For businesses navigating cash flow gaps, unexpected expenses or time-sensitive opportunities, short-term business loans offer fast access to capital without the long-term commitment of a traditional bank loan. However, understanding the different products available and what it all costs can mean the difference between securing the right finance and paying overs.
Business loans are among the most accessible and flexible financing options available to Australian businesses, with demand for them continuing to grow rapidly. According to the Australian Banking Association (ABA), new lending to SMEs more than doubled between 2020 and 2025, rising from $80.18 billion to $179.56 billion. Lending to small businesses alone grew by 96.3% over that period, while medium business lending saw a 140.4% uptick.
What are short-term business loans?
Short-term business loans are a type of business financing designed to be repaid over a shorter period than a standard business loan. Terms as short as one to three months are available with some lenders, reaching as long as two to three years.
They’re generally used to cover immediate needs, rather than long-term investments. This makes them well-suited to SMEs that need funding quickly or want to avoid lengthy repayment commitments.
Short-term business loans can be secured or unsecured, which will have a direct impact on the amount you’re able to borrow and the cost of your loan. Interest rates are often higher than those on longer-term facilities, reflecting the shorter repayment window and, in many cases, the reduced security requirements.
What can I use my short-term business loan for?
Lenders place few restrictions on how short-term business loan funds can be used. Common loan purposes include:
- Managing cash flow gaps or covering day-to-day operating expenses
- Purchasing stock or inventory ahead of a busy period
- Covering unexpected expenses or emergency repairs
- Taking advantage of a time-sensitive business opportunity
- Funding a short-term marketing or promotional campaign
- Paying staff wages or contractor invoices during a slow period
- Purchasing equipment or tools needed for an upcoming project
- Bridging the gap while waiting on outstanding invoices to be paid
How much can I borrow with a short-term business loan?
Borrowing amounts for short-term business loans typically start from $5,000 and can go up to $300,000 or more, particularly with a secured loan. Some lenders may offer higher limits depending on your business’s financial profile and the collateral you provide. However, while a lender might advertise a maximum amount, you may not be approved for the full figure. Your loan offer will depend on how much your business can realistically afford to repay based on its cash flow and existing liabilities.
Factors that influence how much you can borrow include:
- Your average monthly revenue: some lenders may offer a loan equivalent to one month’s turnover or more.
- Time in business: established businesses may qualify for higher amounts.
- Creditworthiness: both business and personal credit scores may be assessed.
- Whether the loan is secured: using an asset as security can increase your borrowing capacity.
You’ll also need to ensure you can comfortably meet the weekly or fortnightly repayments, which tend to be higher than those on long-term loans due to the shorter duration, as well as any fees, such as establishment fees and ongoing account-keeping fees.
How much can I borrow with a short-term business loan?
Short-term business loans are available from as little as $5,000 to as much as $500,000, though some non-bank lenders may lend up to $1 million or more for well-established businesses with strong financials. How much your business can borrow will ultimately depend on several factors, including:
- Annual revenue and turnover: lenders typically want to see consistent revenue, with many capping your loan amount at a percentage of your monthly or annual turnover.
- Time in business: most lenders require a minimum trading history of three to six months, with longer-established businesses generally able to access higher loan amounts.
- Credit history: both your business and personal credit scores will be assessed, with a stronger credit profile unlocking higher borrowing limits and more competitive rates.
- Security offered: secured loans, backed by an asset such as property or equipment, allow businesses to borrow more than unsecured facilities.
- Existing debt: outstanding loans or liabilities will be factored into the lender's assessment, as they affect your business's capacity to take on additional repayments.
How much will my short-term business loan cost?
There’s a variety of factors that can impact the cost of your short-term business loan. The following tables show how the term length you choose and the interest rate you’re offered can make a difference to your total loan bill:
Short-term business loan cost: term length
| Loan amount | Loan term | Interest rate | Monthly repayment | Total repaid | Total interest |
|---|---|---|---|---|---|
| $50,000 | 3 months | 9.50% p.a. | $16,931 | $50,794 | $794 |
| $50,000 | 6 months | 9.50% p.a. | $8,566 | $51,395 | $1,395 |
| $50,000 | 9 months | 9.50% p.a. | $5,778 | $52,000 | $2,000 |
| $50,000 | 12 months | 9.50% p.a. | $4,384 | $52,610 | $2,610 |
| Calculations are for illustrative purposes only and do not include any additional loan fees. Rates, amounts and term lengths aren’t necessarily reflective of the terms you’ll receive on your short-term business loan. | |||||
Short-term business loan cost: interest rate
| Loan amount | Loan term | Interest rate | Monthly repayment | Total repaid | Total interest |
|---|---|---|---|---|---|
| $50,000 | 6 months | 8.50% p.a. | $8,541 | $51,247 | $1,247 |
| $50,000 | 6 months | 9.50% p.a. | $8,566 | $51,395 | $1,395 |
| $50,000 | 6 months | 11.00% p.a. | $8,603 | $51,616 | $1,616 |
| $50,000 | 6 months | 13.00% p.a. | $8,652 | $51,913 | $1,913 |
| $50,000 | 6 months | 15.00% p.a. | $8,702 | $52,210 | $2,210 |
| Calculations are for illustrative purposes only and do not include any additional loan fees. Rates, amounts and term lengths aren’t necessarily reflective of the terms you’ll receive on your short-term business loan. | |||||
Beyond the term length and interest rate, several other variables will affect the total cost of a short-term business loan:
- Loan amount: the larger the loan you take out, the more interest you’ll pay overall.
