Cash flow problems rarely mean a business is broken. More often, money is simply arriving later than it's going out. Wages are due Friday, a big supplier order lands before the busy season, or a client is sitting on a 60 day invoice. The fix depends on the gap you're trying to close. Here's how the three most common cash flow finance options compare, and how to pick the right one.
The quick comparison
| Unsecured business loan | Business line of credit | Invoice finance | |
|---|---|---|---|
| How you get the money | Lump sum up front | Draw down as needed, up to a limit | Advance against unpaid invoices |
| How you repay | Fixed regular repayments | Repay and redraw | When your customer pays |
| Interest charged on | The full loan | Only what you've drawn | The amount advanced |
| Security | No specific asset, usually a director's guarantee | Varies, can be unsecured or secured | Your invoices (receivables) |
| Best for | One off costs and growth projects | Ongoing ups and downs | Slow paying B2B customers |
Unsecured business loans
An unsecured business loan gives you a lump sum that you repay over a fixed term, often with weekly, fortnightly or monthly repayments. "Unsecured" means no specific asset, such as property or a vehicle, is pledged. Most lenders still ask the directors or owners for a personal guarantee.
Good for:
- stock ahead of a busy season
- a fit out, marketing push or new hire
- covering a one off tax or supplier bill.
Watch for:
- rates are usually higher than secured lending, because the lender takes more risk
- shorter terms mean bigger repayments
- interest applies to the full amount from day one, even if you don't need all of it yet.
At Lend It, unsecured business loans run from $10k to $500k, with decisions in as little as 24 hours. Details are on our business loans page.
Business line of credit
A business line of credit works like a safety net. You're approved for a limit, you draw what you need, repay it, and draw again. You generally only pay interest on the balance you're using, although some lenders also charge line fees.
Good for:
- seasonal businesses with lumpy income
- covering the gap between paying suppliers and getting paid
- having a buffer ready for the unexpected.
Watch for:
- line, account or undrawn fees, so check the full cost
- the temptation to treat it as permanent funding rather than a buffer
- limits that a lender can review over time.
Invoice finance
Invoice finance turns your unpaid invoices into cash now. A lender advances a percentage of the invoice value, commonly up to around 80%, and you receive the balance (less fees) when your customer pays.
There are two main styles:
- Invoice discounting. You keep collecting from your customers, and the funding is generally confidential.
- Invoice factoring. The lender manages collections, so your customers pay the lender directly.
Good for:
- B2B businesses on 30, 60 or 90 day terms
- growing businesses whose invoices are growing faster than their cash
- businesses without property to offer as security.
Watch for:
- it only works if you invoice other businesses or government
- fees can add up if customers pay slowly
- some facilities require you to finance your whole ledger, not just chosen invoices.
Which one fits your business?
| Your situation | Often the best fit |
|---|---|
| You need $50k for a one off project | Unsecured business loan |
| Cash is tight a few months each year | Line of credit |
| You're waiting on $120k of invoices | Invoice finance |
| You need a truck, ute or machine | Asset finance, not cash flow finance |
| Your financials aren't up to date | Low doc business loan |
That fourth row matters. Using an unsecured loan to buy equipment usually costs more than equipment finance, where the asset secures the loan. Keep cash flow funding for cash flow.
Business loan requirements
Requirements vary by lender and product, but you'll commonly be asked for:
- your ABN and trading history
- 3 to 12 months of business bank statements
- a minimum monthly turnover, which differs by lender
- your credit history, both business and personal
- for invoice finance: an aged receivables report and details of your customers.
Newer ABNs and businesses with patchy paperwork still have options. A low doc business loan may use bank statements or BAS instead of full financials, with low doc options up to $500k, subject to lender criteria.
Bad credit business loans: a word of caution
Some lenders will consider businesses with past credit issues, but the trade off is usually a higher rate or a smaller limit. Before you apply anywhere, get advice. Multiple applications can leave multiple enquiries on your file, which can make the next approval harder.
How Lend It helps
We compare 70+ lenders across unsecured business loans, lines of credit and invoice finance, so you're matched to the structure that fits the gap, not just the first product on offer. Decisions can come through in as little as 24 hours.
Getting a quote doesn't affect your credit score. We may run a soft check, and a full credit enquiry only happens when you apply. We're based on the Gold Coast, help businesses Australia wide and we're open 7 days, 8:30am to 6pm.
FAQs
What is the difference between an unsecured business loan and a line of credit?
A loan gives you a lump sum with fixed repayments. A line of credit gives you a limit to draw from and repay as needed, with interest generally charged only on what you use.
Do unsecured business loans need a guarantee?
Usually, yes. Most lenders ask the directors or owners for a personal guarantee, even though no specific asset is pledged.
How fast can I get a working capital loan?
Some lenders make a decision within 24 hours once they have your bank statements and details. Funding times vary by lender.
Can I use invoice finance if I sell to consumers?
Generally not. Invoice finance is built for businesses that invoice other businesses or government on payment terms.
Can a new business get cash flow finance?
Often, yes. Some lenders will consider newer businesses, especially with strong bank statements. Options vary a lot between lenders, so it pays to compare.
Let's close the gap
Tell us what's causing the squeeze and we'll lay out the options side by side. Get a business loan quote or call 1300 082 012.
General information only. This article is not financial, tax or legal advice and doesn't take your circumstances into account. Talk to your accountant or a licensed adviser before you make a decision. Lend It Finance Group is a credit representative (535206) of COG Compliance Services Pty Ltd, Australian Credit Licence 384428.