Business borrowing guide stage 3: Loans for high-growth businesses

Business borrowing guide stage 3

Is your business growing more quickly than you can keep up with? This is your guide to the specific funding your business might need.

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.

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.

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.

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
  • Allows for a flexible borrowing amount
  • Generous loan terms (usually up to 25 years)
Term loan $10,000–$500,000 Regular repayments based on a fixed or variable interest rate or a factor rate
  • Regular, automatic repayments
Business overdraft $10,000–$100,000,000 Make the minimum repayment on your outstanding balance
  • Only pay for the funds you use
  • Attached to your business bank account
Invoice financing 80% of the invoice amount Pay fees to receive the loan
  • Reduce waiting time for invoices to be paid
  • Invoice financing can be confidential
Equipment loans Cost of the equipment Regular repayments based on a fixed or variable interest rate
  • Lease and loan options are available
  • Gets you quick access to equipment without using cash reserves
Credit cards $500-unlimited Pay the minimum balance, or pay the entire balance if it's a charge card
  • High credit limits
  • Only use as much as you need
  • Earn reward points and other perks

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
  • Be a registered Australian business or an Australian citizen or permanent resident
  • Directors have a Equifax Score greater than 510
Bigstone 9 months $250,000
  • Be an Australian company or trustee
  • Have more than one employee
Business Fuel 1 year $120,000
  • Have been trading in the same location for one year
  • Make at least $10,000 per month in total sales
  • You have 12 months left on your lease and the rent is up to date
Capify 6 months $120,000
  • Accept credit card/EFTPOS sales if applying for the merchant cash advance
  • Be able to provide merchant/bank statements for the last four to six months
GetCapital 9 months $120,000
  • Be using the loan for 100% business purposes
Kikka Capital 12 months $120,000
  • Be an Australian sole trader, partnership, business, company or trust
NAB 12 months -
  • Be a sole trader, a partnership with up to two partners or a company with up to two directors
  • Have a valid ABN
  • Be at least 18 years old and an Australian citizen or permanent resident
  • Have an Australian business and residential address
Max Funding 6 months $72,000
  • If you cannot meet the turnover and operating time criteria, you need to own an asset
Merchant Cash 12 months $60,000
  • Have property or a vehicle to use as security if you need a term longer than 12 months
Moula 12 months $60,000
  • Have a fair credit history
OnDeck 12 months $100,000
  • Currently operating in Australia
  • Not be operating in a restricted industry (check OnDeck's website)
Prospa - -
  • Your business will be evaluated on its viability using the ProspaScore
Spotcap 12 months $100,000
  • Have an online Australian bank account
  • Are registered in Australia
  • Have online accounting software or financial documents for the last two years
ThinCats - -
  • Be a corporate SME
  • Be borrowing to grow the business
  • Start-up companies must have industry-experienced directors and have a tangible net asset position

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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