Credit Limit
A Credit Limit is the maximum amount a business can access through a revolving facility such as a Business Line of Credit or an Invoice Finance limit. It’s determined using financial health, revenue trends, security strength, and overall Borrowing Capacity.
Unlike a lump-sum Business Loan, a Credit Limit is reusable — funds can be drawn, repaid, and redrawn as needed.
Why Credit Limits Matter
Australian SMEs in the Tradie, Truckie, Café, and Whitecoat industries rely on flexible access to cash to manage stock, payroll, repairs, and seasonal swings.
Higher limits allow businesses to:
- cover supplier and ATO payments
- fund short-term expenses without using savings
- absorb long customer payment cycles
- take on bigger projects or inventory orders
- smooth out cashflow volatility
In products like Invoice Finance, limits increase naturally as revenue grows.
How Credit Limits Are Set
- 90–180 days of Bank Statements
- Revenue stability and average monthly deposits
- Existing debt and repayment behaviour
- Business structure and director strength
- Security position or PPSR ranking
- Industry risk and trading history
For asset-backed products, limits may also reference LVR (Loan-to-Value Ratio).
Credit Limits are core to facilities like a Business LOC or a structured Cashflow System (LOC + WCL + Invoice Finance).
How Businesses Increase Their Credit Limit
- showing consistent revenue growth
- improving cashflow through Invoice Finance
- reducing debt load or refinancing via Asset Refinance
- maintaining timely ATO payments
- strengthening director profiles or removing adverse listings
- providing acceptable security (PPSR or asset-backed)
Clean behaviour over 3–6 months can significantly increase Credit Limit eligibility.
Related Switchboard Resources
For official financial guidance: business.gov.au