Working Capital Loans Australia 2026

TL;DR — Working Capital Loans

• Working capital is a category, not a product — six different structures (term loans, lines of credit, invoice finance, overdrafts, MCAs, trade finance) each solve a different cash flow problem.
• A term loan suits a one-off defined need; a line of credit suits recurring gaps; invoice finance suits B2B businesses with slow-paying clients; trade finance suits importers funding stock.
• The cheapest product is not always the right product — a mismatch between structure and cause of the gap costs more in the long run than a slightly higher rate on the right facility.
• Match the product to the problem first, then compare cost. Rates run from 9.00% p.a. (invoice finance) to 14.55%+ p.a. (overdrafts), with MCAs and trade finance priced differently again.

Rates at a Glance

Rates indicative as of May 2026. RBA cash rate 4.35% (effective 6 May 2026). The right product depends on your cash flow cycle, security position, and trading profile.

What Are Working Capital Loans?

Working capital is the difference between a business's current assets — cash, debtors, stock — and its current liabilities — accounts payable, short-term debt, wages payable. Working capital finance bridges the timing gap between cash going out the door and revenue coming back in. It is not about whether the business is profitable; it is about whether the cash arrives in time to cover the obligations.

Unlike a term loan taken out to buy equipment or fund a fit-out, working capital finance is short-to-medium term and directly tied to the operating cycle of the business. A retailer ordering stock for peak season, a construction subcontractor waiting sixty days for a progress payment, or a staffing agency paying wages weekly while invoicing clients monthly — all have profitable business models but face a structural timing gap that working capital finance is designed to fill. The loan is not plugging a loss; it is smoothing a mismatch.

Businesses need working capital finance for a range of reasons: customers paying on 60–90 day terms, seasonal revenue concentrated into a few months, rapid growth that requires capital outlay before revenue catches up, lumpy project-based payment schedules, and large upfront stock orders. Each cause is real and legitimate — and each one points to a different product structure.

Compare working capital finance from 40+ lenders — no credit score impact, takes 2 minutes.

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The 6 Working Capital Products — Which One Fits Your Situation

Working Capital Term Loan

A fixed lump sum advanced to the business and repaid over a set term — typically one to three years — with fixed or variable repayments. The predictability is the appeal: you know the repayment amount, schedule, and total cost from day one. Best for a defined, one-off need — a stock build, a bridge through a known slow period, or a buffer while a major contract ramps up.

Rates start from 9.90% p.a., typically 9.90–18% p.a. depending on security, trading history, and lender. Unsecured options sit in the 12–18% range; secured facilities can push toward the floor.

Business Line of Credit

A revolving facility with an approved limit. Draw funds when you need them, repay when cash allows, and pay interest only on the amount drawn. Best for businesses with ongoing or recurring working capital gaps — seasonal businesses, variable debtor timing, or regular gaps between paying suppliers and receiving customer payments.

Rates from 10.00% p.a., typically 10–18% p.a. Most lines also carry a facility fee — typically 0.5–2% p.a. on the approved limit, regardless of how much is drawn. Lines are reviewed periodically (usually annually), so refinancing risk is real if the business deteriorates. Compare business lines of credit →

Invoice Finance

Invoice finance — also called debtor finance — unlocks cash tied up in unpaid invoices. Instead of waiting 60–90 days for a customer to pay, the business advances 70–90% of the invoice value from the lender as soon as the invoice is issued. When the customer pays, the balance — minus the lender's fee — is released. The facility scales automatically with revenue.

Purpose-built for B2B businesses with slow-paying clients. Available as invoice discounting (confidential) or factoring (disclosed — the lender manages collections). Most Australian SMEs choose discounting to preserve customer relationships. Rates from 9.00% p.a., typically 9–16% p.a. Compare invoice finance →

Business Overdraft

A pre-approved negative balance limit on your transaction account. When the balance drops below zero, the overdraft kicks in automatically — no drawdown process, no application at the time of use, no delay. Best for short, sharp timing gaps: a payroll run before a client payment arrives, a quarterly ATO obligation that lands before revenue clears.

Rates from 14.55% p.a., typically 14.55–20% p.a. — materially higher than a term loan or line of credit. The overdraft is a premium for immediacy. The problem is when an overdraft becomes semi-permanent: a business perpetually at its limit is paying a high-cost rate on what has effectively become structural working capital. Compare business overdrafts →

Merchant Cash Advance

An advance against a business's future card and EFTPOS revenue. The lender provides a lump sum upfront, and repayment is structured as a fixed percentage of daily card sales — repayments rise when revenue is strong and fall when it's quiet. There is no fixed term: the advance is repaid through sales until the total (advance plus factor fee) is cleared.

