Business Loans for Tradies: How LOC, WCL & Invoice Finance Actually Work

Business loans for tradies in Australia – Switchboard Finance

Tradies · Business Loans · Low Doc

Business Loans for Tradies: How LOC, WCL & Invoice Finance Actually Work

Ute loans and tool finance are only half the story now. Growing tradie businesses need real business loan firepower to cover wages, slow-paying builders, ATO bills and surprise repairs — without raiding the offset account every time something pops up.

For Australian tradies with ABNs

Lines of credit · Working capital · Invoice finance

Updated 2025

This guide shows how tradies can use business loans as an umbrella — with a business line of credit, working capital loan and invoice finance working together — alongside existing gear finance. The goal: keep jobs moving, keep the team paid and keep your accountant happy, without crossing the line into “always stressed about repayments”.

We’ll map out how each product behaves in the real world for electricians, plumbers, carpenters and other trades, how they sit alongside your ute and equipment loans, and a simple 12–24 month blueprint tradies can follow as they grow. Think practical numbers and examples, not abstract bank talk.

Why tradies need more than just asset finance

Vehicle and equipment finance are great at buying things with wheels, engines or cords. They’re terrible at covering short, sharp cash squeezes — especially when a builder or client pays you 30–60 days late.

Most tradies start with simple asset finance for a ute, van or core tools. As the business grows, the cash stress usually comes from somewhere else: wages to keep the crew, materials that have gone up 20%, ATO and BAS, and fuel and repairs that never land at a “good time”. That’s where the first cracks show if there’s no business loan buffer sitting over the top.

Banks often want full financials and long trading history before they’ll look at a classic overdraft. For a lot of ABN holders, that means either dipping into personal savings, paying suppliers late or whacking everything on a personal credit card. None of those scale well once you’ve got multiple jobs running and staff relying on you.

• Equipment and vehicle loans help you own assets over time.
• Business loans help you survive timing gaps between money out and money in.
• Used together properly, they create a system instead of a string of random debts.

Gear & vehicles = long-term repayments

Business loans = short-term cash flow gaps

The mix matters more than the rate

Real-life example

An electrical contractor in South East Melbourne had two ute loans and a scissor lift on finance. The work was there, but builders were paying on 45-day terms. Without any business facility, every time wages and materials landed together, he drained the home-offset. Once we set up a small business line of credit plus a short working capital loan, he could cover those spikes and pay the buffer back down as invoices cleared, instead of living on personal redraw.

The three business loan pillars tradies actually use

For tradies, the business loan umbrella usually has three moving parts: a business line of credit, a working capital loan and invoice finance. They each solve a slightly different problem.

A business line of credit behaves like a flexible buffer. You only pay interest on what you use, you can draw and repay as jobs ebb and flow, and it’s ideal for small gaps — materials, fuel, emergency repairs, or those awkward weeks where three invoices are “with accounts” but not actually in your bank yet.

Working capital loans are better for bigger, planned pushes — hiring an extra apprentice for the busy season, funding a new crew vehicle deposit, or consolidating a couple of nasty short-term debts into a more stable repayment. They’re usually fixed term with set repayments, which makes them easier to budget around your pipeline of work.

• Business line of credit: flexible, reusable buffer for day-to-day swings.
• Working capital loan: fixed term, used for specific upgrades or clean-ups.
• Invoice finance: converts slow builder or commercial invoices into same-week cash.

Invoice finance plugs the longest gaps — usually large invoices to builders, councils or commercial clients who take 30–60 days to pay. Instead of waiting, you access a percentage of the invoice early, finish the job and move onto the next one while the finance facility waits for the customer to pay.

LOC = breathing room

WCL = growth push

Invoice finance = slow-payer solution

Real-life example

A carpentry crew working on townhouse frames set up a small business line of credit for weekly materials, a 12-month working capital loan to fund an extra vehicle, and invoice finance only for their two slowest-paying builders. The mix meant they always had timber and wages covered, could take on an extra site, and still kept asset loans separate for utes and nail guns through their Tradie Loan Pack.

Stacking tradie business loans with gear finance (without blowing up repayments)

The danger isn’t using different products. It’s stacking them with no plan, until repayments creep ahead of revenue. A simple structure keeps everything in its lane.

First, ring-fence your vehicles, trailers and big-ticket gear with proper asset facilities like a chattel mortgage or lease, ideally spread across terms that match how long you’ll keep the gear. For bigger rigs and truck upgrades, your existing low doc asset finance or low doc vehicle finance pages do the heavy lifting.

Then, set guardrails around your business loan limits. One simple rule some tradies use: keep total repayments across business loans and asset finance under a set percentage of average monthly turnover. Another is to make sure the limit on your line of credit is enough to be useful, but not so big that you can dig a hole if things go quiet for a few months.

