Unsecured Overdraft

Key Takeaways of Taking Out a Business Line of Credit Key Point Description How Does a Business Line of Credit Work? A business line of credit loan offers SMEs flexible access to a predetermined amount. They can withdraw funds as needed without having to seek approval each time. Why Taking Out a Business Line of Credit Could Be a Wise Choice Good reasons to take out a business line of credit include effective cash flow management, readiness for business growth opportunities & flexibility in usage. Moreover, it offers SMEs access to readily available funds without using business property as security. Let Our Team of Lending Experts Assist You If you’re considering a business line of credit or exploring other financing options, darkhorsefinancial.com.au is here to assist you. Small and medium-sized enterprises (SMEs), particularly in construction, manufacturing, and B2B sectors, require flexible financial solutions to maintain or even expand their operations. A business overdraft or line of credit offers this flexibility, acting as a revolving credit facility that meets your company’s different needs. Today, let’s explore five reasons to take out a business line of credit for your growing Australian company. What Is a Business Line of Credit & How Does It Work? A business line of credit offers SMEs flexible access to credit up to a predetermined amount. You can withdraw funds as needed without having to seek approval each time.  Say your manufacturing firm is approved for a $250,000 line of credit, and you use $20,000 to purchase goods. You only have to pay interest on the $20,000 used. The remaining $230,000 will still be available for your firm to borrow. Benefits of a Business Line of Credit 1. Effective Cash Flow Management Effective cash flow management is a common challenge for businesses, particularly those with irregular income patterns. A business line of credit directly addresses this issue by providing a financial cushion during periods of reduced cash flow, such as offseasons or late payments from customers. It allows businesses to access funds as needed, ensuring they can cover essential expenses like payroll and supplier bills. This financial flexibility is especially valuable in manufacturing, construction and other industries where project timelines and payment schedules vary. A business line of credit ensures continuous operations, helping SMEs avoid project delays or other issues often rooted in cash flow shortages. 2. Readiness for Growth Opportunities Opportunities for business growth can arise suddenly, and the ability to capitalise on them can set a firm apart. A business line of credit provides immediate access to funds, allowing companies to quickly take advantage of opportunities, such as bulk purchase discounts, expanding to new markets, or new technology investments. In the B2B sector, where large contracts and rapid scaling are common, a line of credit can help support growth. It enables companies to respond promptly to market demands, take on new projects, or scale operations without being held back by limited cash flow. 3. Emergency Fund for Unforeseen Circumstances A business line of credit can act as a buffer for unexpected financial needs. In business, where unpredictability is the only constant, having quick access to funds can mean smoothly handling a sudden challenge, like urgent repair needs or a sudden drop in revenue. This readily available fund can be especially useful for those with tight operating margins or for any company needing a lifeline during critical moments. 4. Flexibility in Usage and Repayment The flexibility of a small business line of credit is one of its key advantages. Unlike loans designed for specific purposes, a line of credit can be used for various business activities, such as purchasing goods or managing cash flow gaps.  With such flexibility, business owners can make decisions based on immediate needs without being limited by strict loan conditions. Moreover, a line of credit’s repayment terms are generally more adaptable than traditional loans. Companies can repay quickly to minimise interest or make smaller payments during financially tight times. 5. No Assets Needed to Be Pledged with Unsecured Options Unsecured business lines of credit can be indispensable for those hesitant to tie their assets to a loan. These are particularly appealing for startups and smaller enterprises that might lack substantial assets but still require funding. Learn more from one of our case studies: Overdraft Line of Credit Without Property Security. An unsecured overdraft or business line of credit can be sourced with a low-doc application for limits up to $500,000. Let Our Team of Lending Experts Assist You If you’re considering a business line of credit or exploring other financing options, our team is here to assist. We can guide you through the options and help you choose a solution that aligns with your business goals and financial situation.  Get in touch with us today to explore how we can support your business’s growth and success. You can start by requesting a quote online. Contact Us Here

