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Last reviewed: 30 October 2026 · Written by John Pierre Saliba, Director, OverdraftMe
A working capital loan is short-term business finance that covers day-to-day costs such as wages, stock, rent and supplier payments while you wait to be paid. It suits trading Australian businesses with uneven cash flow: $10,000 to $500,000 from 50+ lenders, decisions from 1 hour, and no tax returns or property security under $150,000.
Reviewed by John Pierre Saliba on 30 October 2026. Indicative only, subject to lender assessment.
A working capital loan provides your business with short-term funds to cover day-to-day operating expenses - wages, rent, stock, supplier invoices, and other costs that arise in the normal course of trading. It bridges the gap between when your business spends money and when it gets paid.
Working capital finance can take several forms: a revolving overdraft or line of credit, a fixed-term business loan, or invoice finance. The right structure depends on whether your cash flow gap is ongoing (overdraft) or a one-off need (term loan).
Not sure whether you need an overdraft, a loan, or both? OverdraftMe will assess your situation and recommend the right structure. There's no cost - we're paid by the lender.
Weighing up structures? See every working capital business loan option compared, with worked costs.
Most working capital lenders on our panel give a decision from 1 hour on bank statements alone, with funding often inside 24 to 48 hours of approval. No tax returns are needed under $150K. Minimums are 6+ months trading with $6,000+ in monthly revenue. If speed is the priority, see our guide to fast business loans in Australia.
| Product | How it works | Best for |
|---|---|---|
| Business Overdraft | Revolving facility - draw and repay repeatedly | Ongoing cash flow management |
| Business Loan | Lump sum with fixed repayments | One-off purchases or known expenses |
| Line of Credit | Same as overdraft - revolving, flexible | Ongoing working capital buffer |
We compare 50+ lenders in a single application with one credit enquiry. You tell us what your business needs, we find the best working capital solution - whether that's an overdraft, a term loan, or a combination. Our service is free to you; the lender pays our fee on settlement.
Working capital loan interest rates in Australia range from 12% to 22% p.a. for unsecured term loans, and 14.55% to 25% for revolving facilities like overdrafts and lines of credit. Secured working capital facilities backed by property start from 6% p.a. through major banks.
| Lender type | Rate range | Term | Typical use |
|---|---|---|---|
| Bank, secured term loan or overdraft | 6% to 12% p.a. | 1 to 5 years (loan) or annual review (overdraft) | Established businesses with property security and full financials |
| Non-bank unsecured overdraft or line of credit (OverdraftMe panel) | 14.55% to 25% p.a. on the drawn balance, plus a 0.5% to 2% p.a. line fee on the limit | 12-month revolving facility, renewable | Recurring gaps: wages, stock, BAS, supplier terms |
| Non-bank unsecured working capital term loan | 12% to 22% p.a. | 3 to 36 months, fixed repayments | One-off known cost, repaid on a set schedule |
| Invoice finance | 1% to 4% of invoice value per advance | Per invoice, 30 to 90 days | B2B businesses on long payment terms |
| Merchant cash advance | Factor rate, for example 1.25 (about 90% APR equivalent over 6 months) | Repaid daily from card sales until the fixed fee is cleared | Retail and hospitality with consistent EFTPOS takings |
Indicative only and subject to lender assessment. Panel ranges reflect the OverdraftMe lender panel; bank ranges are market context. Convert a factor rate with the factor rate to APR calculator.
The rate you receive depends on your credit score, trading history, monthly revenue, and whether you offer security. Through OverdraftMe, we compare 50+ lenders to find the lowest rate for your specific profile - one application, one credit enquiry.
All working capital loan interest is tax deductible when used for business purposes. At the 25% base rate entity tax rate, an 18% interest rate effectively costs 13.5% after the deduction.
Working capital finance comes in several forms, each suited to different business needs:
Business overdraft / line of credit: A revolving facility where you draw and repay as needed. Best for ongoing, unpredictable cash flow needs. You only pay interest on what you draw, and the facility resets when repaid. This is the most popular working capital product for Australian SMEs. Learn more about business overdrafts.
Working capital term loan: A lump sum with fixed repayments over 6-24 months. Best when you know exactly how much you need and for how long. Lower rates than revolving facilities but less flexibility. Learn more about business loans.
Invoice finance: An advance against outstanding invoices. Best for B2B businesses with long payment terms (30-90 days). The financier advances 70-85% of the invoice value and releases the remainder when the client pays, minus a fee.
Merchant cash advance: An advance against future card sales. Best for retail and hospitality businesses with consistent card revenue. Repayments are taken as a percentage of daily card sales.
| Business overdraft | Working capital loan | Invoice finance | |
|---|---|---|---|
| Structure | Revolving - draw and repay | Lump sum, fixed repayments | Advance against unpaid invoices |
| Interest charged on | Drawn balance only | Full amount | Advanced amount (fee-based) |
| Best for | Recurring, unpredictable gaps | One-off known needs | B2B with 30-90 day terms |
| Typical unsecured cost | 14.55-25% p.a. + line fee | 12-22% p.a. | 1-4% of invoice value |
| Reapply each time? | No | Yes | Per invoice batch |
Costs are indicative and subject to lender assessment. See the full loan-vs-overdraft comparison and overdraft vs invoice finance.
