What is a business line of credit?
It’s capital kept on call. Rather than borrowing a fixed sum on day one, your business is approved for a limit. You draw against it when a gap opens — wages due before a progress claim is paid, a supplier wanting payment before your customers settle, a BAS instalment landing in a quiet month — and you repay as money comes back in. Whatever you repay refills the limit, ready for the next time.
That draw, repay, draw-again rhythm is the difference between a line of credit and a term loan. You aren’t carrying a lump sum that sits idle in the account. You’re keeping a buffer within reach for the weeks that actually need it.
Which Australian businesses use one?
Lines of credit earn their keep wherever cash arrives unevenly:
- Seasonal operators — a dive charter out of Airlie Beach, a ski-hire shop at Jindabyne, a cellar door in Margaret River, a mango contractor around Bowen.
- Businesses waiting to be paid — builders and subcontractors lodging progress claims, consultancies on 30-day end-of-month terms, suppliers to large retailers.
- Stock-heavy businesses — importers paying for containers weeks before they clear Port Botany, retailers loading up for Black Friday and Christmas.
- Tax and payroll timing — a quarterly BAS, PAYG instalments and, from 1 July 2026, super due within days of every payday.
Lenders on our panel generally look for a business trading for six months or more, with business bank statements showing regular income. Sole traders, companies, partnerships and trusts can all apply, provided the money is used for business purposes.
How does the draw-and-repay cycle look in practice?
Example scenario — illustrative only. A small commercial fit-out business in Brisbane invoices on monthly progress claims but pays its crew weekly.
| Month | What happens | Facility position |
|---|---|---|
| July | Quarter-four BAS due, two claims still unpaid | Draw part of the limit |
| August | Both claims paid | Repay the draw in full |
| October | Bulk plasterboard offered at a discount | Draw again to buy early |
| November | Next claim paid, job margin improved | Repay; full limit back on call |
The dollar amounts differ for every business. The pattern is what matters: the facility flexes around your cash flow instead of locking you into a fixed repayment that ignores how your money actually moves.
What do lenders assess?
Because most lines of credit are unsecured, the decision rests on how your business trades:
- Turnover — how much flows through the business account each month, and how consistent it is across the year.
- Bank statements — lenders read deposits, regular outgoings, dishonoured payments and existing loan repayments closely.
- Time trading — usually six months or longer.
- Credit history — weaker credit is considered. An old default doesn’t automatically rule you out; the lender looks at the full picture.
Once the lender has what it needs, decisions are sometimes made the same day. The Reserve Bank has noted that non-bank lenders’ share of small business lending has grown strongly since 2022, which is one reason an answer from the market can look different from the one your bank gave.
When is a line of credit the wrong fit?
It’s better to know before you apply. A line of credit usually isn’t the right tool if:
- The need is large and long-lived — buying premises, a truck you’ll run for years, or another business. A term loan or property-secured loan suits that shape better.
- The business is very new, with little bank statement history to assess.
- The gap isn’t temporary. If costs consistently run ahead of revenue, extra credit only postpones the problem.
If you need more than an unsecured limit is likely to reach, a property-secured top-up of $20,000 to $1m can be arranged against Australian property you or a supporting party already own. It’s a lump sum, not a revolving facility, but many owners run one alongside a smaller line of credit. Our side-by-side line of credit vs overdraft vs term loan comparison helps you pick the structure.
What does it cost?
We don’t publish rates, because no single figure applies to every business. Each facility is priced on your individual circumstances, and our job is to find the sharpest option available for your situation. Your lending specialist will set out the full cost before you commit.
How do you put a line of credit on call?
- Enquire — the 60-second enquiry asks what you need and roughly what your business turns over.
- Talk it through — a lending specialist contacts you, asks how your cash moves through the year and explains the options that fit.
- Share statements — usually recent business bank statements, often through a secure bank-link.
- Decision and set-up — once approved, your limit is ready to draw.
Want to understand the mechanics first? Our guide to how a business line of credit works covers draws, repayments and limits in plain English, and how it works explains our process step by step.