Need extra cash in the business? There are three common ways to get it, and lenders assess each one very differently. The cheapest is often already parked in your yard.
Business loans and overdrafts: based on turnover
Both are assessed mainly on what the business earns. As a rough rule of thumb, lenders rarely lend more than about 10% of your yearly turnover.
- A business loan suits a one-off need, repaid in fixed instalments over a set term.
- An overdraft is a limit on your business account for short-term cash-flow gaps. You only pay interest on what you use.
Equity release: based on what you own
If a truck, machine or trailer is worth more than you owe on it, a lender may pay out the existing loan and give you extra cash against the difference. You don’t need to own it outright.
Say you owe $30k on a truck worth $250k. Another lender may pay out that $30k and hand you an extra $100k in cash, secured against the truck. Think of it as a second mortgage on your truck instead of your house.
With a clear asset behind it, equity release is typically easier to approve, and cheaper, than a business loan or overdraft.
The fast-cash trap
Online lenders promising “funded in 24 hours” might fix today’s problem. In our experience, a loan from one of them, or even just an enquiry, can leave you close to unfinanceable with mainstream lenders afterwards.
Talk to us first. The conversation doesn’t touch your file, and there’s almost always a cheaper path.
All three need clean bank statements
Whichever path fits, lenders will want your bank statements to confirm your turnover and check there’s no banking misconduct. Our clean bank statements guide shows what they look for.
We arrange all three. Tell us what the money’s for and we’ll show you the cheapest sensible path, not the easiest one for us to write. Try the business loan calculator, get a quote or call 1800 958 510.
Common questions
How much can I borrow?
An unsecured loan or overdraft is tied to your turnover, rarely more than about 10% of a year’s revenue. With equity release, the limit is set mostly by the asset’s value and what you still owe on it.
Can I borrow without security?
Yes, but unsecured loans are assessed on turnover, usually cost more, and lenders may ask directors for a personal guarantee. Equity release uses vehicles and equipment, so your house stays out of it.
Is business loan interest tax deductible?
Generally yes, if the money is used for the business. Confirm how and when to claim with your accountant.
General information, not tax advice.
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