A subcontractor invoices $120,000 a month but gets paid on 45-day terms, while wages and materials of about $60,000 leave the account every fortnight. A $60,000 revolving facility drawn for the two-week gap at an indicative 18% p.a. costs roughly $415 per cycle in interest - against wages that must be paid on time and supplier discounts worth far more. The same need funded by a 12-month term loan would incur interest on the full $60,000 for the whole year. Structure matters more than rate.
Real outcome: a WA landscaping business turning over about $50,000 a month needed day-to-day working capital and was approved for a $55,000 unsecured overdraft within 24 hours - no property security.
The key difference is structure. A working capital term loan gives you a fixed amount with fixed repayments - you know exactly what you owe each week or month. An overdraft gives you a flexible facility you can dip into and repay at your own pace.
For most SMEs, an overdraft or line of credit is the better working capital solution because cash flow needs are inherently unpredictable. You might need $30K this month and $5K next month - a revolving facility accommodates that without reapplying. A term loan locks you into repayments on the full amount regardless of whether you still need the funds.
Full comparison: overdraft vs loan
A common rule of thumb is that your working capital facility should cover 1-2 months of operating expenses. This includes payroll, rent, supplier payments, insurance, and other fixed costs. Having this buffer means you can always meet obligations even when client payments are delayed.
For more precision, calculate: average monthly expenses minus average monthly revenue timing gap. If you spend $80K/month but receive most payments 30-45 days after invoicing, you need $80K-$120K in working capital available to bridge the gap.
Use our borrowing calculator for an instant estimate
From 1 July 2026, Australian employers must pay superannuation at the same time as wages - within 7 business days of each payday. This replaces the current quarterly system and eliminates the quarterly super "float" that many SMEs used as working capital.
At 12% super guarantee rate, a business with $20,000 weekly payroll needs $2,400 available for super every single payday. Over a quarter, that's $31,200 that previously sat in the business account earning interest or funding operations - now it leaves the business immediately.
A working capital facility bridges this gap. Draw to cover super on payday, repay as client payments come in. The facility costs a fraction of the ATO's non-deductible Superannuation Guarantee Charge if you miss a payment.
Full Payday Super guide | Payday Super calculator
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A working capital loan is finance for the day-to-day running of a business - wages, stock, supplier payments and the gap between invoicing and getting paid. In Australia it comes as a revolving facility (a business overdraft or line of credit) or a fixed-term loan. Through the OverdraftMe panel, indicative rates run 14.55% to 25% p.a., with no tax returns or property security required under $150,000.
Two structures. A revolving facility gives you an approved limit you draw, repay and redraw, with interest only on the drawn balance - suited to recurring cash flow gaps. A fixed-term working capital loan is a lump sum repaid over 3 to 36 months - suited to a one-off need. Non-bank lenders assess both from 6 months of business bank statements.
Through a broker or direct to a lender. The non-bank route needs 6 months of business bank statements, an ABN and a driver's licence - no tax returns under $150,000. Guides: $6,000+ monthly turnover and an Equifax score of 550+. Decisions come from 1 hour, with funding typically within 24 to 48 hours of approval. Start with the 2-minute eligibility check.
Yes - small businesses are the core market. From 6 months of trading and $6,000+ monthly turnover, non-bank lenders fund working capital facilities from $10,000, sized on your monthly revenue and assessed on bank statements. Sole traders qualify on the same basis as companies.
Often, yes. Non-bank lenders consider working capital applications from Equifax 550+, weighing revenue consistency more heavily than the score - and a managed ATO debt on a payment plan is generally acceptable. Expect pricing at the upper end of the 14.55% to 25% p.a. panel range. See business finance with bad credit.
The whole process runs online: check your eligibility in the 2-minute calculator, upload 6 months of bank statements as PDFs, and one application goes to the best-matched of 50+ lenders - one credit enquiry. Decisions from 1 hour, funding typically within 24 to 48 hours of approval.
A fixed lump sum for working capital, repaid on a set schedule over 3 to 36 months - unlike an overdraft, there is no redraw. It suits a defined one-off need; if your gaps are recurring, a revolving facility usually fits better. Compare both in the business overdraft calculator.
Match the tool to the gap. Recurring timing gaps, such as wages due before invoices land, suit a revolving overdraft where interest applies only while drawn. A one-off, known cost suits a fixed term loan. Many businesses run both. Model the costs side by side in the business overdraft calculator.
Through the OverdraftMe panel, unsecured working capital term loans run about 12% to 22% p.a. and revolving overdrafts or lines of credit 14.55% to 25% p.a. on the drawn balance, plus a line fee of 0.5% to 2% p.a. on the limit. Bank facilities secured by property sit around 6% to 12% p.a. but need full financials and usually property. Your rate depends on credit score, trading history, monthly revenue and security.
Yes. Unsecured working capital term loans are available from 6 months of trading with $6,000 or more in monthly revenue and an Equifax score of 550 or above. Revolving overdrafts typically need a 1-year ABN if you own property or 2 years if you do not, with strong candidates considered earlier. Every file is assessed case by case on 6 months of bank statements. See business loans with 6 months trading.
Decisions come from 1 hour on bank statements alone, and funding is often same day, typically within 24 to 48 hours of approval. The fastest files have 6 months of statements ready as PDFs or linked through bank verification, a clean ABN and ID, and a clear purpose for the funds.
A business overdraft is better for recurring, unpredictable gaps because you draw, repay and redraw and pay interest only on the drawn balance. A working capital term loan is better for a one-off known cost because the base rate is usually lower and repayments are fixed. Many businesses run both. See the full working capital loan vs overdraft comparison or compare the unsecured business overdraft.
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