7 Types of Business Finance Available in Australia (2026 Guide)

Choosing the right type of business finance can mean the difference between paying too much for capital and getting a structure that actually supports your growth. Below, we break down each of the seven main types of business finance available in Australia, including typical terms, rates, and who each option is best suited for.

1. Business Term Loans

A business term loan is the most straightforward form of business finance. You borrow a fixed amount, repay it over a set period with interest, and the loan is closed once fully repaid. Term loans can be either secured (backed by property or other assets) or unsecured (based on business cash flow and creditworthiness).

Terms typically run from 1 to 7 years and loan sizes vary widely. Secured term loans attract lower rates because the lender carries less risk — the right rate depends on your financials, the security available, and which lender we approach on your behalf.

Best for: business expansion, capital expenditure, one-off large purchases, and consolidating existing debts into a single facility. If you need a defined lump sum for a specific purpose, a term loan is usually the starting point.

2. Business Overdrafts & Lines of Credit

A business overdraft or line of credit is a revolving facility that gives you access to funds up to an approved limit. Unlike a term loan, you only pay interest on the amount you actually draw down, and as you repay, those funds become available again.

Typical limits range from $20,000 to $2 million, and the facility is usually subject to an annual review. Both major banks and challenger lenders offer business overdraft products, though approval criteria and pricing vary considerably between them.

Best for: managing day-to-day cash flow, covering seasonal fluctuations in revenue, and bridging gaps between paying suppliers and receiving payment from customers. If your business has lumpy income or regular timing mismatches, an overdraft provides a safety net without the rigidity of a term loan.

3. Equipment Finance

Equipment finance covers a range of products designed to help businesses acquire physical assets. The three main structures are chattel mortgage (you own the asset from day one), finance lease (the lender owns the asset during the lease term), and hire purchase (ownership transfers to you at the end of the agreement).

Terms typically run from 1 to 7 years, and because the asset itself serves as security, lenders can often provide up to 100% financing with faster approval times than unsecured products. This makes equipment finance one of the more accessible forms of business lending.

Best for: purchasing vehicles, machinery, IT infrastructure, medical equipment, or any tangible asset that the business needs to operate. If you are looking to preserve working capital while acquiring essential equipment, this is the right structure. Learn more about our business growth finance solutions.

4. Invoice Finance (Debtor Finance)

Invoice finance allows you to unlock cash tied up in outstanding invoices. Instead of waiting 30, 60, or 90 days for your customers to pay, a lender advances you up to 80-90% of the invoice value upfront. When your customer pays the invoice, you receive the remaining balance minus the lender's fee.

There are two main types. Invoice factoring means the lender takes over the collection process and your customers pay the lender directly. Invoice discounting is more discreet: you retain control of collections and your customers may not know a lender is involved. Costs vary by lender and invoice volume.

Best for: B2B businesses with slow-paying clients, companies experiencing rapid growth that need working capital to fulfil new orders, and businesses that want to smooth out cash flow without taking on traditional debt. Invoice finance is particularly useful when your balance sheet is asset-light but your receivables are strong.

5. Trade Finance

Trade finance is a category of products designed to support businesses involved in buying and selling goods, particularly across borders. Key instruments include letters of credit (a bank guarantee that the seller will be paid), import/export finance (funding to cover the cost of goods in transit), and supply chain finance (arrangements that allow suppliers to be paid early while the buyer defers payment).

These products help bridge the gap between when a business needs to pay for goods and when it receives payment from its end customer. Trade finance is typically structured on a transaction-by-transaction basis rather than as an ongoing facility.

Best for: importers, exporters, and businesses with international supply chains. If you are purchasing inventory from overseas and need to pay suppliers before your goods arrive and are sold, trade finance reduces the risk and cash flow strain of international trade.

6. Commercial Property Loans

Commercial property loans are used to purchase, refinance, or develop commercial real estate including offices, retail premises, industrial properties, and warehouses. LVR (loan-to-value ratio) is a key factor lenders assess — the right LVR for your deal depends on the property type, location, tenant quality, and your overall position. Terms are generally 1 to 5 years with an interest-only option available in many cases.

Rates vary significantly depending on the lender, property type, location, and tenant quality. A well-tenanted commercial property in a strong location will attract more favourable pricing than a vacant or specialised asset. Both bank and non-bank lenders are active in this space, and the right lender depends on your specific situation.

Best for: property investors building a commercial portfolio, business owners purchasing their own premises to reduce rent exposure, and developers looking for project-specific funding. Explore our commercial property finance services.

7. Business Acquisition Finance

Business acquisition finance is used to purchase an existing business as a going concern. The typical funding structure combines senior bank debt with buyer equity and, in many cases, vendor finance (where the seller agrees to defer part of the purchase price). The right mix depends on the deal.

Lenders assess acquisition deals based on the target business's EBITDA (earnings before interest, tax, depreciation, and amortisation), debt service coverage ratio (DSCR), industry risk, and the buyer's experience and financial position. Due diligence is critical, and the quality of your financial information will directly impact the terms you receive.

Best for: entrepreneurs purchasing established businesses, search fund and ETA (Entrepreneurship Through Acquisition) operators, and franchise purchases. If you are looking to acquire a business rather than build one from scratch, structuring the right debt package is essential to making the deal viable. Learn more about our acquisition finance expertise.

Comparison: Which Type of Business Finance is Right for You?

The table below provides a quick overview to help you compare the seven types of business finance side by side.

How to Choose the Right Finance for Your Business

The right type of finance depends on three things: what you need the funds for, how quickly you need them, and what security you can offer. A business buying a piece of machinery has very different needs from one looking to acquire a competitor or manage a seasonal cash flow gap.

It is also worth noting that many businesses use more than one type of finance at the same time. A commercial property loan for your premises, an equipment finance facility for vehicles, and an overdraft for working capital is a common combination. The key is matching each need to the right product rather than trying to force everything through a single facility.

Working with a finance broker who understands the full range of products, and has access to both bank and non-bank lenders, ensures you are not limited to whatever your existing bank happens to offer. At FGO Finance Group, we work across all seven types of business finance and help our clients structure the right funding mix for their specific situation.