Advance Rate
Last reviewed 13 June 2026 by Nick Lim, finance broker (FBAA).
Advance Rate is the percentage of an asset's value a lender will lend against, such as 80 percent of invoices or 60 percent of stock. In invoice finance the advance rate is often 80 to 90 percent of the invoice value, with the balance, less fees, paid when the customer settles. It works much like an LVR but applies to business assets like debtors, stock or equipment rather than property.
Why Advance Rate Matters
The advance rate sets how much cash an asset actually unlocks, which is what matters for working capital.
- Percentage of asset value the lender funds
- Similar idea to an LVR for business assets
- Often 80 to 90 percent in invoice finance
- Lower for riskier or harder-to-sell assets
- Drives how much working capital is freed up
Common Features of Advance Rate
- Set as a percentage of assessed value
- Higher for liquid assets like invoices
- Lower for stock or specialised equipment
- Reviewed as the asset base changes
- Defines the available funding limit
Official reference: business.gov.au
What is an advance rate?
The percentage of an asset's value a lender will lend against, similar to an LVR but for business assets.
What is a typical advance rate for invoice finance?
Often 80 to 90 percent of the invoice value, with the rest paid on collection in invoice finance.
Why is the advance rate lower on stock?
Stock is harder to value and sell quickly, so lenders fund a smaller share of it.
Advance rate vs LVR?
Same idea. LVR is the property version; advance rate applies to debtors, stock and equipment.
Can the advance rate change?
Yes, lenders adjust it as the quality of the asset base or the customer mix changes.