What is a business line of credit?
A business line of credit is a revolving credit facility that lets an Australian business draw funds up to an approved limit, repay, and redraw at any time — with interest charged only on the drawn balance, not the full limit.
Unlike a term loan, which deposits a lump sum and charges interest on all of it from day one, a line of credit sits idle at no interest cost until you draw against it. That makes it the cheaper structure for businesses whose funding needs come and go.
Limits in Australia typically run from $10,000 to $1,000,000, are reviewed every 12 months, and can be unsecured or secured by property or other assets. Once approved, drawdowns are instant and require no further credit assessment.
| Also known as | Revolving credit facility, business overdraft (bank version) |
|---|---|
| Typical limit | $10,000 – $1,000,000 |
| Interest charged on | Drawn balance only, calculated daily |
| Usual extra cost | Annual facility fee of roughly 1% – 3% of the limit |
| Time to access | Instant redraw once the facility is established |
| Best suited to | Seasonal trade, invoice-term gaps, emergency buffers |
Best used for
- Uneven cash flow
- Seasonal trade
- Supplier deposits
- Emergency buffers
- Payroll smoothing
Why a line of credit beats a term loan for cash flow
A term loan puts a lump sum in your account and charges interest on all of it from day one. A line of credit sits idle and costs nothing until you draw against it, making it the cheaper structure for businesses that need funds intermittently rather than continuously.
That structure suits seasonal Australian businesses precisely: tourism operators trading through a wet season, growers waiting on harvest income, and contractors bridging 30 to 60 day payment terms all draw when the gap opens and repay when receivables land.
- Interest applies only to the drawn balance
- Redraw without a new application once the limit is approved
- Limits are typically reviewed annually and can be increased with trading growth
What lenders look for
Line of credit approvals lean heavily on transaction data: consistency of deposits, average daily balance, and how the account behaves under stress. Sharing read-only bank data during the application usually produces a higher limit than uploading statements, because the lender can verify the pattern rather than estimate it.
Line of credit eligibility & approval checklist
Most Australian lenders assess a line of credit against the same handful of signals. Work through the list below to self-qualify before you apply — if you can tick the core items, you are very likely to be matched with a facility.
Core eligibility
- Active ABN or ACN, ideally registered 6+ months
- Business bank account with consistent deposits
- Minimum turnover of about $5,000 – $10,000 per month
- Australian-based, currently trading business
- Director aged 18+ with photo ID
What strengthens your limit
- 12+ months of trading history
- GST registration and lodged BAS
- Few or no dishonours in the last 3 months
- Positive average daily bank balance
- Property or asset security offered (optional)
What you need to apply
- ABN and business contact details
- Read-only access to 6 months of bank data
- Rough limit required and intended use
- Details of any existing loans or ATO arrangement
When an application is usually declined
- Business not yet trading or with no deposits
- Undisclosed ATO debt with no payment arrangement
- Current insolvency, administration or unpaid judgments
- Personal-only income with no business banking
Line of credit drawdown & repayment estimator
A line of credit only costs money while you are using it. Set your limit, an indicative rate and how you expect to draw the facility to see what the interest and repayments look like.
| Typical drawn balance70% of your limit | $70,000 |
|---|---|
| Undrawn (costs no interest)Interest applies only to funds you use | $30,000 |
| Interest per month while drawn14% p.a. on the drawn balance | $816.67 |
| Interest per week while drawnMonthly interest × 12 ÷ 52 | $188.46 |
| Repayment in month 1Principal $35,000 + interest | $35,816.67 |
| Interest over 2 months drawnBridging 30–60 day invoices | $1,633.33 |
| Annual facility fee1.5% of the approved limit | $1,500 |
| Estimated year-one costInterest for the drawn period plus the facility fee | $3,133.33 |
Estimates only. Actual rates, fees and repayment structures vary by lender and are confirmed in your offer. Interest is calculated on the drawn balance for the period shown and does not compound in this illustration.
Business Line of Credit FAQs
Do I pay interest if I do not use the line of credit?
No interest is charged on undrawn funds. Some lenders charge a small establishment or annual facility fee regardless of usage, which is disclosed before you accept the offer.
- Zero credit score impact
- 5-minute match
- 90+ Australian lenders
How quickly can I access funds once approved?
Access is instant. Once the facility is established you can draw funds to your business account at any time, usually via the lender's online portal, without a further credit assessment.
- Zero credit score impact
- 5-minute match
- 90+ Australian lenders
Is a business overdraft the same thing?
They are close cousins. An overdraft is attached to your transaction account and is typically bank-provided; a line of credit is a standalone facility available from a wider range of non-bank lenders, usually with faster approvals.
- Zero credit score impact
- 5-minute match
- 90+ Australian lenders
What is a business line of credit?
A business line of credit is a revolving credit facility with an approved limit that a business can draw from, repay and redraw at any time. Interest is charged only on the balance drawn, not the full limit, which makes it the cheapest structure for funds you need intermittently.
- Zero credit score impact
- 5-minute match
- 90+ Australian lenders
How does a business line of credit work?
The lender approves a maximum limit based on your turnover and bank transaction history. You draw any amount up to that limit into your business account, interest accrues daily on the drawn balance only, and repayments reduce the balance and restore your available funds. Limits are usually reviewed every 12 months.
- Zero credit score impact
- 5-minute match
- 90+ Australian lenders
How do I get a business line of credit in Australia?
Apply with your ABN, ID and 6 months of business bank data. Most Australian lenders assess electronically and approve within 24 to 48 hours; once the facility is established, drawdowns are instant. Comparing 90+ lenders in one application is a soft enquiry, so it does not affect your credit score.
- Zero credit score impact
- 5-minute match
- 90+ Australian lenders
Can a new business get a line of credit?
Yes, but the options narrow. Most Australian lenders want an ABN registered for at least 6 months and consistent monthly deposits. Businesses under 6 months old are usually offered a smaller starter limit, a secured facility, or a short-term loan first, with a line of credit opened once trading history is established.
- Zero credit score impact
- 5-minute match
- 90+ Australian lenders
Is a business line of credit a good idea?
It is a good idea when your cash needs are irregular — seasonal trade, 30 to 60 day invoice terms, or supplier deposits — because you pay interest only while drawn. It is a poor fit for a single large one-off purchase, where a term loan is usually cheaper, and it can become expensive if the balance is never repaid down.
- Zero credit score impact
- 5-minute match
- 90+ Australian lenders
How much does a business line of credit cost?
Cost is interest on the drawn balance plus, with most lenders, an annual facility fee of roughly 1% to 3% of the approved limit. Indicative Australian rates commonly range from about 8% to 25% p.a. depending on turnover, credit profile and whether the facility is secured.
- Zero credit score impact
- 5-minute match
- 90+ Australian lenders
How do I apply for a business line of credit?
Complete the 5-minute matching form on this page. Enter your ABN and funding need, connect read-only bank data, then compare the matched line of credit offers by limit, rate and fees before choosing one. No documents need to be printed, signed or emailed.
- Zero credit score impact
- 5-minute match
- 90+ Australian lenders
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