Explore short-term business loans in Australia—fast approval, flexible terms, and competitive rates to help your business grow.

Key takeaway

• Fast funding: Short-term business loans in Australia can be approved in as little as 24 hours, making them ideal for urgent cash flow needs or growth opportunities.
• Loan terms: Loan terms usually range from 3 to 18 months, with borrowing amounts between $5,000 and $500,000, depending on your revenue and credit profile.
• Interest rates: According to the Reserve Bank of Australia, the average interest rate for unsecured business loans sits at 10.5%–20%, though some short-term lenders charge even higher, especially for riskier profiles.
• Ideal use cases: They're ideal for seasonal businesses, equipment upgrades, or bridging cash flow gaps—but costly if used as a long-term solution.
• Business impact: 85% of small businesses in Australia reported in an NAB survey that access to fast funding was crucial to seizing growth opportunities.
• Credit score impact: Short-term loans can impact your credit score—positively or negatively—based on how you manage repayments.
• Loan comparison: Always compare lenders, check the true cost (including fees), and ensure repayment won’t strain your working capital.
  

Introduction: What are short-term business loans?

In a fast-moving business environment, waiting weeks for funding isn’t an option. Whether it’s a sudden equipment breakdown, a large order you need to fulfil, or bridging the gap between invoicing and payment, short-term business loans offer quick, flexible financing for Australian businesses.

But the big question is: Are they worth it? Let’s break it down.

What exactly is a short-term business loan?

A short-term business loan is a type of financing typically repaid within 3 to 18 months. These loans are designed for immediate needs and short repayment cycles, unlike traditional business loans which often stretch over years.

Key Features:

• Loan amounts between $5,000 and $500,000
• Repayment terms typically range from 3 to 18 months
• Interest rates are usually between 10.5% and 30% depending on risk
• Funding is often available within 24 to 72 hours
• Repayments are often made on a daily or weekly basis

When is a short-term loan worth considering?

1. To cover seasonal cash flow gaps

Many Australian businesses—especially in retail, hospitality, and agriculture—face uneven cash flow. Short-term loans can bridge the gap between expenses and slow revenue periods.

The Australian Bureau of Statistics reports that over 42% of small businesses experience seasonal cash flow fluctuations.

2. To seize growth opportunities

If you need to buy inventory for a major sale or launch a new product line, a short-term loan can give you the capital boost to act quickly. For example, buying stock in bulk at a discounted rate before the end of financial year can improve profit margins. If the return exceeds the cost of the loan, it may be a smart business decision.

3. To replace or upgrade equipment

Equipment breakdowns can halt operations. A short-term loan allows you to respond quickly without draining your reserves.

IndustrySearch data shows that unplanned equipment downtime can cost businesses between $1,000 and $5,000 per day in lost productivity.

4. To handle emergency repairs or bills

Short-term loans are useful for covering urgent expenses such as tax bills, utility payments, or repairs—especially when delaying them could result in penalties or operational disruptions.

5. To boost working capital before a peak period

Leading up to busy trading periods like Christmas or EOFY, extra cash can help you build inventory, hire casual staff, or increase marketing spend to maximise sales.

Short-term vs. Other financing options

Short-term loans are just one tool in your finance toolkit. Here’s how they compare:

Short-term loan vs line of credit

• Loan: Lump sum, fixed repayments
• Line of Credit: Flexible drawdown, interest only on what you use

Short-term loan vs invoice financing

• Loan: Based on creditworthiness and purpose
• Invoice Finance: Secured against unpaid invoices; good for cash flow gaps

Short-term loan vs equipment finance

• Loan: Used for general needs
• Equipment Finance: Secured against the equipment; lower rates, longer terms

Pros and cons: The real trade-off

Advantages:

• Quick access to funding, often within one to three business days
• Fewer documentation requirements compared to bank loans
• Suitable for various short-term needs
• Many options are unsecured, meaning no collateral is required
  
  

Disadvantages:

• Higher interest rates and associated fees
• Frequent repayment cycles can strain your working capital
• Short repayment terms often mean higher regular repayments
• Poor management can negatively impact your business credit score
  
  

Cost breakdown: Understanding the true cost

It’s important to look beyond the interest rate and consider all associated fees.

Watch for:

• Origination or establishment fees, usually between 1% and 5%
• Early repayment penalties in some contracts
• Monthly administration or account maintenance charges
• The actual cost over time, calculated by multiplying repayment amounts by the loan term

Example:
If you borrow $50,000 over six months at an 18% interest rate, the total repayment amount (after fees and charges) could exceed $55,000.

Top industries using short-term loans in Australia

Based on lending data from Prospa and other Australian providers, the industries most likely to use short-term loans include:

• Retail and e-commerce
• Trades and construction
• Professional services
• Transport and logistics
• Hospitality

These sectors often experience fluctuating income, short contract windows, or high upfront costs that make short-term loans a flexible funding solution.

FAQ: Your top short-term loan questions answered

Q1: Will applying for a short-term loan hurt my credit score?
It might, especially if the lender performs a hard credit check or if repayments are missed. However, positive repayment history can help improve your score.

Q2: What documents do I need to apply?
You’ll generally need:

• ABN/ACN details
• 6–12 months of business bank statements
• Financials such as BAS or profit and loss statements
• Personal ID

Q3: Can I repay the loan early?
Some lenders allow early repayment with no penalty, but others may charge fees. Always read the fine print.

Q4: Are there unsecured options available?
Yes, many short-term business loans in Australia are unsecured. However, these often come with higher interest rates due to the increased risk to lenders.

Q5: Can startups access short-term loans?
Possibly. While some lenders require a trading history of at least 6–12 months, others will consider newer businesses if they can demonstrate revenue and cash flow.

Conclusion: Are short-term business loans worth it?

In the right context, short-term business loans are a smart way to access fast capital. They can help you bridge gaps, take advantage of short-term opportunities, or respond to urgent situations—without waiting weeks for bank approval.

But they also come with a price. High interest rates and tight repayment schedules mean you need to calculate the return carefully. Used wisely, they can help your business grow. Used poorly, they can become a costly burden.

Before you commit, always weigh up the cost, compare lenders, and make sure repayment fits within your business’s financial strategy.