Every business needs additional cash from time to time so it can grow and stay on top of various expenses.  If you find yourself feeling stressed about bills or if you need a cash injection to pay for materials or stock, a business overdraft could be the answer. Also known as a line of credit, this is a fast and easy cash flow solution for businesses of all sizes.  Right now, there are a range of flexible options for secured or unsecured business overdraft facilities. Take a look at the multiple benefits of using a business line of credit this way.  Why have a business overdraft? There are a number of reasons why a business may require an overdraft facility. You may be experiencing:  Almost every type of business can benefit from an overdraft, especially those in construction, transport, retail, labour hire and hospitality.  Your overdraft is designed to be a short-term solution — for example, a construction business may use its overdraft facility to place an order for building supplies after signing a contract with a client. The owner will know they have the money coming so it’s not a risky move to dip into additional funds.  These days, this small business line of credit solution is largely ‘industry agnostic’. With some very niche exceptions, most businesses that apply for an overdraft are assessed on merit, not industry.  The other good news about a business overdraft is that it’s now possible to complete an application in minutes and have access to your line of credit within 24 hours. If your cash flow is causing frustration, this straightforward process to secure a business overdraft can come in handy.  How does a business overdraft compare to a business loan or business credit card?  Many businesses come to us because they are confused about their options when it comes to accessing additional funds. Here’s a quick breakdown of how an overdraft differs from a loan or a credit card:  See more: Secured & unsecured business loans. Unsecured vs secured overdraft When you have an unsecured business overdraft, you’re not ‘borrowing’ against any assets such as vehicles, property or equipment. This arrangement can be helpful for businesses and companies that need to pay for materials and equipment before starting a job.  In the past, opportunities for unsecured overdrafts were limited but flexibility around this option has increased in recent years.  Access a market-leading business overdraft solution Each client we work with is different and applications are reviewed on a case-by-case basis but at darkhorsefinancial.com.au we offer a highly competitive overdraft solution.  This product:  Offering a genuine revolving line of credit with a 5-year term, this product is the closest option to a major bank overdraft but our clients prefer it because the application process is lightning-fast and doesn’t require endless amounts of documents and income evidence.  Businesses can apply for this overdraft if they have previously been declined by a bank and also have the option to increase their limit as business turnover expands.  Client case study Our client ‘A/B Construction Products’ (name is withheld for privacy reasons) recently came to us seeking $300k in an unsecured business overdraft with no financials, no line fees, no establishment fees and no history of positive responses from lenders. A business supplying products to the construction industry, the client was experiencing long waits for accounts to be reconciled. Although its financial position was strong, it wanted to secure a line of credit as insurance.  Our recommended unsecured overdraft solution was a perfect fit as there were no charges to establish the revolving line of credit and interest is only charged on funds drawn. An application was placed and the overdraft facility was established in 48 hours. The client made a smart move by applying for a business line of credit before the need for it actually arose. This is because credit is generally cheaper to secure when the need is not urgent.  Business overdraft FAQ Take a look at some commonly asked questions about arranging a business overdraft:  What is a revolving line of credit? Also referred to as an overdraft, this term describes the ability to draw against a set limit of funds and then repay and redraw endlessly up to the pre-approved limit. Do I lose access to my business overdraft if I don’t use it? Your overdraft is there when you need it and there is no expectation to draw down on it each month. It will not be withdrawn if you don’t use it, but talk to us about the ongoing fees involved to make sure the arrangement will align with your budget.  Is there a minimum usage or dollar amount that has to go through my business overdraft each year? There is no minimum amount of use for most business overdrafts. If you’re seeking an overdraft as an insurance policy in case you need it in the future, we recommend choosing an option with the lowest fees to minimise costs until your line of credit is required. What can I use funds from my overdraft for? The items you purchase with your overdraft are not limited to any specific goods or services. You can spend money to pay staff, buy materials, settle outstanding accounts or pay your tax bill.  What happens if I pay off the balance of my overdraft? If you clear your overdraft balance down to $0, your full credit limit will be available for when you next need it.  For some overdrafts, you could be charged a line fee which will be a percentage of the limit. For this reason, it’s important to consider how much you intend to use your overdraft and what fees are payable along with interest to understand which is the best solution for your business.  Can I qualify for a bank overdraft and an unsecured overdraft?  It is possible to have a bank overdraft and an unsecured overdraft.  Non-bank solutions often don’t require financials as part of the application process, can be

If you’re still using your branch as your go to point for your business lending, apart from missing out when things turn tough, you’ll also be missing out on the advantages from lender competition for business from small to medium business owners. What business owners don’t immediately realise is that this can also save them thousands on their home loan. A good example of this is a product that’s known to every business owner, the business overdraft.  Traditionally a business overdraft is tied to the family home. It’s a way that a major lender also ensures home loan loyalty from a customer (most home loan lenders outside of the big four don’t offer overdraft facilities). Rather than receiving discounted rates for having more than one loan with a lender, business owners will usually find themselves the victim of what we call “rate creep.” Over time and at regular intervals the business owner might not recognise their rates going up on a regular basis, even if the rest of the lending market is trending down. A good example of this was a Transport expert business we saw recently with home and investment rates above 4.5%, when appropriate alternatives have rates in the low 3s. With $1M of lending set at a rate that’s nearly 2% higher than it should be, that’s a big handicap to your outcome and to your ability to build wealth. A solution to this is a ‘no property’ overdraft. Typically those without property can easily obtain an overdraft over $50,000 simply by having a lender assessing 6 months of bank statements – last week we secured a $60,000 overdraft limit for a residential builder without any financials whatsoever. If you are a property owner, lenders will score and regard you higher than a non property and will be prepared to offer an overdraft limit much higher amounts.  With an overdraft that is no longer tied to your family home, it then allows you the freedom to look for a much cheaper home loan rate. With the best home loan rates now starting with a 2 on the front of them, that’s a big deal.  In addition to much cheaper home loan rates, lenders outside of the big 4 are offering cash out up to $1M against equity held in residential assets. This provides the opportunity for business owners to invest back into their businesses with access to a large amount of capital to drive growth and take advantedge of their business opportunities.  Much better than being handcuffed to your current overdraft bank, isn’t it?

Overdrafts are a staple for small business owners in Australia, providing a cash flow solution with money available when they need it. The big 4 love them too. With high interest rates, the family home as security, line fees and small limits it makes the overdraft a low risk, high profit product for the banks. There is an alternative for many small businesses though and that’s debtor finance – also known as invoice financing or factoring. Debtor finance is well known and used in the US and European markets but less so here in Australia. In the past debtor finance was presented by banks as a product for cash strapped businesses and as a result it’s had some stigma that’s just not justified. With a debtor finance facility a business can raise an invoice based on an order and receive up to 80% of the invoice value straight away. This money can be used to pay for materials, supplies, labour or other costs that go towards providing their solution until their customer pays. If a business is on 60, 90 or even 180 day terms (if you supply a supermarket in this country I feel your pain) this kind of cash flow solution can allow for growth, expansion and solve a lot of problems that could occur while a small business waits to get paid. Rates are generally well below the overdraft rates that banks charge and all without needing property for security.