There are five common options for business finance – credit cards, overdrafts, loans, asset finance and invoice financing. The right choice for you will likely depend on your business and what you’re looking to fund.

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First, ask yourself why you’re looking to borrow. Some typical reasons may be to:

  • Pay for business expenses
  • Manage business cash flow
  • Purchase a property or business
  • Purchase a car or equipment
  • Grow your business
  • Comfortably maintain day-to-day operations

It’s important to consider which financing option might be right for your business. Here are some of the types of finance to consider:

Business credit cards

A business credit card can help cover immediate or ad hoc expenses. With credit limits typically extending to $50,000, they can be a good way to access funds, fast. Some cards might also earn you points for your business’s spending that you can redeem on a wide range of gift cards, merchandise and flights.

However, if you’re looking for a permanent solution to help manage cash flow, a credit card is generally not the best option. Rates on business credit cards are generally higher than other financing options – which means you could end up paying a lot more in interest. Credit cards typically have annual, cash advance and late payment fees, so make sure you factor that in when deciding which finance option to use.

Business overdraft

Another way to cover unexpected expenses is through a business overdraft facility. This is linked to your business transaction account, allowing you to access extra funds (up to your approved limit) when your account balance reaches zero.

You’ll have to pay interest when your account drops below zero. Overdrafts typically involve an establishment fee, and a line fee charged on the full limit (even if you don’t use it).

Business loan

A business loan can be an appropriate option if you’re looking to grow your business, buy commercial property, or acquire a new business. Your loan is delivered in a lump sum, and you can typically tailor your repayment frequency (monthly or quarterly) to suit your cash flow.

You will generally need to provide security for your loan, and have the choice of a fixed or variable rate.

Business loans also have fees to be aware of, including establishment, monthly service and exit fees. With a fixed interest loan, if you pay it out early, you may be subject to an early repayment adjustment and administration fee.

Asset finance

If you’re looking for finance to fund a business vehicle or equipment, asset finance can be a good option. The loan is secured against the asset you buy – enabling you to pay off the vehicle or equipment while using it to generate revenue.

Depending on the asset financing product you choose, you may own the financed vehicle or equipment at the end of the term, or have the option to buy it out for an additional cost.

Invoice financing

CommBank now offers business financing through its Stream Working Capital facility. Acting like a secured overdraft, Stream Working Capital lets you tap into the value of your unpaid invoices – while you’re waiting for them to be paid. This could be a good way to both manage day-to-day cash flow needs, and/or grow your business, as the amount of capital available is linked to the amount of your unpaid invoices.

Stream Working Capital connects directly into your accounting software, providing a direct link to invoices in your system. You can then adjust the amount of credit you can access by nominating which customers’ invoices to use as a security.

Importantly, you only pay interest on the funds you use and the amount available to borrow scales up or down with the number of unpaid invoices coming into the business.*

With no complex fee structure, when it comes to working out how to manage cash flow effectively, Stream Working Capital’s flexibility may be suitable for both your business's short and longer term cash flow needs.*

Flexible business financing solutions

CommBank offers a range of business financing solutions, from overdraft facilities, asset financing, business loans and credit cards, to flexible invoice financing via Stream Working Capital. 

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Things you should know

  • This article is intended to provide general information of an educational nature only and is prepared without taking into account your individual and/or business needs and objectives. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on this, consider the appropriateness to your circumstances. Examples used in this article are for illustrative purposes only.

    Credit provided by the Commonwealth Bank of Australia. These products are only available to approved business customers and for business purposes only. Applications for finance are subject to the Bank’s eligibility and suitability criteria and normal credit approval processes. View our current Terms and Conditions for Credit CardsBusiness Finance and Asset Finance and consider them before making any decision about these products. Fees and charges apply.

    *For Stream Working Capital, the minimum value of nominated invoices is $15,000 per month. A minimum facility limit of $50,000 or more applies to Stream Working Capital. We will require your consent to access your accounting software to assess your application and manage your account going forward. Full terms and conditions, interest rate, establishment fee and line fee are included in the Loan Offer, you should consider these before making any decisions about these products. Bank fees and charges may apply. To use Stream Working Capital you'll need to open or switch to a Stream Working Capital Transaction Account if your application is approved. Fees and charges for this account are in addition to those associated with any existing business transaction product. For the Stream Working Capital Transaction Account view our CommBank Business Savings and Transaction Accounts Terms and Conditions, Financial Services Guide (PDF), the Electronic Banking Terms and Conditions (PDF) and the Target Market Determination, you should consider these before making any decisions about these products. Bank fees and charges may apply. View our current interest rates.

    Commonwealth Bank of Australia ABN 48 123 123 124 and Australian credit licence 234945.