Types of Business Loans in Australia (2026): Terms, Examples & How They Work
Australian business owner reviewing business loan facility options and cashflow timelines
📘 types + terms guide · Australia ·
Business Owners Hub · 2026
There isn’t just one “business loan”. In Australia, the most common types include a business line of credit, working capital loans and invoice finance — each with different loan terms, repayments and approval requirements. This guide breaks down the options, typical terms, and how to choose based on your cashflow problem.
- Business line of credit → revolving limit (draw/repay as needed)
- Working capital loan → fixed lump sum over a set term
- Invoice finance → unlock cash from unpaid invoices
1) Types of business loans (quick guide)
Google often lumps everything under “business loan”. Lenders don’t. These are the main facilities most Australian SMEs actually use — and the “term” implications for each.
Business line of credit
What it is: A revolving limit you can draw from and repay, then reuse.
When it fits: You need an ongoing buffer for uneven weeks, supplier timing, or seasonal swings.
Typical term: Ongoing facility (reviewed periodically; terms vary by lender).
Working capital loans
What it is: A lump sum paid upfront with fixed repayments over a set term.
When it fits: You have a defined cash gap (e.g., growth push, stock build, or short runway to stabilise cashflow).
Typical term: Short to medium term (varies by lender and cashflow strength).
Invoice finance
What it is: Funding linked to unpaid invoices (receivables), so cash comes forward.
When it fits: You sell B2B on 30–60 day terms and cash timing is the problem (not revenue).
Typical term: Ongoing / linked to invoices (structure varies by provider).
Short-term business loan / “one-off capital purchase”
What it is: A simple short-term lump sum with fixed repayments.
When it fits: You need to fund a one-off expense quickly (and the story is clean in statements).
Typical term: Short term (varies by lender and risk profile).
2) Business loan terms (what “term” actually includes)
People search “business loan term” meaning two different things: the length of the loan and the conditions attached to it. Use this as your quick checklist.
| Terms checklist | What to check (simple) |
|---|---|
| Term length (months/years) | How long you’ll be repaying for — and whether it matches your cash cycle. |
| Repayment frequency (weekly/fortnightly/monthly) | Match repayments to how money actually lands (wage weeks, customer payment cycles, seasonality). |
| Fees (establishment + ongoing) | Upfront fees, monthly fees, line fees, and any platform/admin costs. |
| Security / guarantees | Whether it’s cashflow-based, asset-backed, or secured — and whether personal guarantees apply. |
| Early payout / break costs | Exit fees, payout calculation rules, and whether early repayment saves meaningful interest. |
| What affects pricing | Credit profile, time in business, cashflow stability, existing exposure, and statement “red flags”. |
3) What counts as a “business loan” in Australia?
In plain terms, it “counts” when the funds are borrowed for business purposes — working capital needs, supplier bills, payroll timing, BAS/ATO timing, marketing spend, expansion costs, or investment back into the business.
Lenders usually test three things: (1) the business is real and operating (ABN + trading evidence), (2) the purpose is business-related, and (3) repayment capacity makes sense from the business’s cashflow. For a consumer baseline on borrowing and credit concepts, see MoneySmart (ASIC).
- Borrower — who’s legally responsible (entity + directors/guarantors where applicable).
- Purpose — what the funds are actually used for (and whether the story matches).
- Repayment source — what cashflow pays it back (trading pattern + buffers).
4) What causes a “purpose mismatch” (why good deals get sized down)
The most common problem isn’t the type — it’s the purpose. If it’s mainly personal consumption dressed up as “business”, lenders can treat it as higher risk or push you into another lane.
- Business account is used like a personal everyday account (lots of retail/lifestyle spend).
- No consistent trading deposits (income is irregular or unclear).
- The requested amount doesn’t match the stated purpose (too big / too vague).
- Repayments rely on “hope” rather than observable cashflow buffers.
5) Secured vs unsecured: what “security” changes
“Secured” usually means the lender has specific security (asset or property) supporting the facility. “Unsecured” relies more on cashflow, credit profile, and the business’s trading strength (often with personal guarantees).
- Limit sizing — lenders may be more comfortable extending higher limits.
- Pricing/terms — stronger risk profile can improve options (case-by-case).
- Docs focus — security doesn’t replace repayment ability.
If you’re ranking for types of business loans and business loan terms, your edge is clarity: pick the right facility (LOC vs working capital vs invoice finance) and understand the terms that control cashflow.
FAQ
The most common are a business line of credit (revolving), a working capital loan (lump sum + set term), and invoice finance (cash against unpaid invoices). If you want the category definition too, see Business Loan, and for your options hub start at Business Loans.
It depends on the facility and your cashflow strength. A “term” can mean length, repayment frequency, fees, and exit rules — not just months/years. If you’re comparing cashflow facilities, understanding Working Capital helps you pick the right structure.
Credit profile, time in business, statement conduct, existing exposure, and whether the purpose matches the cashflow evidence. Clean buffers and a “fits the lane” story usually matter more than people expect.
A line of credit is a reusable limit (draw/repay as needed). A working capital loan is a fixed lump sum over a set term. The right answer depends on whether your problem is ongoing volatility (LOC) or a defined short runway (WCL).
If you’re profitable but cash is delayed by customer terms, invoice finance can fit better because it follows receivables timing. If the need is broader (multi-purpose spend), a term-style facility may fit better.
Disclaimer: This content is general information only and isn’t financial, legal, or tax advice.
