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Types of small business loans

Types of small business loans

Small businesses are the backbone of the Australian economy, and accessing the right financing can be a game-changer. In this guide, we’ll explore the various types of small business loans available in Australia, providing insights into each option and helping you navigate the financial landscape.

1. Small Business Loans: Fast Funding Solutions

Small Business Loans have become very popular with small business owners today.

With the rise of the internet, small business lenders now provide fast access to business funding with a simple online application and quick settlement. With loan terms ranging from 3 months to 36 months, these loans offer stability and predictability.

Businesses receive a lump sum upfront, which can be used for various purposes such as expansion, equipment purchases, or working capital.

2. Business Line of Credit: Flexible Financing 

A  Business line of credit provides flexibility by allowing you to borrow funds up to a predetermined limit. Interest is only charged on the amount you use, making it an ideal solution for managing cash flow fluctuations, seasonal expenses, or unexpected costs. 

Linked to your business bank account, it acts as a safety net, allowing you to withdraw more funds than your account balance. This can be particularly helpful for covering short-term cash flow gaps

3. Equipment Financing: 

For businesses needing new equipment or machinery, equipment finance is tailored to help you acquire assets without a hefty upfront cost. The equipment itself serves as collateral, making this type of loan more accessible for businesses with limited credit history.

4. Invoice Financing: Unlock Cash Tied Up in Invoices

Invoice finance, or accounts receivable financing, enables businesses to access funds by leveraging unpaid invoices. Lenders provide a percentage of the invoice amount upfront, helping businesses maintain a steady cash flow while waiting for customers to settle their accounts.

5. Caveat loans: Fast Access to Cash

Fast Caveat Loans are loans where you use the value of your property to secure the loan. Once the loan has been approved, a caveat is registered on the title of the property to provide security for the lender.

This is similar to registering a first or second mortgage over a property title. Depending on the circumstances, a caveat lender may prefer to register either of these instead of a caveat. This provides them with greater security and may be requested depending on the loan amount and the property offered as security. 

When it comes to repayments, borrowers must have an effective exit strategy like selling or refinancing another property, cash flow from future sales, or disposing off any business asset. 

Caveat loans for small businesses
Caveat loans for small businessses

6. Unsecured Business Loans: No Collateral, More Flexibility

Unsecured business loans provide businesses with financial support without the need for collateral. Unlike secured loans, where assets secure the borrowing, unsecured business loans are granted based on the borrower’s creditworthiness. This type of financing offers more flexibility, making it an attractive option for businesses that may not have valuable assets to pledge as collateral. Unsecured business loans can be used for various purposes, from managing working capital to seizing unexpected opportunities, without putting assets on the line.

7. Online Lenders for Quick Approval

Online lenders and alternative financing options have gained popularity for their streamlined application processes and quicker approval times. While interest rates may vary, these lenders provide additional choices for businesses seeking fast and efficient funding. Choose between a short-term business loan or a business line of credit.


Understanding the diverse landscape of small business loans in Australia is crucial for making informed financial decisions. Whether you’re looking for stability with term loans, flexibility with lines of credit, or quick approval with an online business loan, the key is to align your business needs with the right financing solution. By exploring these various options, you can optimise your financial strategy and propel your business toward success.

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Trevor Mayes Director
Meet Trevor Mayes, a seasoned financial expert with an impressive 30-year track record in the finance industry. His wealth of experience spans both personal and business finance, positioning him as a highly regarded authority in the field.
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