• Use asset finance for utes, vans, trailers and major tools — keep them on their own schedule.
• Use business loans only for short-term gaps and growth pushes, not for every new gadget.
• Review facilities every 6–12 months as your secured loan balances and revenue change.

A simple way to avoid over-complicating things is to have one main broker who can see the full picture. That makes it easier to restructure or refinance when you outgrow early facilities, rather than collecting five different small limits from five different lenders that no one is properly managing.

Real-life example

A plumbing business came to us with two vehicle loans, a random card facility from a supplier and an expensive online “fast business loan”. By mapping their repayments against an average month, we replaced the fast loan with a structured working capital facility, added a small business line of credit for materials, and tightened their limits. Repayments dropped by over $1,000 a month while still giving them room to take on a new commercial contract.

A 12–24 month business loan blueprint for growing tradies

You don’t have to build the perfect structure on day one. The trick is to grow into it in stages, rather than reacting to the next “urgent” cash gap.

Over the first 12 months, most tradie businesses simply need one good asset facility and a modest business line of credit. Once the pipeline fills and staff numbers grow, that’s when a dedicated working capital loan or invoice finance facility can help you step up to bigger commercial jobs without starving the rest of the business.

As you move into the 18–24 month window, it’s worth reviewing whether your current structure still fits. That might mean refinancing older loans, shifting some debt out of personal names, or formalising what started as an ad-hoc arrangement into a cleaner mix of facilities under the Tradie Hub.

• Months 0–12: core gear finance + small LOC for materials and emergencies.
• Months 12–18: add working capital loan to fund an extra vehicle, trailer or staff member.
• Months 18–24: introduce invoice finance only if slow-paying commercial work is becoming normal.

For tradies who want a deeper dive, the Business Cashflow System article shows how the same three pillars work for broader SMEs, and the Top Tools Tradies Finance First and Tradie Cashflow Trap blogs zoom in on tools and timing mistakes to avoid.

Real-life example

A small tiling business started with one ute loan and no business facilities. Year one, they added a modest line of credit for materials. By the end of year two, they had two vehicles on finance, a disciplined working capital facility to fund a larger warehouse lease and a small invoice finance line only for their biggest commercial client. Instead of scrambling every time progress claims were slow, they followed a simple blueprint and grew into a stable mix of facilities.

Want a clean, grown-up business loan structure that fits your trade instead of random debts everywhere? Switchboard can map out a simple mix of facilities for your ABN — from gear finance to business lines of credit, working capital loans and invoice finance — based on real numbers, not guesses.

Talk to a Broker Check Eligibility

Tradie business loans: quick answers

A few of the questions tradies ask us most often when they start looking beyond a single ute loan or card limit.

Can I get a business loan as a tradie with only 2 years on my ABN? +

In many cases, yes. Plenty of lenders look at tradies with 2+ years trading and consistent invoices, even if your accountant hasn’t lodged the latest returns yet. The key is showing stable revenue, clean bank statements and a sensible level of existing debt. A broker can help match you with lenders who understand trades, rather than treating every application like a big corporate facility.

Should I use a business line of credit or a working capital loan first? +

If your main issue is “some weeks are tight, some weeks are flush”, a business line of credit is usually the first step. It acts as a reusable buffer you can pull down and top back up as invoices clear. If you’re funding something bigger — like taking on a second crew, leasing a larger shed or clearing an expensive short-term facility — a working capital loan with fixed repayments may be a cleaner option. Often, tradies end up with both once the business grows.

How does invoice finance work for tradies working with builders? +

With invoice finance, you submit an approved invoice to the facility and access a portion of it up front — instead of waiting 30–60 days for the builder to pay. When the builder eventually pays, the facility collects the funds, takes their fee and releases any balance owing to you. It’s not for every job, but used only on bigger or slower-paying contracts it can smooth out lumpy project income without touching your regular overdraft or personal savings.

What’s the difference between gear finance and a business loan for tradies? +

Gear finance is tied to a specific asset and usually secured against it — for example, a chattel mortgage over a ute or excavator. Business loans sit over the top and aren’t always linked to a single asset. They’re better for wages, materials, marketing or bringing smaller debts into one place. The trick is to let gear facilities do the heavy lifting for vehicles and equipment, and use business loans only where they add real flexibility or stability to your cash flow.

Will a business loan stop me upgrading my ute or truck later? +

Not if the overall structure is planned properly. Lenders look at total exposure across your facilities, not just one loan. If your repayments are manageable and your financials are improving, it’s still possible to upgrade a vehicle or add another rig through asset finance. Just make sure things like chattel mortgage terms and any balloon payment line up with how long you’ll keep the vehicle, so you don’t get stuck needing a big payout at a bad time.

General information only — not personal advice. Talk to your accountant or adviser about tax outcomes, and speak with a broker who understands trades before restructuring your facilities.