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Guide to loans for high-growth businesses
Is your business growing more quickly than you can keep up with? This is your guide to the specific funding your business might need.
Loan Types
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Being in a stage of high growth is the aim of every business owner, but it can also make business operations more difficult. High-growth businesses still encounter cash flow issues and have new needs for expansion and hiring. If you don't want to put a strain on unpredictable cash flow, there are financing options you can consider.
In this guide...
Business Guide 3:What is a "high-growth" business?
A high-growth business is a business of any size that is in a period of rapid growth. This type of business usually has a few employees and is past its initial stages, which are usually marked with high costs and uncertain profits. High-growth businesses can also be larger companies that are experiencing growth after restructuring or launching a new product or service.
Not the stage your business is at? Explore other options:
What funding requirements will a business experiencing high growth need?
Businesses in this stage of growth have very specific funding needs:
- Flexibility. Businesses in rapid growth stages rely on flexibility to continue growing. This includes flexibility in the funding they choose.
- Variable loan amounts. While a high-growth business might need $10,000 today, they might need $50,000 tomorrow. Opportunities for large orders and expansions occur quickly, and these businesses rely on being able to change their funding needs.
- Tailored repayments. What works for a start-up business may not work for a business that is growing quickly. Tailored repayments help keep cash flow fluctuations manageable and put less of a strain on businesses.
Compare the business loans below
The types of finance that are available
Lenders prefer businesses that can demonstrate they're able to repay the loan, so if your business is in a high-growth phase you are in a good position to borrow. There are a range of financing options available so it's important to review your options and find the one that best fits your needs.
| Loan type | Loan amount | Repayments | Features |
|---|---|---|---|
| Line of credit | $10,000–$1,000,000 | Make the minimum, regular repayments on your outstanding balance |
|
| Term loan | $10,000–$500,000 | Regular repayments based on a fixed or variable interest rate or a factor rate |
|
| Business overdraft | $10,000–$100,000,000 | Make the minimum repayment on your outstanding balance |
|
| Equipment loans | Cost of the equipment | Regular repayments based on a fixed or variable interest rate |
|
| Credit cards | $500-unlimited | Pay the minimum balance, or pay the entire balance if it's a charge card |
|
| Invoice financing | 80% of the invoice amount | Pay fees to receive the loan |
|
Compare invoice financing products
Useful guides for high-growth businesses
How to compare high-growth business loan options
- When you will receive the funds. If your business is experiencing high growth, chances are you need the funds quickly. Many business lenders can provide funds within 24 hours, but some may take longer. Find out when you can expect to receive it.
- How much you can apply for. Loan amounts differ between lenders. Some might offer a maximum of $50,000 while others will offer more. Ensure the lenders you are comparing are offering the amount of money you need.
- How flexible is the loan? Can you repay the funds early without penalty? Can you top-up your loan? When will your business be required to make repayments? Make sure the loan is as flexible as you need it to be.
- Is there a fixed term? This depends on the type of loan you're looking for. Fixed term loans will mean your ongoing repayments pay back the loan at the end of the term, but a non-fixed term loan, such as a line of credit or overdraft, will be more flexible with topping up the loan.
- How is interest charged? Will interest be calculated on the principal or on how much you have left to repay? Will the rate be fixed or variable? This has a huge impact on the cost of your repayments so make sure you check this.
Will my business be eligible?
| Lender | Time in operation | Annual turnover | Other minimum criteria | Find out more |
|---|---|---|---|---|
| Banjo | 2 years | $500,000 |
| More |
| Bigstone | 9 months | $250,000 |
| More |
| Business Fuel Loans | 1 year | $120,000 |
| More |
| Capify | 6 months | $120,000 |
| More |
| GetCapital | 9 months | $120,000 |
| More |
| Kikka Capital | 12 months | $120,000 |
| More |
| NAB | 12 months | - |
| More |
| Max Funding | 6 months | $72,000 |
| More |
| Merchant Cash | 12 months | $60,000 |
| More |
| Moula | 12 months | $60,000 |
| More |
| OnDeck | 12 months | $100,000 |
| More |
| Prospa | - | - |
| More |
| Spotcap | 12 months | $100,000 |
| More |
| ThinCats | - | - |
| More |
How much the loan will cost
Each lender will set different interest rates and fees for your loan. Keep an eye out for the following:
- Interest rate. If the loan type you choose charges an interest rate, you need to check whether it is fixed or variable. It may also be a factor rate, which is expressed as a decimal figure and doesn't compound.
- Upfront fees. You may be charged an establishment fee or application fee. These will be added onto your loan amount and you don't need to pay these unless you are approved and sign the loan contract.
- Ongoing fees. Monthly and annual fees are common with business loans, so remember to incorporate these into the overall cost of your loan to see how much your repayments could be.
- Other fees. You may be charged for making additional repayments or repaying your loan early, there could be a documentation fee, a direct deposit fee or a fee for topping up your loan.
Questions to ask before applying for a loan
How will the repayments affect your business cash flow?
By answering this question you can find out how manageable the loan payments will be and if you should adjust the amount you are borrowing or the term.
Is your ability to repay the loan based on your current level of growth?
It's easy for a business to stagnate, so if you're relying on your increasing cash flow to repay the loan, you need to consider how reliable those projections are.
How is your credit position?
Have you checked your business credit score or credit file? It will give you an idea of your financial stability as well as the likelihood of your business being approved.
Do you have property or a vehicle to use as security?
Many lenders give more competitive rates or terms for secured loans, and you may increase your chances of being approved if you offer an asset.
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