Pricing is expressed as a factor rate, not interest rate. A factor of 1.20x means you repay $1.20 for every $1.00 advanced. Typical factor rates run from 1.20x to 1.50x. Suits retail, hospitality and other businesses with consistent card revenue but unpredictable cash flow timing — and accessible to businesses that may not qualify for traditional working capital lending. Compare merchant cash advances →

Trade Finance

Funds the purchase of stock, raw materials, and imported goods. Rather than the business paying a supplier upfront and waiting for the goods to arrive, clear customs, and be sold, the lender pays the supplier directly. The business repays the lender when the goods are sold — aligning repayment with the cash conversion cycle. Effectively finances the entire stock-to-sale cycle (30–120+ days for importers).

Rates from 2.50% per month (typically 2.50–5% per transaction). Priced per transaction, not annualised. The relevant comparison is total cost relative to the gross profit on the goods being financed. Purpose-built for importers, wholesalers, and manufacturers with long stock-to-sale cycles. Compare trade finance →

What's Causing Your Working Capital Gap?

The cause of the gap should drive the product choice. Match the structure to the problem.

Six Factors That Drive the Rate You Get

• Security position — property security typically unlocks the lowest rates; unsecured products price the additional risk in.
• Trading history and turnover — lenders want 6–12+ months of trading and stable or growing revenue; stronger turnover means better pricing.
• Industry and seasonality profile — hospitality, construction and heavily seasonal retail are viewed as higher risk.
• Director credit score — defaults, judgements or thin credit history will push rates up.
• Product type (secured vs unsecured) — the same lender will price a secured facility 2–5 percentage points lower than an equivalent unsecured one.
• Lender type — non-bank fintech lenders approve faster with less paperwork but price higher; banks offer lower rates with more friction and longer timelines.

What to Compare When Choosing

Rate matters — but it's not the first thing to look at.

Match the product to the cause — not just the cost

A cheap product that doesn't fit the cause of your gap will not solve it. Invoice finance at 9% p.a. is irrelevant to a retailer with no invoices. A working capital term loan at 9.90% p.a. is the wrong shape for a business with unpredictable, recurring gaps. The "cheapest" facility you can find is often expensive in practice if it forces you to draw too much, repay on the wrong cycle, or refinance into a more expensive product six months later. Get the structure right first; then optimise the cost within that structure.

Potential Drawbacks

• Higher rates than capex term lending. Working capital is priced at a premium — products are unsecured or lightly secured, short-term, and often revolving, all of which increase lender risk. Comparing to a property-secured commercial loan rate is not a like-for-like comparison.
• Short terms mean refinancing risk. One-to-three-year facilities need to be refinanced at maturity. If conditions tighten, the next deal may be more expensive or unavailable. Maintain relationships with multiple lenders.
• Revolving credit requires discipline. A line of credit that's always at its limit isn't working capital — it's debt that has become permanent. Healthy facilities are genuinely drawn and repaid within the operating cycle.
• Variable rate exposure. Most working capital facilities — particularly lines of credit and overdrafts — carry variable rates linked to the lender's cost of funds or the RBA cash rate (currently 4.35%).
• Facility fees on lines of credit and overdrafts. A 1.5% annual facility fee on a $500,000 line costs $7,500 per year before any interest. Size your facility for realistic need, not theoretical maximum.

Eligibility Snapshot

Most working capital products in Australia require an active ABN with 6–12 months of trading history and annual revenue from $100,000 (some non-bank lenders set the threshold lower; banks typically want $250,000+). For invoice finance, eligibility also depends on having B2B invoices with creditworthy debtors. Property security is not required for most working capital products, but offering it where available will typically improve both rate and maximum facility size. A director guarantee is standard across virtually all working capital products. See the full range of business loan types at our business loans hub.

Consider alternatives if:

• You're funding a long-term asset (equipment, vehicle, fit-out) — use asset finance, not working capital
• Multiple working capital facilities are stacked and expensive — debt consolidation may simplify the picture
• The business has been at the limit of its line of credit for 18+ months — the real need may be equity or a fundamental operating change
• You're a pure service business with no invoices and no card revenue — your options are term loans or unsecured business finance

Instead, compare: Equipment finance, business debt consolidation, or unsecured business loans.

How LoanGorilla Compares Working Capital Finance

LoanGorilla matches your business profile against 40+ Australian lenders and surfaces the right product category before the rate comparison:

• Identifies which of the six working capital structures best fits your cash flow problem
• Personalised rates and total cost across the panel within that category
• Eligibility rules — what each lender will and won't accept
• Key fees: establishment, facility, drawdown, and early payout
• Realistic funding speed — same-day for some fintechs, weeks for major banks

Use our free calculators to size the need before you apply:

• Working Capital Gap & Cash Flow Runway Calculator — model how much working capital you need and how long your buffer will last.
• Business Loan Affordability & Stress-Test — check whether the business can service the finance under real revenue conditions.

Ready to Compare? Working Capital Finance from 40+ Lenders

Free comparison. No credit score impact. Takes 2 minutes. LoanGorilla matches your situation to the right product structure first — then to the lenders most likely to approve and price competitively.

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