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Business & working capital finance
Cash flow is a timing problem, not a profit problem.
The work is done and the invoice is sent. Wages are Thursday and the money lands in sixty days. That gap is what most business lending is actually for.
Business finance
Even profitable businesses can run out of money.
It is one of the cruelties of running a business. You can be winning work, invoicing well and genuinely profitable on paper, and still be sitting on a Tuesday night working out who gets paid first. Growth makes it worse rather than better — every new job needs materials and wages up front and pays you months later.
I have spent twenty-one years in lending, with more than twenty-five lenders on one panel, and I work with business owners across Western Sydney every week. You deal with me from the first phone call to the money landing, and I will tell you plainly when borrowing is the wrong answer to the problem you have described.
The part worth knowing is that this corner of the market is the least transparent one there is. A good deal of business lending is not priced in interest rates at all, and the figures you are quoted are often built so they cannot easily be compared. Working out the real cost of an offer is most of the value in having someone look at it before you sign.
Start to finish
How it works
Faster than a mortgage by a wide margin — but the first question is whether you should be borrowing at all.
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What's actually happening
Thirty minutes. What the business does, what the shortfall is, and — the important one — whether it is a one-off gap or something that recurs every month. Those two problems have completely different answers, and borrowing only solves one of them.
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The right shape, before the right lender
An overdraft, a term loan, a line of credit and invoice finance all cost differently and suit different problems. Choosing the shape first and the lender second is the opposite of how most of these get sold.
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The numbers on one page
What it costs in dollars over the life of the facility, not as a headline figure. Where an offer is quoted in a way that hides the cost, I convert it into something you can compare against the others.
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Lodgement
I present the business the way a credit assessor needs to read it. On unsecured lending that often means recent bank statements rather than last year's financials, because these lenders look at how the business is trading now.
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Settlement, and a conversation about next time
Once it's funded, the useful question is what would stop you needing it again — terms, deposits, how you invoice. That part costs nothing and is often worth more than the facility.
Five shapes
What's actually available
Most business owners are shown one of these and assume it's the only option. Usually it isn't.
| Facility | How it works | Usually suits |
|---|---|---|
| Business overdraft | A limit attached to your trading account. You draw on it when you need it and pay interest only on what you use. | A recurring monthly gap between paying wages and getting paid. The cheapest option for genuine timing problems, and usually the hardest to get. |
| Line of credit | A revolving limit that sits separate from your trading account, drawn and repaid as you go. | Businesses with lumpy, unpredictable needs that don't want to re-apply each time. |
| Unsecured business loan | A fixed amount over a fixed term, no property security. Often approved in days, sometimes on bank statements alone. | A specific one-off need with a clear payback. Fast and convenient, and priced accordingly — read the cost section below before you sign one. |
| Invoice finance | You draw against invoices you've already issued, and the facility clears when your customer pays. | Businesses whose problem is entirely that their customers pay slowly. It grows with your sales rather than being a fixed limit. |
| Term loan | A set amount over a set period, secured or unsecured, repaid in instalments. | A defined project — a fit-out, a hire, a push into a new market — rather than a cash flow gap. |
Buying premises is on the commercial property page, and vehicles, trucks and plant on the truck and equipment page. Financing equipment separately usually beats paying for it out of working capital.
Five ways this starts
The situations I see most often
| Situation | Who it suits | What I'd tell you |
|---|---|---|
| You've won a job you can't fund | A contractor whose biggest contract is also their biggest risk | The best problem on this list. The work is real and the money is coming, so the question is only which facility bridges it most cheaply. |
| Customers pay in sixty days, staff get paid weekly | Anyone invoicing larger businesses | A structural timing problem rather than a one-off, so it needs a revolving facility, not a term loan. A term loan here just moves the squeeze out a year. |
| A quiet quarter you need to trade through | Seasonal businesses | Arrange it before the quiet period, not during it. A lender looking at three strong months reads very differently from one looking at three weak ones. |
| You're behind with the ATO | A business that used tax money to cover a gap | More common than anyone admits, and not automatically fatal. Some lenders will fund it, usually with conditions attached. |
| You're buying a business | An employee buying in, or a competitor taking over | A different kind of application — lenders assess the business being bought as much as the buyer, and goodwill is rarely good security. |
Read this part twice
What it costs you
Business lending is generally not regulated by the National Consumer Credit Protection Act, which means the consumer protections that apply to a home loan don't apply here in the same way. A brokerage fee is also common across the market on commercial lending.
The thing to actually watch
This is the least transparent corner of lending in Australia, and that can be deliberate. An offer can look competitive and cost two or three times what you assumed. Three things to check on anything put in front of you:
- Is it a rate, or a factor?Some lenders quote a flat multiple of the amount borrowed rather than an interest rate. Because you repay as you go while the charge is calculated on the original sum, the real annual cost can be roughly double the figure you were shown.
- How often are the repayments?Daily and weekly repayment schedules make a monthly budget very hard to read, and they take money out of the account exactly when a business under pressure can least afford it.
- What does it cost to get out early?Some facilities charge the full term's cost whether you repay in twelve months or three, which removes the saving you were counting on.
None of this makes those lenders wrong — speed genuinely is worth something, and sometimes they are the right answer. It makes them expensive in ways that aren't obvious. What I do is put every offer into the same dollar terms so you can see what you're choosing.
Later, not now
What to have ready
Nothing for the first conversation. Less than a property loan needs, and often much less.
