For Australian small and medium-sized enterprises (SMEs) fluctuating cash flow presents an ongoing issue.

No collateral business finance allows SME owners to access funding without the need for property security. Which means, for many business owners that lack the property assets required as collateral, they can still access the business finance they need to succeed.

ScotPac’s business line of credit offers flexible, funding to help you manage your cash flow and ensure access to working capital when you need it most.

Explore how a line of credit can help fuel your business’s growth

Is property security required for SME business funding in Australia?

The short answer is no.

In the past, traditional banks have required property-secured loans as a condition for business lending. But non-bank lenders, like us here at ScotPac now offer SME funding facilities that don’t require any personal property to be put up as security.

This alleviates one of the biggest concerns for business owners needing business finance.

What criteria is used for business finance when no property is required?

A finance facility without property security means your approval is based on your business’s performance, rather than leveraged against property assets.

In other words, if your business has strong enough cash flow, regardless of your personal asset position, you may be eligible for non-collateral business finance. Lenders may look at the following metrics to determine your cash flow:

  • Operating Cash Flow Ratio
  • Cash Flow to Debt Ratio
  • Cash Conversion Cycle
  • Debt-to-Income Ratio
  • Free Cash Flow
  • Cash Flow Margin
  • Working Capital

Speak to a ScotPac lending specialist to find out more about these metrics.

What types of business finance facilities don’t require property security?

Business line of credit 

A business line of credit provides revolving access to a set limit of funds. Access is generally based on your business turnover and credit strength.

Invoice Finance 

This form of funding is secured by your customer invoices rather than your property.

Trade Finance 

With this finance facility, you enjoy greater purchasing power secured by your purchase orders and receivables.

What is a business line of credit and how does it work for Australian SMEs?

For SMEs and start-ups in Australia, a line of credit is often a great choice of no-collateral business finance.

By avoiding the need for property security, business owners can protect their personal assets without compromising ability to scale operations or invest in market growth opportunities.

How does a business line of credit work?

A business line of credit gives business owners fast and easy access to funds up to a pre-approved limit.

You only pay for the funds you use (including interest). This is unlike a fixed-term loan where you receive and begin repaying the full amount.

With a business line of credit, the funds you pay back are available to be redrawn as required, much like a credit card.

Why is a business line of credit good for SMEs?

There are a number of reasons why a small or medium sized business would benefit from a line of credit finance facility.

  • Only one application is needed to access a set credit limit
  • You can access funds as you need and when you need it
  • You can re-draw funds once it has been repaid
  • Interest applies only on the amount drawn not the full credit limit
  • You can use the funds as required, to pay wages, supplier bills or invest in growth
  • It provides short-term flexibility
  • There are no locked-in long-term repayments
  • There is no property required for this business finance

To find out more about how a line of credit can be used to free up your business’s cash flow, give ScotPac a call today.

Why choose a business line of credit over other business finance?

When it comes to a business line of credit vs traditional overdraft facility or Invoice Finance Facility, you can think of the line of credit as more of a financial safety net.

This safety net can alleviate the cash flow pressures experienced by many Australian businesses, whether due to seasonal fluctuations in sales, unpaid invoices from customers, or expansion activities.

A business line of credit provides flexible access to working capital whether you need to:

  • Cover operational expenses during slower months of the year.
  • Cover unexpectedly large expenditure needs
  • Pay suppliers for bulk discounts.
  • Pay suppliers for early-payment discounts
  • Meet payroll.
  • Fund activities before invoices from your customers are paid
  • Fund marketing or growth opportunities in the market.

What are the differences between a business line of credit and a traditional overdraft?

Security 

A line of credit is a form of business finance with no property required.

Bank overdrafts usually require property as collateral.

Approval time 

A business line of credit from ScotPac can take only days for approval and access.

Traditional bank overdraft facilities are significantly slower and can take weeks for approval.

Flexibility 

A business line of credit is a reusable and re-accessible facility.

A bank overdraft is usually linked to an existing business transaction account and thereby limited.

Access 

With ScotPac’s 24/7 online portal you can access the funds you need with a business line of credit whenever you need it.

A bank overdraft is often limited to account agreement and other bank-specific requirements.

Cost 

With a line of credit, you only pay for the funds you use.

A bank overdraft facility may apply monthly or annual fees regardless of use.

What are the differences between a business line of credit and Invoice Finance?

The truth is some SMEs in Australia confuse invoice finance and a line of credit facility. While both provide working capital, they do so in different ways.

Invoice Finance

With Invoice Finance, you can access otherwise locked up working capital due to unpaid invoices. The unpaid invoices stand in as collateral in place of property security.

This means it is great for businesses with long debtor cycles.

To explore Invoice Finance facilities with ScotPac, click here.

Line of Credit

A business line of credit provides ongoing and revolving access to funds independent of invoices as well as property collateral.

For some businesses, access to both business finance solutions can be useful. Invoice finance can help to speed up receivables and in-flow of cash, whilst a line of credit ensures a flexible cover of funding for short-term expenses.

Who can apply for a Business Line of Credit with ScotPac?

ScotPac supports and funds a wide range of Australian businesses.

If your business ticks the following boxes, you may be eligible for a business line of credit:

  • Are you 18 years of age or older?
  • Is your business registered in Australia?
  • Are you an Australian citizen?
  • Do you have at least 12 months of trading history?
  • Do you have consistent cash flow/revenue?

Ready to take the next step in exploring business finance with no property required?

Apply online with ScotPac today for fast funding to fuel your business’s growth!