The Complete Guide to Cash Flow Lending in Australia

Cash flow lending encompasses financing products based primarily on business revenue and cash flow rather than property security. These solutions help businesses manage timing gaps, fund growth, and maintain operations during challenging periods. Options range from revolving credit facilities to advances against invoices or future sales, each with different structures, costs, and suitability for different situations.

A business line of credit provides ongoing access to funds that you can draw as needed, similar to a credit card. You only pay interest on the amount drawn, and with a revolving facility, your limit replenishes as funds are repaid. Credit limits typically range from $10,000 to $750,000 with rates starting from around 7.99% p.a. Lines of credit suit businesses with unpredictable cash flow needs, seasonal fluctuations, or those wanting flexibility for unexpected expenses.

Invoice finance allows you to borrow against outstanding invoices, accessing up to 85-95% of invoice value within 24 hours rather than waiting 30, 60, or 90 days for customer payment. Two main options exist: invoice factoring, where the finance provider collects from your customers, and invoice discounting, where you maintain collections and the arrangement remains confidential. Rates include a factor fee of 1.5-4.5% plus interest of 7.99-20% p.a.

A merchant cash advance provides upfront capital based on future card sales. Rather than fixed monthly repayments, you repay through a percentage (typically 5-20%) of daily card transactions. When sales are strong, you pay faster; during slower periods, repayments reduce automatically. Factor rates of 1.1-1.5 mean borrowing $50,000 might cost $62,500-$75,000 total. MCAs suit card-heavy businesses like retail, hospitality, and service providers who need fast funding.

Unsecured business loans provide capital without property collateral, based on creditworthiness and cash flow. Loan amounts typically range from $5,000 to $250,000, often capped at 1-3 months revenue. Interest rates range from 10-16% p.a. (up to 25% for higher risk). These loans suit established businesses needing a one-time capital injection with predictable cash flow for repayments. Approval is often within 24 hours.

Business lines of credit start from 7.99% p.a. Unsecured business loans range from 10-16% p.a. Invoice finance costs include factor fees of 1.5-4.5% plus interest. Merchant cash advances use factor rates of 1.1-1.5 (effective APR 40-150%). Requirements typically include 6-12 months trading, minimum monthly revenue of $6,000-$12,000, GST registration, and reasonable credit history. Documentation usually includes bank statements, BAS, and identification.

Choose a line of credit for ongoing, unpredictable working capital needs. Use invoice finance when cash is tied up in unpaid invoices and you have reliable B2B customers. Consider a merchant cash advance if you process significant card payments and need very fast funding with flexible repayments. Opt for an unsecured loan when you need a defined amount for a specific purpose with fixed repayments. Your choice depends on your cash flow patterns, customer payment terms, and funding timeline.