Quick answer
Small Australian businesses usually choose from six kinds of finance: unsecured loans sized on turnover, lines of credit, equipment finance, invoice finance, property-backed loans and low doc loans. Which ones are realistic depends on how long you've traded, your turnover, whether you own property, how up to date your books are and your credit history. Sole traders, partnerships and companies can all borrow, with directors usually guaranteeing company loans.
Key points
- Six main kinds of finance cover most small business needs.
- Time trading, turnover, property, paperwork and credit decide what's realistic.
- Sole traders borrow personally; company loans usually need director guarantees.
- Newer businesses often rely on property or a deposit.
“Small business loan” sounds like one product. In practice it’s a whole market, and the part of it that suits you depends on the kind of business you run. A two-year-old sole trader with no property and books behind lives in a different corner of that market from a 15-year-old company that owns its warehouse. This guide lays the market out by business profile.
What are the main kinds of small business finance?
| Kind | What it is | Typical size |
|---|---|---|
| Unsecured loan | Lump sum sized on turnover | $5k to $500k |
| Line of credit | Revolving limit | Sized on turnover or property |
| Equipment finance | Secured on the asset | Matched to the asset |
| Invoice finance | Advance on unpaid invoices | Grows with sales |
| Secured loan | Backed by property | $20k to $5m |
| Low doc loan | Lighter paperwork | Small to medium |
Which options suit which kind of business?
| Your business | Options to look at first | Why |
|---|---|---|
| New, under 12 months, owns property | Secured loan, equipment finance with deposit | Security offsets short history |
| New, no property | Equipment finance, small unsecured if trading is strong | Fewer options; asset or trading carries it |
| Established, clean books, no property | Unsecured loan, line of credit, invoice finance | Trading record does the work |
| Established, owns property | Any, including the lowest-cost secured options | Widest choice |
| Books behind | Low doc, secured | Bank statements or property instead of returns |
| Credit issues | Secured, specialist unsecured | Security or recent trading offsets history |
| B2B with slow payers | Invoice finance | Funds the ledger directly |
| Seasonal | Line of credit | Flexible draw and repay |
Does your business structure matter?
| Structure | How borrowing works |
|---|---|
| Sole trader | You borrow personally under your ABN; you’re personally liable |
| Partnership | Partners usually borrow jointly and are jointly liable |
| Company | The company borrows; directors usually guarantee |
| Trust | The trustee borrows; guarantees from directors of a corporate trustee are common |
Whatever the structure, lenders look at both the business and the people behind it.
What do lenders weigh most for small businesses?
- Turnover and its trend. Growing, steady or falling?
- Time in business. More history means more confidence.
- Bank account conduct. Dishonours and overdrawn days are red flags.
- Existing debts. Especially other short-term loans.
- Tax position. Lodgements current and any debt on a plan.
- Credit history of the business and the owners.
- Security, if any is available.
The Reserve Bank has noted that smaller businesses have found credit harder to get than larger ones, often because they have less collateral and shorter track records. That’s why property and clean bank statements carry so much weight.
How do small business needs map to finance?
| Need | Typical fit |
|---|---|
| New equipment or vehicle | Equipment finance |
| Fit-out or refurbishment | Unsecured or secured term loan |
| Stock for a busy season | Line of credit or short-term loan |
| Waiting on customer payments | Invoice finance |
| Tax bill | ATO payment plan or tax debt loan |
| Hiring ahead of growth | Unsecured loan or line of credit |
| Buying a competitor | Secured loan |
An illustrative example
Illustrative example. A Bondi barber has run his shop as a sole trader for three years, rents the premises and has steady card takings. He wants $30,000 to add two chairs and hire a second barber. His BAS is current and his account is clean. An unsecured loan over two years fits. A friend who runs a smaller shop, only nine months old, wants the same amount; with less history, she uses equipment finance for the chairs and fit-out items and covers the rest from savings.
What’s changed for small business borrowers recently?
A few things are worth knowing:
- Non-bank lenders now provide a large share of smaller business loans, often with quicker assessment. See bank vs non-bank.
- Electronic bank statement access has made unsecured lending faster.
- ATO interest is no longer deductible for income years starting from 1 July 2025, which changes the maths of carrying a tax debt.
- The $20,000 instant asset write-off for small businesses has been an important factor in equipment timing; check the current rules with the ATO and your accountant.
How should a small business compare offers?
Use the method in our how to compare business loans guide: shortlist the right loan type, then compare offers on total dollar cost, monthly equivalent, early payout terms and security.
What do small businesses most often get wrong?
Across all these options, a handful of mistakes come up again and again:
| Mistake | Better approach |
|---|---|
| Using a short-term loan for a long-lived purpose | Match the term to the purpose’s life |
| Stacking several short-term loans | One structured facility, or consolidate |
| Borrowing for a margin problem | Fix pricing first; finance won’t cure it |
| Mixing business and personal banking | One dedicated business account |
| Applying everywhere after a decline | Find out why, fix it, then apply once |
| Comparing weekly with monthly repayments | Convert to a monthly equivalent |
| Ignoring the guarantee | Read what you’re signing personally |
Avoiding these doesn’t require financial expertise, just a few minutes of thought before signing.
How do you choose between two good options?
When two options both fit, use three tie-breakers:
- Which costs less in total dollars over the time you’ll realistically have the loan?
- Which asks less of you: lighter security, fewer guarantees, simpler covenants?
- Which is more flexible: fair early payout, extra repayments, redraw?
If one option wins on two of the three, it’s usually the better choice. The loan offer comparer helps with the first question; our pages on guarantees and security and early payout help with the others.
Where can you learn more?
business.gov.au has plain-English guidance on choosing funding, managing cash flow and applying for a business loan, and lists current government programs that may support small businesses. Moneysmart explains credit reports. Your accountant can tell you how a loan would affect tax, and whether your structure suits the borrowing you have in mind.
Reading even one of those resources before you apply puts you in a stronger position, because you’ll recognise the terms in any offer and know which questions to ask. Pair that reading with a comparison of real offers, in dollars, and you’ll have done more homework than most borrowers.
What’s realistic for your business?
Every small business is different, and the right finance depends on details you know best. Asking us doesn’t affect your credit file; a check only comes up once you decide to go ahead. We don’t fire your enquiry off to a long list of lenders. A real person looks at your structure, history and needs, then shows you the two or three options that genuinely fit.
Please be accurate on the form about turnover, time trading and any property. See if you qualify, or find your corner of the market with the comparison tool and then send your enquiry.
Frequently asked questions
What is the easiest small business loan to get?
For an established trading business with clean banking, a smaller unsecured loan or line of credit is often the most straightforward. For a business owner with property equity, a property-backed loan can be easier regardless of trading history.
Can a sole trader get a business loan?
Yes. Sole traders borrow in their own name using their ABN. Lenders look at business bank statements, BAS and personal credit history.
How long do I need to have been trading?
Many unsecured lenders want to see several months to a year or more of trading. Property-backed lenders and equipment financiers can be more flexible for newer businesses.
Are there government loans for small business?
Government support changes over time and is usually delivered as grants, guarantees or programs rather than direct loans. business.gov.au lists current programs.
How much can a small business borrow?
Unsecured options for trading businesses typically run from $5,000 to $500,000. With property, $20,000 to $5,000,000 is possible, depending on equity and the ability to repay.