Australian business lending splits into roughly eight product types, and the right one for your situation depends on cash-flow patterns, asset profile, and how predictable next quarter looks. Picking the wrong product can mean paying twice the rate you should, or signing personal guarantees you did not need to.
The six finance families
Everything below sits in one of six families: working capital for the day-to-day gap, invoice finance for money already earned but not yet paid, asset and equipment finance for the things you buy and keep, commercial property finance for the premises, trade finance for import and export cycles, and private lending for the deals that need to move faster than a bank credit committee can.
Working capital vs. overdraft
Both fund short-term cash gaps; they are not interchangeable. An overdraft sits against a transactional account, charges interest only on the drawn balance, and is reviewed annually. A working capital line is usually larger, often facility-fee structured, and sized against accounts receivable or projected cash conversion.
Rule of thumb: if you regularly cycle cash within a 90-day window and need flexibility, an overdraft is cheaper. If you have a 6 to 9-month working-capital gap (e.g. seasonal stock), a working capital facility is structurally better. We break the definitions down further in what is working capital and business overdraft vs unsecured business loan.
Chattel mortgage vs. lease vs. hire purchase
Three products that fund equipment. The differences matter for tax treatment and balance-sheet presentation more than for headline rate. A chattel mortgage gives you ownership from day one with the asset as security; depreciation and interest are deductible. A finance lease keeps the lender as legal owner; payments are deductible but you need a residual value at term. Hire purchase is essentially a chattel mortgage with a different historical accounting treatment.
“If you regularly cycle cash within a 90-day window and need flexibility, an overdraft is cheaper. For a 6 to 9-month working-capital gap, a working capital facility is structurally better.
For most SMEs buying utes, machinery, or fit-out equipment, chattel mortgage is the default. We see leases preferred when balance-sheet optics matter or when the lender will not extend chattel terms long enough. The full side-by-side is in chattel mortgage vs hire purchase vs finance lease.
Funding invoices rather than borrowing
If the problem is timing rather than capital, borrowing may be the wrong tool. Invoice finance advances against debtors you have already invoiced, so the facility grows with sales rather than being re-negotiated every year. Start with what is invoice finance, then invoice finance vs factoring vs invoice discounting for the differences between the three.
When to skip the bank entirely
Commercial property investment, equipment over $1M, and time-pressed deals often work better with specialist non-bank lenders. They are more expensive but considerably faster: typical settlement is 7 to 14 days versus 6 to 8 weeks for a major bank. See what is bridging finance for how the short-dated end of that market works.
A twenty-minute brief gets you a recommendation across these products and an indicative panel. No fees to clients — the lender pays us.
If this raises questions about your situation, we arrange commercial finance across our whole lender panel. No fees to clients; the lender pays us when finance settles. Book a 20-minute brief.
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