- Interest rate type: variable rates may move over the life of your loan, while fixed rates lock in your repayment from the outset, making budgeting more predictable.
- Establishment and ongoing fees: many lenders charge an upfront fee to set up the loan, typically ranging from 1% to 3% of the loan amount, while you may also be charged monthly account-keeping fees, which can add up over the loan term.
- Comparison rate: the comparison rate combines the interest rate and unconditional fees into a single figure, making it easier to compare the true cost of loans across different lenders.
Unsecured vs secured short-term business loans
As mentioned, short-term business loans can either be unsecured or secured. Unsecured is the most common option and requires no collateral, meaning the lender takes on more risk. To offset this, unsecured loans carry higher interest rates and lower borrowing limits. However, they’re faster to approve and more accessible to businesses that don't own significant assets.
A secured loan, on the other hand, requires the borrower to offer an asset as collateral, such as property, equipment or a vehicle. If the borrower defaults, the lender can seize that asset to recover the outstanding debt. As a result, they come with lower interest rates, higher borrowing limits and longer repayment terms. The asset must be eligible to serve as collateral, though, so cars that are too old or equipment in average or poor condition may not be accepted.
| Secured | Unsecured | |
|---|---|---|
| Collateral required | Yes | No |
| Typical loan amount | Up to $500,000+ | Up to $250,000 |
| Interest rates | Lower | Higher |
| Approval speed | Slower | Faster |
| Risk to borrower | Asset can be seized if you default | No asset at risk, though personal guarantees may apply |
Some lenders offering unsecured loans will still require a personal guarantee, meaning the business owner becomes personally liable for the debt if the business can’t repay it. This is worth understanding before signing any loan agreement.
How to apply for a short-term business loan through Savvy
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Complete our online form
Tell us about your business and its finances, as well as the loan you’re after.
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Send through your documents
We’ll need to verify your financial position and that of your business, as well as your identity.
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Speak to your broker
Your broker will give you a call to chat about your short-term business finance options.
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Have your application submitted
We’ll handle the preparation and submission of your application to your lender once you’re ready.
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Receive formal approval
Your lender can formally approve your application as soon as one day after submission.
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Settle the loan and receive your funds
Simply sign off on all the required documents and the money can be transferred to your business.
Why apply for a business loan with Savvy?
Short-term business loan eligibility and documentation requirements
To qualify for a short-term business loan, you’ll typically need to meet the following criteria:
- Be at least 18 years old
- Be an Australian citizen or permanent resident
- Have an active ABN
- Be registered for GST
- Have been trading for at least six months
- Meet a minimum monthly revenue threshold (this varies by lender, but may start from around $6,000)
Lenders will also usually ask for the following:
- A valid form of photo ID (e.g. driver’s licence or passport)
- Proof of your ABN and GST registration
- Three to six months of business bank statements
- Your most recent tax return (personal or business)
Requirements may vary depending on the lender, the amount you’re applying for and whether the loan is secured or unsecured. Having these documents ready can improve your chances of a swift approval.
Should I choose a long-term business loan instead?
The primary advantage of opting for a longer loan term is a lower monthly repayment, as the debt is spread over a greater number of instalments. This eases pressure on cashflow, particularly for businesses managing multiple expenses at once.
The trade-off, however, is the overall cost. While monthly repayments are lower, you’ll be paying interest for longer, meaning the overall amount repaid is higher. Longer-term loans also may require a stronger credit history, more detailed financial documentation and collateral. For that reason, longer terms may not be an option for many small or startup businesses that don’t qualify.
Short-term business loan alternatives
Short-term business loans aren't the right fit for every owner or operator. Depending on your needs, one of the following alternatives may be a better match:
Business line of credit
A business line of credit gives you access to a pre-approved pool of funds that you can draw from as needed, repaying and redrawing over time. Interest is only charged on the amount you use, making it a flexible option for managing ongoing or unpredictable cash flow needs. Interest rates are higher for this type of finance.
Business overdraft
A business overdraft is essentially a line of credit linked to your existing bank account, allowing you to spend beyond $0 up to an agreed limit. It works well as a cashflow buffer for day-to-day expenses, but interest rates are often higher than other facilities and you’ll typically be charged a fee for having the overdraft available.
Business credit card
A business credit card provides a revolving credit limit that can be used for everyday purchases and expenses. Many cards come with interest-free periods, rewards programs and expense tracking tools. They're best suited to smaller, recurring expenses rather than large one-off costs, as letting debt roll over outside the interest-free period will likely net you a significant interest bill.
Invoice financing
Invoice financing allows businesses to unlock cash tied up in unpaid invoices before the customer has actually paid. A lender advances a percentage of the invoice value, up to 95%, with the remainder paid once the customer settles. It's particularly useful for businesses with long payment terms or slow-paying clients.
