Business line of credit in Australia

How does a business line of credit work?

A business line of credit gives your business a pre-approved limit you can draw on at any time without reapplying. Unlike a term loan, which pays a lump sum upfront, it acts as a pool of funds you use only when needed.

Interest starts on the drawn amount from the day you draw it. As you repay, the available credit replenishes, ready to be drawn again, for as long as the facility runs.

For example, with a $200,000 line of credit you might draw $50,000 to buy stock and pay interest only on that $50,000. When the stock sells and you repay it, the full $200,000 is available again for the next need.

Which lenders offer a business line of credit, and on what terms?

The same product goes by two names: overdraft at the banks, line of credit at the online lenders. The fee structure is the real difference. Checked against each lender's published product page on 20 September 2026, with the Westpac, CommBank and Lumi fees and rates re-checked on 30 September 2026. Terms change without notice; confirm the current position with the lender or your broker before relying on it. Where a lender does not publish a figure the cell says so.

What are the benefits of a line of credit?

Flexibility. A term loan charges interest on the whole balance whether you need the money or not; a line of credit charges only on what you use, which makes it cheaper for funding needs that come and go.

It also handles uncertainty. Rather than guessing how much you will need and for how long, you set a limit and draw as circumstances dictate, without the delay of a new application each time.

For a growing business the limit can grow too: lenders review facilities, usually annually, and can raise the limit in line with revenue.

What do businesses use a line of credit for?

The most common uses include:

• Working capital management: Smoothing cash flow between customer payments and business expenses
• Stock and inventory: Purchasing stock ahead of busy periods and repaying as it sells
• Seasonal businesses: Funding operations during quiet seasons and repaying during peak trading
• Opportunity funding: Having capital ready to act on time-sensitive business opportunities
• Project bridging: Covering costs at the start of projects before progress payments arrive
• Emergency buffer: Maintaining access to funds for unexpected expenses or opportunities

Who is eligible, and how do you apply?

What lenders look for

Typically a registered ABN active for at least 12 months (Lumi publishes six), consistent monthly revenue, a clean personal and business credit history, and business bank statements showing healthy cash flow. Secured facilities also need property or other assets as collateral.

How the application runs

Enquiring through Your Finance Guide starts with a short online form. If you ask for a broker, a licensed broker who meets our criteria asks for business bank statements and basic identification and matches you with a suitable lender. Lumi publishes approval and funding on the same business day for its line of credit; secured bank facilities take longer because the property has to be valued.

Sizing the limit

Size the limit to your largest realistic gap, not the most you can get. At the banks the line fee is charged on the whole limit, so an oversized facility costs money every month even if you never draw it. If the balance never comes back to zero, a term loan is usually the cheaper home for that debt.