Small Business Line of Credit: Eligibility, Limits and How to Apply

A small business line of credit gives Australian SMEs revolving access to working capital, typically from $5,000 to $500,000 unsecured. Most non-bank lenders require at least 9 to 12 months of trading history, a minimum monthly turnover of $12,000, and an Equifax score of 550 or above. Interest starts from around 8% p.a., but the total cost includes line fees and establishment charges that most comparison sites leave out.

Who qualifies for a small business line of credit

Eligibility thresholds vary by lender, but the table below covers what most non-bank and bank lenders require in 2026. Meeting these minimums does not guarantee approval, but falling short on any one usually means a decline or a request for additional security.

A lower credit score does not automatically disqualify you. Some non-bank lenders approve applicants with scores below 550, but the limit will be smaller and the rate higher. Outstanding ATO debt is a harder obstacle. Most lenders will not begin assessing until tax compliance is resolved.

How much can you access

Your approved limit depends on your monthly revenue, not just what you apply for. Most non-bank lenders calculate limits as a multiple of your average monthly sales.

The general formula: 0.75x to 1.5x your average monthly turnover, up to a maximum of $500,000 unsecured. A business turning over $40,000 per month could expect an initial limit between $30,000 and $60,000. A business at $100,000 per month could access $75,000 to $150,000.

Limits often start at the lower end of that range and increase after 6 to 12 months of clean repayment. This step-up approach is standard. Lenders want to see how you manage the facility before extending more. If your business needs more than $500,000, secured options backed by property can extend limits significantly, but most SMEs sit within the unsecured range.

What a small business line of credit actually costs

Interest rate is only one part of the total cost. A business line of credit has three cost components, and comparing on rate alone can be misleading.

Interest

Charged daily on the drawn balance only. If you have a $100,000 limit and draw $40,000, you pay interest on $40,000. Non-bank rates in 2026 typically range from 8% to 18% p.a., depending on your risk profile, trading history, and whether the facility is secured. Bank rates start lower, from around 6% to 10% p.a., but are harder to qualify for.

Line fee (facility fee)

Charged on the total approved limit, whether you use it or not. This is the cost of having the facility available on standby. Line fees typically range from 0.5% to 2% p.a. On a $100,000 limit, that is $500 to $2,000 per year regardless of usage.

Establishment fee

A one-off setup charge when the facility is first approved. Non-bank establishment fees range from $495 to $995. Some lenders waive this entirely, particularly for larger facilities or repeat customers.

Total cost of ownership: what you actually pay

The table below shows the total annual cost of a $100,000 line of credit at 12% p.a. interest, with a 1.5% line fee and $750 establishment fee, across four usage levels.

At 25% average utilisation, the line fee and establishment charge make up almost half the total first-year cost. This matters because many businesses use a line of credit as a safety net, drawing only when needed. If you expect low utilisation, compare the line fee carefully. A lower interest rate with a higher line fee can cost more than a higher rate with no line fee.

Secured vs unsecured: which to choose

An unsecured line of credit is assessed on cash flow and director credit. No property required. Approval can take as little as 24 hours with a non-bank lender. The trade-off is a higher interest rate (typically 8% to 18% p.a.) and a lower maximum limit (usually $500,000).

A secured line of credit uses property (commercial or residential) as collateral. This lowers the lender's risk, which means a lower interest rate (from around 6% p.a.) and potentially higher limits. The trade-off is a longer approval process (2 to 6 weeks), valuation costs, and the fact that your property is at risk if you default.

For most small businesses needing $50,000 to $200,000 in revolving working capital, an unsecured facility is the practical choice. The speed, simplicity, and lack of property risk outweigh the higher rate. If you need $500,000 or more on an ongoing basis, secured pricing makes the cost difference significant enough to justify the longer setup.

How to apply: step by step

1. Check your position

Before you apply, confirm your BAS is lodged and up to date, check your Equifax credit score (available free from Equifax directly), and make sure your business bank account shows at least 9 to 12 months of trading history. Clear any outstanding ATO obligations or get a payment plan in place.

2. Gather your documents

Most non-bank lenders need six months of business bank statements (digital bank feed access is increasingly standard), photo ID for all directors, your ABN and GST registration details, and a brief description of how you plan to use the facility.

3. Compare options

Look beyond the headline interest rate. Compare total cost including line fees and establishment charges. Check whether the facility has a fixed term or renews automatically, whether there are early repayment penalties, and what the step-up process looks like for increasing your limit after the initial period.

4. Apply and settle

Non-bank lenders can provide approval in as little as 24 hours, with funds available the same day or next business day. Bank applications typically take 2 to 4 weeks. Once approved, your limit is available to draw immediately. Most facilities are revolving, meaning repaid funds become available again without reapplying.

Subject to lender approval, terms, and conditions apply. Rates, fees, and limits vary by lender, applicant profile, and security offered.

This article is general information only and is not financial advice.