Almost every company encounters financial problems at some point during the lifespan of the business. In fact, over 60% of small business owners regularly struggle with cash flow issues.

If you’re experiencing a cash flow crisis and you don’t have a rainy day fund, you’ll need emergency funding to help you get your business back on track.

In this guide, we’ll take a look at the types of emergency business loans and financing options available in Australia. You’ll learn the pros and cons of each so you can choose the right solution for your needs.

5 Ways to Finance Your Business During an Emergency

1. Business Credit Card

A business credit card can be a good short term funding solution to help you cover emergency costs. You can avoid any upfront expenses and spread payments over a more extended period.

If your credit score has taken a hit due to a financial crisis, a business credit card can also be an effective way to rebuild your score. Keeping on top of your monthly repayments and clearing your debt will increase your credit score and make your business more attractive to lenders.

However, credit cards typically have high interest rates. If you cannot clear your balance in full each month, it’s easy to slip into a spiral of debt. As interest mounts up, repayments become more and more expensive. Many credit cards are also subject to additional fees that can add to your debt.

Credit card applications are faster than an emergency business loan, but they take longer than other types of emergency business financing.


Flexible – You can use the credit card as and when you need it.
Improve Your Credit Rating – Credit cards can be a good way to build up your credit score.


Expensive – Credit cards are usually subject to high interest rates.
Easy To Fall Into Debt – Charges and interest can quickly mount up if you don’t clear your balance each month.

2. Invoice Finance

Invoice Finance is the fastest way to access emergency funding if your business sells to other businesses on net terms. Invoice Finance is a type of cash flow financing that enables you to use your outstanding sales invoices as collateral to secure funding.

The finance company will provide up to 95% of the invoice value upfront as a cash advance. When your customer pays the invoice, the finance company transfers the remaining balance to your bank account, less fees.

For example, let’s say you have outstanding invoices totalling $20,000. Rather than waiting 30+ days for your customers to pay, you submit the invoices to the finance company and receive up to $19,000 upfront as a cash advance. Then, when your customers pay, the finance company transfers the remaining $1,000, less fees.

Invoice Finance can be an effective way to ease the pressure of late-paying customers and extended payment terms. According to the Australian Small Business and Family Enterprise Ombudsman, average payment times have doubled due to the impact of the Covid-19 pandemic:


Fast Funding – Invoice Finance is one of the quickest ways to raise capital.
No Long Term Debt – By releasing capital tied up in your invoices, you don’t need to take on any new debt.


Reduced Profit – The finance company will charge a fee that reduces your profit margin on each sales invoice you choose to fund.
Limited by Invoice Value – You can only access funding up to the value of your outstanding invoices.

Find out more about this type of financing and a more detailed breakdown of the pros and cons by checking out our guide What is Invoice Finance?.

3. Merchant Cash Advance

A merchant cash advance is another type of cash flow financing that allows you to secure funding based on your expected earnings. Rather than using outstanding invoices, the finance company uses the expected value of card sales to provide a cash advance to your business.

You receive a lump sum upfront and repay the amount owed plus interest through a percentage of your future card sales. The funding provider will look at your historical card sales revenue to determine how much you can borrow.

Along with Invoice Finance, a merchant cash advance is one of the fastest ways to raise emergency funding. However, merchant cash advances typically involve high interest rates.

If you need working capital fast and don’t qualify for Invoice Finance, a merchant cash advance can be a good option. If time isn’t a pressing issue, other emergency financing solutions can provide more affordable funding.


Fast Funding – Like Invoice Finance, this is one of the fastest ways to raise capital.
No Fixed Monthly Repayments – The amount you repay monthly is determined by the volume of card sales you process.


High Interest – Merchant cash advances are one of the most expensive emergency funding options.
Can Hurt Long-Term Cash Flow – With a percentage of your card payments deducted every day, a merchant cash advance can later cause more cash flow problems.

For more information on this type of financing, read our guide, The Pros and Cons of a Merchant Cash Advance.

4. Business Line of Credit

A line of credit works in a similar way to a business credit card. You can use the credit facility when you need it and only pay interest on the amount you have drawn down. As you make repayments, the amount of credit you can access increases again. Some lines of credit are subject to monthly facility fees.

This type of emergency business finance can help you get through a cash flow crisis. The rates of interest are generally cheaper than a business credit card. However, the application process for a line of credit can take time. You’ll need to have a good credit score and trading history to qualify, and many lenders also require real estate collateral.

An alternative solution is to combine Invoice Finance with a line of credit. Here at ScotPac, we provide Invoice Finance solutions linked to a flexible revolving line of credit with no property security required.


Flexible – You can use the facility when you need to cover unexpected costs and emergencies
Only Pay Interest on What You Use – Interest is only charged on the amount of credit you have drawn down.


Long Application Process – It can take several weeks for a line of credit to be approved and made available.
Hard To Qualify For – This type of emergency business finance is usually only available to businesses with a long trading history and strong credit score.

5. Asset Finance

The best way to quickly raise emergency funds for many companies is to release capital from within the business rather than taking on new debt. You can use high-value assets your business owns, such as machinery, vehicles, and equipment, to secure immediate funding.

Asset Finance, or asset refinancing, is a way to release capital tied up in the assets your business already owns. When you apply for Asset Finance, the funding provider will inspect the asset you want to refinance and provide a valuation. This valuation is used to determine how much you can receive as a cash advance.

Once you have received the advance, the ownership of the asset is temporarily transferred to the funding provider. You can still use the asset while it is financed. When you have repaid the advance and interest, ownership of the asset is transferred back to your business.

Read our Client Story to see how Asset Finance helped Australian food icon SPC unlock trapped value and fund new growth.


Unlock Value in Your Business – Asset Finance enables you to raise capital from within your business rather than taking on new debt.
Keep Using the Asset – Get immediate funding while still being able to use the asset.


Long Application Process – A surveyor will need to value your asset before it can be used to access funding.
Risk of Losing the Asset – If you fail to make repayments, you could risk losing the asset.

Why Small Business Loans Aren’t Suitable For Emergency Business Finance

While business loans are the first option many business owners think of when they need emergency funding, this type of financing is not suitable when you need fast access to capital.

The application process for a business loan can take up to several weeks or months. In an emergency, the extended approval process means bank loans are not practical. Traditional lenders typically also require some form of real estate collateral. If you don’t own your home or don’t want to risk losing it, emergency business loans are not an option.

How to Speed Up the Emergency Business Finance Application Process

Time is a pressing issue during a financial emergency. If you need to secure funding quickly, making sure your accounts and financial statements are up to date can help to speed up the process.

Most emergency business loan lenders will want to see accurate details of your current trading history and review your financial statements. For Invoice Finance, the funding provider will also need to review the payment history of your customers.

Keeping your records up to date makes it easier for lenders to evaluate your business and quickly put a funding facility in place.