The term also covers lines of credit, invoice finance, equipment finance, trade credit from suppliers, investor money and grants. When most owners say business finance, they mean borrowing.
Can a brand-new business get finance?
It depends on the lane. Cash-flow lenders generally want an active ABN and at least six months of trading. A property-secured loan is assessed on the equity and how the loan gets repaid, so a newer business with property behind it can still qualify.
Do I need financials or tax returns?
Banks usually ask for them. Our property-secured loans don’t: no financials or tax returns, and overdue lodgements don’t stop the application. Cash-flow loans are assessed on your business bank statements instead.
Will checking my eligibility affect my credit file?
Not with us. The 60-second eligibility check makes no credit enquiry and costs nothing. A credit check only happens later, with your consent, if you decide to go ahead.
Is the interest on business finance tax deductible?
Generally, interest on money borrowed for your business is a deductible expense, according to the ATO. How it applies to your structure is a question for your accountant.
Does it cost anything to apply?
No. There's no cost to apply or check your eligibility. All costs are set out in writing in your loan offer before you sign anything.
Will checking my eligibility affect my credit score?
No. Our 60-second eligibility check doesn't make a credit enquiry. A credit check is only done later, with your consent, if you decide to proceed.
