Types of business loans in Australia: the 2026 guide

Ask ten business owners what a “business loan” is and you’ll get ten answers. For one it’s the overdraft they’ve had since the 1990s. For another it’s the app that debits their account every morning. For a builder it’s the second mortgage that carried them through a slow-paying project. All of them are business loans, and each was built for a different job.

This guide maps the common types available to Australian businesses in 2026: what secures each one, what it’s good for, and when it’s the wrong tool. Business.gov.au groups finance into debt, equity and grants. This guide covers the debt side, which is where most owners start.

What are the main types of business loans in Australia?

Type	Usually secured by	Typical use	Repayment style
Bank term loan	Property, plus director guarantees	Long-term needs: buying a business, expansion	Regular instalments over years
Overdraft	Property or other bank security	Day-to-day swings in the transaction account	Interest on the drawn balance
Line of credit	Property or other bank security	A reusable limit for recurring needs	Draw and repay; reviewed yearly
Unsecured online loan	Director guarantee only	Small, quick needs	Daily, weekly or fortnightly debits
Equipment finance (chattel mortgage, hire purchase, lease)	The equipment or vehicle	Machinery, vehicles, technology	Monthly over the asset’s life
Invoice finance	Your unpaid invoices	Unlocking cash tied up in debtors	Repaid as customers pay
Trade finance	The goods and the bank’s security	Buying stock to fill an order	Repaid when goods sell
Commercial property loan	The property being bought	Buying premises or investment property	Instalments over many years
Private first mortgage	Real estate you own	Purchases, refinances, fixed deadlines	Interest can be prepaid or capitalised; one repayment at the end
Second mortgage	Real estate behind an existing loan	Releasing equity without refinancing the bank	As above, shorter terms
Caveat loan	A caveat over real estate	Very short, urgent needs	As above, often weeks to months
Vendor finance	The seller’s agreement	Part of a business or property price	Negotiated

Business.gov.au describes a line of credit as borrowing up to a set limit, notes that hire purchase lets you rent an item with the option to own it, and explains that a chattel mortgage is borrowing to own an item outright. It also warns that factoring, where a company buys your invoices at a discount, can be expensive compared with traditional finance.

How do secured and unsecured business loans differ?

Security is the single biggest factor in what a loan looks like. A secured loan gives the lender a claim over an asset it can sell if the loan isn’t repaid. Business.gov.au notes that for a secured loan, the lender can take the security to cover its losses, while for an unsecured loan it looks harder at the business’s financial health.

In practice:

• Secured loans allow bigger amounts, longer or more flexible terms and lower cost, but put the asset at risk.
• Unsecured loans are quicker to arrange for small amounts, but carry frequent repayments, higher cost and personal guarantees from directors.

Our secured vs unsecured business loans comparison works through both with real decisions.

Which loans are built for buying assets?

Equipment and asset finance suits vehicles, machinery and technology with a resale market. The asset secures the loan, so you don’t tie up property. Business.gov.au lists equipment leases and asset financing as standard bank products.

Tax treatment interacts with this. The ATO confirmed in September 2026 that the $20,000 instant asset write-off is permanent from 1 July 2026 for businesses with aggregated turnover under $10 million, applied to each asset. That shapes how some owners choose between leasing and buying.

Commercial property loans fund premises and investment property over the long term. They’re cheapest when the business has clean financials and time to wait for approval.

When an asset doesn’t suit equipment finance (specialised, second-hand or bought at auction), property equity is the fallback. Our page on funding equipment and machinery compares the two.

Which loans fund cash flow?

• Overdrafts and lines of credit cover recurring swings. They’re the cheapest option when a bank will offer them, but limits are reviewed and can be reduced.
• Invoice finance turns debtors into cash, best when customers are large and pay reliably.
• Trade finance funds stock for a specific order.
• Unsecured online loans suit small, short needs. The RBA’s October 2025 bulletin found unsecured small business loans are often short-term and priced higher, and are commonly used to manage temporary cash flow problems.
• Property-secured short-term loans cover larger or less predictable gaps where the owner has equity. See cash flow while waiting on customers to pay.

For a detailed head-to-head of the two most common cash flow tools, read business line of credit vs secured short-term loan.

Where do private property-secured loans fit?

