Working capital
Working capital finance, matched to your cash flow.
Funding for wages, stock and the wait on unpaid invoices. Term loans, lines of credit, overdrafts and invoice finance, compared side by side.
You don’t pay to compare.
No credit file impact · No cost to compare · No obligation
The gap
Money goes out before it comes in.
Wages, rent and supplier bills keep falling due. Customers can take 30, 60 or 90 days to pay. Working capital finance covers the gap in between.
The products
Ways to fund the gap between payments.
A set amount
A facility you use as needed
- Business Line of CreditDraw funds as you need them and only pay interest on what you use.
- Business OverdraftA flexible buffer on your everyday account, for smoothing cash flow gaps.
- Invoice FinanceUnlock cash tied up in unpaid invoices instead of waiting 30, 60, or 90 days to get paid.
- Business Charge CardSpending power for your team, on a card built for business expenses.
Compared
Side by side, at a glance.
| Term loan | Line of credit | Overdraft | Invoice finance | |
|---|---|---|---|---|
| Amount | $10,000 to $5,000,000 | $10,000 to $500,000 | $10,000 to $1,000,000 | Up to 90% of invoice value, sized to your receivables |
| Term | 1 to 5 years, fixed repayments | Revolving, typically 12 to 36 months | No fixed term, subject to an annual review | Revolving across your debtor ledger, with no fixed end date |
| Security | Unsecured options typically to $250k to $500k | Unsecured to $250k, on a director’s guarantee | Director’s guarantee; larger limits usually secured | Your invoices and debtors |
| How you pay | Equal instalments of principal and interest | Interest only on funds drawn, not the full limit | Interest only on the overdrawn balance, day by day | The balance, less fees, comes to you when your customer pays |
| Suits | A business funding growth, stock or working capital | A business that pays wages, buys stock or waits on invoices in cycles | A business that needs to cover short gaps between money going out and coming in | A business that invoices other businesses and waits 30, 60 or 90 days to get paid |
| In full | Business Term Loans | Business Line of Credit | Business Overdraft | Invoice Finance |
Indicative, and subject to lender assessment.
Is it right for you?
When working capital finance fits, and when it doesn’t.
Often fits
- Cash flow that runs in cycles: wages, stock, waiting on invoices
- Short gaps between payments on your everyday account
- Business customers on 30, 60 or 90 day terms
- A set amount for growth, stock or working capital
Usually not
- Equipment you want to own, where a chattel mortgage may fit
- One large invoice now and then, where funding a single invoice may fit
Illustrative example
A $200,000 facility, costed over a year.
A line of credit charges interest on the drawn balance only. A term loan charges it on the full balance.
Illustrative only, from our line of credit guide. Rates are indicative, not quotes.
- The need
- A $200,000 facility, averaging $60,000 drawn across the year
- Term loan at 10.5% p.a.
- Interest on the full $200,000 balance: $21,000
- Line of credit at 14% p.a.
- Interest on the drawn balance: $8,400. Undrawn limit fee (0.75% on $140,000 avg): $1,050. Total cost: $9,450
- The difference
- The line of credit costs $11,550 less over the year
Interest only applies to the $60,000 actually in use. Your Compare Report shows the exact rate and term each lender offers your business.
Business funding, compared on real data, in three steps.
How It WorksQuestions about working capital.
Can I use a line of credit for anything?
Most lenders don’t restrict use once the facility is in place, though it’s intended for working capital - stock, materials, payroll timing, and short-term cash flow gaps - rather than large one-off asset purchases, which are usually better suited to a term loan or equipment finance.
What is the difference between an overdraft and a line of credit?
They’re very similar. Both are revolving credit facilities where you pay interest only on drawn funds. The main difference is that an overdraft is attached to your everyday business bank account and activates automatically when your balance goes negative, while a line of credit is usually a separate account you draw from intentionally. Some lenders use the terms interchangeably.
Do I need to put up my house as security?
Not always. Unsecured facilities are typically available up to $250,000 to $500,000, though most lenders still ask for a director guarantee. Larger or lower-rate facilities usually need security: business assets, a general security agreement, or sometimes property.
How do you get paid?
Comparing costs you nothing. Not comparing can cost you plenty.
The headline rate rarely tells the whole story. Fees, charges and loan terms can add far more to what you repay. That’s why your Compare Report shows every cost we can identify side by side.
In most cases, the lender pays us, and only if you decide to proceed with their product offer. For more complex deals, or where the lender pays us little or nothing, we may charge a fee for our service. It doesn’t happen often, but when it does, it’s shown on your Compare Report and we’ll walk you through it before you decide.
No obligation to proceed, ever.
Related
Read more, or work out the cost.
Guides
- Business line of credit: how it works and what it costsHow a line of credit works, what it costs and how much you can draw.
- Business overdrafts, explainedHow an overdraft works as a buffer on your account, and what it costs.
- Invoice finance or debtor finance?One invoice or an ongoing facility over your ledger, and which fits.
- Business term loans: what they costWhat a term loan costs, how much you can borrow and who qualifies.
See your options, side by side.
No credit file impact · No cost to compare · No obligation
Or talk to us: 1300 161 641 · support@tradefunding.com.au