- Business bank statementsUsually six to twelve months. On unsecured lending these often matter more than your financials, because they show how the business is trading right now.
- Recent BASThe quickest read a lender gets on your turnover.
- Financials and tax returnsLast year's, where you have them. Some facilities need them and some genuinely don't.
- ATO positionWhether you're up to date, and if not, whether there's a payment arrangement in place. Much better disclosed up front than discovered.
- YouID, and a list of your personal debts and card limits. Directors are assessed personally on most business lending.
No dead ends
Where it gets hard, and what I do about it
Most of what goes wrong here is about the cost of the money rather than whether you can get it.
Tell me where you're stuck-
The rate you were quoted isn't a rate
An online lender quotes a figure that sounds reasonable, the application takes ten minutes and the money arrives tomorrow. The figure was a factor rate, the repayments come out daily, and the real annual cost is roughly double what you thought you had agreed to.
What I do about itSend me the offer before you sign it. I'll convert it into an annual cost in dollars and put it beside what else you could have — which sometimes shows the fast option was worth it, and sometimes shows it was worth waiting four days.
This takes me about ten minutes and it is the single most useful thing on this page.
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Everything cheap wants the house as security
The genuinely low-cost facilities — bank overdrafts, secured lines of credit — usually want residential property behind them. The ones that don't are priced for the risk they're taking. That is the trade-off at the centre of business lending and nobody sets it out plainly.
What I do about itYou get both options costed, with the difference shown in dollars, so putting the house up is a decision rather than a default. Where the gap is small, unsecured is usually worth it. Where it's large, it's worth a serious think.
Because I write home loans too, I can also tell you what using the house here does to what you can borrow next — which is set out on the home loans page.
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You need it this week
Urgency is expensive. Lenders who can fund in forty-eight hours know exactly what that is worth, and a business in a hurry is in no position to negotiate. Most of the worst facilities I see were signed by someone with a payroll run three days away.
What I do about itIf it's genuinely urgent I'll move at that speed and tell you honestly what the hurry is costing. But I'd rather you called me the month before — a facility arranged in calm conditions and left sitting unused costs very little, and it is there when you need it.
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You're behind with the ATO
Businesses treat this as the thing that ends the conversation, so they don't mention it, and it surfaces later and ends the conversation. A tax debt is common, it is usually a symptom of the same timing problem, and some lenders will work with it.
What I do about itTell me at the start. It narrows the list of lenders rather than emptying it, and knowing early means I put the file in front of the ones who will read it properly instead of collecting declines.
A payment arrangement already in place helps considerably, and that's worth sorting before an application rather than during one.
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Your financials don't show what the business really earns
Your accountant has spent the year legitimately keeping taxable profit down. A business doing perfectly well presents as a thin file, and the lender reads what is in front of them.
What I do about itAdd-backs: depreciation, one-off costs, director's wages, retained profit — each one evidenced and each one defensible if the assessor asks. It is the same work set out on the home loans page.
Some facilities sidestep the problem entirely by assessing recent bank statements rather than last year's accounts, which suits a business that is trading better now than its returns suggest.
Send me the offer before you sign it.
Ten minutes, no obligation, and no credit enquiry. I'll tell you what it actually costs and what else is available.
Asked on the phone
Questions people are too polite to ask
If yours isn't here, call and ask it. Ten minutes on the phone beats a year of wondering.
Ask Alen directlyHow fast can I get funded?
Unsecured facilities can fund in a few days, and sometimes faster. Anything secured by property moves at the speed of a valuation, so think in weeks.
Speed costs money, and the gap between a two-day approval and a two-week one is often larger than people expect. Worth knowing what the hurry is buying before you pay for it.
Will I have to put my house up?
Not necessarily. Plenty of business lending is unsecured, and that's the trade — no property at risk, higher cost. The cheaper facilities generally do want property.
Separately from security, almost all business lending asks the director for a personal guarantee, which is not the same thing as a mortgage over your home but is still a personal commitment worth understanding before you sign.
What's a factor rate?
A flat multiple applied to the amount you borrow — so borrowing $50,000 at a factor of 1.2 means repaying $60,000, regardless of how fast you pay it back. It is not an interest rate.
Because you repay in instalments while the charge is calculated on the full original amount, the real annual cost is roughly double the headline figure. If an offer is quoted this way, that is the number to work out before you decide.
Do I need to be profitable?
It helps, but it isn't the only thing lenders look at. Consistent turnover through the bank account, how long you've been trading and whether you've been honest about your position all carry real weight — particularly with lenders who assess bank statements rather than financials.
A business that is growing fast and short of cash is a very different file from one that is shrinking, and lenders can tell the difference.
Is this going to affect my home loan?
It can. The repayments count as a commitment, and any personal guarantee you've given follows you into a residential application.
If a house purchase or a refinance is anywhere in the next year or two, say so at the start. How the business facility is structured can be set with that in mind rather than against it.
Should I be borrowing at all?
Sometimes not, and I'll say so. If the gap recurs every month and nothing about the business is changing, a loan postpones the problem and adds a repayment to it.
Occasionally the better answer is in the terms you offer, how quickly you invoice, or a deposit on larger jobs. That conversation doesn't earn me anything, which is probably why it's worth having.
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Let's talk
Request a call back
Tell me what the gap is and when it bites. No calendar to wrestle with — I'll call you.
The money is coming. Let's cover the gap until it does.
Twenty-one years in lending, more than twenty-five lenders, and one person handling the cash flow, the premises, the equipment and the house.