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Some weeks the invoices land late and payroll lands on time regardless. A business line of credit sits ready for those gaps: a pre approved limit you draw on when cash is tight and repay as it flows, with interest only on what you use.
A business line of credit is a revolving finance facility. The lender approves a maximum limit, and you draw funds up to that limit whenever you need them, repay, and draw again, without reapplying each time. Interest applies only to the balance you have actually drawn, not the full limit.
It works much like a business overdraft or a credit card at a business scale. The facility stays in place as an ongoing safety net, which is what separates it from a term loan that hands over a lump sum and starts a fixed repayment schedule from day one.
A line of credit is built for the costs that do not wait for the next invoice to clear:
The three products solve different problems, and the difference comes down to structure.
A line of credit is revolving. You hold an ongoing limit, draw and repay as needed, and pay interest only on what is drawn. A business overdraft is similar, attached to your transaction account so the facility engages automatically when the balance runs below zero. A term loan is the opposite, a fixed lump sum advanced upfront and repaid over a set period, which suits a specific one off purchase rather than fluctuating cash flow.
If your need is ongoing and unpredictable, a revolving facility usually fits. If it is a single defined cost, a term loan is often cheaper. We will help you weigh flexibility against rate.
You will generally need an active ABN, GST registration for many lenders, and a period of trading history so the lender can see how the business runs. Lenders assess your turnover, bank conduct, credit profile, and any security offered. A stronger, more consistent cash flow usually unlocks a larger limit and a sharper rate. Newer businesses and applicants with past credit issues can still be considered, often on a lower limit or a secured basis. Requirements vary across the lenders on our panel, so eligibility is best confirmed case by case.
Tell us how your business trades and the headroom you want, and we will come back with lenders, indicative limits and rates, and a clear view of the trade offs. Free, no obligation, and no mark against your credit file.
Owners weighing up a revolving facility tend to ask the same questions first. These are the ones that come up most.
A business line of credit is a revolving facility with a set maximum limit. You draw funds up to that limit whenever you need them, repay, and draw again without submitting a new application each time. Interest is charged only on the balance you have drawn, not the whole limit. It suits ongoing or unpredictable cash flow needs, working much like a business overdraft, and stays in place as a standing facility rather than a one off lump sum with fixed repayments.
The main difference is structure. A term business loan advances a fixed lump sum upfront, which you repay over a set schedule, and it suits a single defined purchase. A line of credit is revolving: you hold a limit, draw and repay as needed, and pay interest only on the amount drawn. That makes a line of credit better for fluctuating or recurring cash flow needs, while a term loan is often the cheaper option for a one off cost you can plan around.
Both are available, and the right one depends on the limit and your balance sheet. Unsecured facilities rely on your trading performance and usually a personal guarantee, and tend to carry smaller limits and higher rates. Secured facilities are backed by property or a business asset, which generally unlocks a larger limit and a sharper rate. A personal guarantee from the business owner is standard either way. We will explain what each option involves so you can weigh access against the security required.
A line of credit is designed for short term and recurring costs rather than a single large purchase. Common uses include covering payroll between customer payments, paying suppliers early to secure a discount, buying stock ahead of a busy period, managing a tax bill, and smoothing seasonal dips in revenue. Because it is revolving, it works best for expenses that come and go. For a one off asset purchase, a term loan or asset finance is usually a better fit.
Your limit depends on your turnover, the lender, and whether the facility is secured. Unsecured business lines of credit commonly range from a few thousand dollars up to around a few hundred thousand, while secured facilities backed by property can extend considerably further. Lenders set the limit against what your cash flow can comfortably service rather than a fixed figure. A guide many use is a portion of your monthly or annual turnover, and we match you to the lender offering the most workable limit.
Cost has two parts. Interest applies only to the balance you have drawn, so an unused facility costs little to hold. On top of that, some lenders charge a line fee or establishment fee for keeping the limit available. Rates depend on your revenue, credit profile, and whether the facility is secured, with unsecured limits priced higher to reflect the added risk. We compare the panel on both the interest rate and the ongoing fees so the true cost is clear before you commit.
Timeframes depend on the lender, the limit, and whether security is involved. Straightforward unsecured facilities with clean bank statements can be approved within a day or two, with the limit available to draw shortly after. Larger or secured facilities that require a property valuation take longer. Having your recent bank statements and BAS ready when you apply is the single biggest factor in a fast decision. We confirm what each lender needs upfront so nothing holds up the approval.
It is possible. Lenders focus heavily on how the business trades now, so a past default or a lower credit score does not automatically rule you out, particularly where recent bank statements show steady income. Offering property or an asset as security strengthens a weaker credit position and can lift the limit. Pricing will reflect the added risk, and the starting limit may be lower. Specialist lenders on our panel work with impaired credit regularly, so it is worth a conversation before assuming you cannot qualify.
Only on what you use. That is the defining feature of a line of credit. If you hold a limit of one hundred thousand dollars and draw twenty, interest applies to the twenty until you repay it. The remaining headroom sits available at no interest cost, though some lenders charge a separate line or facility fee for keeping it open. This is what makes a line of credit efficient as a standby, you carry the capacity without paying to borrow money you have not touched.
Requesting an indicative quote through Thor Finance does not affect your credit score. We review your position and match you with suitable lenders before any formal application is lodged, so you can compare limits and rates without leaving a footprint. A credit enquiry is only recorded once you instruct us to proceed with a specific lender. That means you can weigh up what a facility would cost and how much headroom you could access before committing to anything.
Thor Finance ABN 31 629 922 589 is an Authorised Credit Representative #557246 of AFAS Group Pty Ltd, Australian Credit Licence #414426. Information on this page is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking advice from your accountant or a qualified adviser before entering into any credit contract. Approval, rates, and terms are subject to lender assessment.
Email us to let us know how we can help you with your business’ Loan requirements.
Thor Finance
ABN 31 629 922 589
Contact us to see how we can help you with your finance requirements
Thor Finance ABN 31 629 922 589 is an Authorised Credit Representative
#557246 of AFAS Group PTY LTD, Australian Credit Licence #414426.