Private first mortgages, second mortgages and caveat loans are built for jobs where timing and certainty matter more than the lowest possible long-run cost:

• settling a purchase on a date the bank can’t meet (buying commercial property fast);
• clearing an ATO debt in one payment (paying ATO debt with property equity);
• bridging until a property sells or a refinance completes;
• funding a business when the bank has declined it on policy grounds.

They’re secured on real estate, assessed mainly on equity and the exit, and typically run for months rather than years. Interest can be prepaid or capitalised, so there may be no monthly repayments. The secured business loans page sets out how the three structures differ, and the caveat loans and private first mortgage pillars go deeper on each.

Loans range from $20k to $5m, there’s no formal valuation required, and funding is possible within 24–48 hours once documents are in.

What changed in business lending in 2025 and 2026?

A few shifts are worth knowing:

• Non-banks grew. The RBA reported in October 2025 that the non-bank share of SME lending has increased strongly since the start of 2022, especially for smaller loans, and that non-banks face fewer prudential constraints than banks.
• Collateral is still the sticking point. The same bulletin named the requirement to provide residential property or other physical assets as collateral as a key challenge for small businesses, alongside strict lender requirements and long processing times.
• Paperwork eased a little. Lenders told the RBA they had relaxed documentation requirements for smaller SME loans.
• Payday Super arrived. From 1 July 2026 employers must get super into staff funds within 7 business days of payday, adding a recurring cash call that some businesses now fund with short-term facilities.

What are bridging loans and vendor finance?

Two more types sit slightly outside the main families.

Bridging loans cover the gap between two events: buying before you’ve sold, or settling before a refinance completes. For a business, the bridge is usually secured on property and repaid when the sale or refinance lands. Our bridging loans for business page covers the mechanics, and caveat loan vs bridging loan explains when the quicker caveat structure does the same job.

Vendor finance is the seller agreeing to be paid part of the price later. It’s common in business sales where the buyer can’t borrow the full amount, and it keeps the vendor interested in a smooth handover. The catch is that the balance eventually falls due, often as a lump sum.

What does each type ask of you?

Type	What the lender mainly wants to see	Typical lead time
Bank term loan or overdraft	Two or more years of financials, tax returns, a business plan, forecasts, property security	Weeks to months
Unsecured online loan	Bank statements, sometimes accounting software access	Days
Equipment finance	The asset’s details and recent trading figures	Days
Invoice finance	Your debtor ledger and customer details	Days to set up, then ongoing
Private property-secured loan	ID, title details, existing loan statements, the purpose and the exit	Possible within 24–48 hours once documents are in

Business.gov.au’s list of what a loan application may need includes proof of identity, a business plan, financial reports, cash flow statements and forecasts, lease agreements and personal financial information. The more of that a lender relies on, the longer the approval tends to take.

How do you choose the right type of loan?

Work through four questions in order:

1. What exactly am I funding? An asset, a gap, a purchase or a deadline.
2. How long do I really need the money? Weeks, months or years.
3. What can I offer as security? The asset itself, invoices, property or nothing.
4. What repays it? Customer receipts, a sale, a refinance or trading profit over years.

The answers usually point to one or two types. If the answer to question 4 is vague, no loan type will fix that, and our guide to exit strategy for a short-term mortgage explains why lenders focus on it.

What does a mix of loans look like in practice?

Illustrative example: a Newcastle engineering firm has four needs in the same quarter. It finances a $180k CNC machine through equipment finance secured on the machine. It keeps its bank overdraft for weekly swings. A mining customer pays on 60-day terms, so it uses invoice finance for that one account. And it needs $350k within three weeks to buy the factory unit next door at auction, which the bank can’t approve in time. The directors own a home worth about $1.5m with $500k owing, so a second mortgage behind the bank funds the deposit and settlement shortfall, at an illustrative 70% LVR band leaving about $550k of headroom. Twelve months later the factory is refinanced into a bank commercial loan and the private loan is repaid.

Each tool did one job. None of them was asked to do all four. Firms in the Hunter can see our Newcastle private lender page.

Need one of these fast? See if you qualify

If one of your needs is time-critical and you own property, check whether you qualify in about a minute. There’s no credit check to enquire, your details go to one direct lender rather than a panel, and a specialist reads what you send. Give accurate figures for the property and what’s owing on it so the answer you get is the right one. Start your enquiry.