Business Financing FAQs

1. How does business finance work?

Business finance is the loose term referring to how a company’s money is financed. This includes the processes and facilities used to access additional funds or raise funds. Future revenue forecasts, budgets, fund allocation and plans related to future working capital are all part of business finance. 

2. What is equity and debt?

Businesses looking to raise finance can do so through either equity or debt. In simplistic terms, equity revolves around raising funds by selling shares and/or other financial securities. Debt, on the other hand, involves borrowing money in the form of business loans and repaying that loan over time (with incurred interest).

3. Why is business finance important?

Having the right business finance plans in place ensures access to working capital. Without capital, businesses cannot operate and/or grow. The goal of business finance is to ensure the long term viability of a company and to provide value to its owners/shareholders.

4. How do you finance business purchases?

There are a few ways in which businesses can seek to finance a purchase or investment. 


Banks, credit units, lenders and other financial institutions may offer a loan to eligible businesses. Both secured and unsecured loans are available with varying interest rates and loan terms on offer. 


If a business has assets, including equipment, machinery or real estate, leasing these assets can help a business finance additional purchases.

Vendor Financing

Another way to finance a business purchase is through vendor financing. In other words, the vendor of the business that is being purchased brings with them financing options that help to seal the sale. 

External Investment

Venture capital and angel investment  are options for businesses at varying stages of growth. Investors provide capital in exchange for equity, which can be a good channel of working capital for new and growing businesses.

For larger companies, private equity firms can offer opportunities to raise capital, again in exchange for a share of the business’s ownership.


Governments, including the Australian government, offer a variety of grants to assist companies and industries to grow, invest and expand. There are eligibility criteria associated with all government grants, and application forms can be complex and difficult. 

5. What is a business loan?

A business loan is an agreement between the business (lendee) and a financial institution (lender) to borrow a set amount of money. This loan is repaid in installments over time, often with interest. It can be an important part of how a business’s finance works. 

6. What types of business loans are available?

The most common business loans in Australia for small to medium sized businesses looking to grow include:

  • Term loans
  • Lines of credit
  • Overdraft facilities
  • Equipment finance

7. How do I apply for a business loan?

Every financial institution and lender has their own business loan application process. Speak to the lender or bank you’re seeking a loan from to understand what business plan, financial statements and other documentation you may need for the process. 

8. What are the eligibility criteria for a business loan?

Once again, the eligibility criteria will vary from lender to lender and may even vary depending on the terms of the loan. In general, businesses will need to provide evidence regarding the age of the company itself, its revenue (including profit/loss), credit history (of both the business and the individuals applying for the loan) and some other general information.

For some loans, there may be a need to provide collateral to act as a financial security in case the loan is not repaid or a business defaults. 

9. What is the interest rate for a business loan in Australia?

The interest rate varies depending on a lot of factors, not the least of which are the terms of the business, the creditworthiness of the company applying, the market/economic conditions and the type of loan being applied for.

Interest rates can really range quite widely across providers starting from a few percent up to 30% plus!

10. What are the repayment terms for a business loan?

Most business loans’ repayment terms are between 6 months and 5 years. Like interest rates, however, this can range widely depending on the specifics of the loan agreement.

11. How long does it take to get a business loan?

It can normally take anywhere from 2 to 4 weeks to acquire a business loan from financial institutions in Australia. With ScotPac however–the largest non-bank lender across Australia –you can access working capital through our financial facilities in as little as 24 hours!

12. What is the maximum amount I can borrow for a business loan?

The amount a business can borrow will depend on the size of the business, its revenue, credit history and some other factors. Some business loans can be as much as $5 million, but you will need to seek professional, custom financial advice regarding the maximum amount your business can borrow. 

13. What are the fees associated with a business loan?

Most business loans are repaid with additional interest added on, but those aren’t the only fees associated with business loans.

Other fees can include:

  • Application fees.
  • Origination fees.
  • Processing fees.
  • Late payment fees.
  • Penalty fees.

14. What documents do I need to provide to apply for a business loan?

The bank, credit union or financial institution you’re seeking a business loan from will undoubtedly outline the exact documentation and evidence you will need to successfully obtain a loan. In general, it is a good idea to have all of your financial statements, ID documentation, business plans and tax returns ready to go from the outset to expedite the process. 

ScotPac – we have the answer to your business finance question!

Whether its simple businesses or complex corporations, ScotPac can assist any business with their corporate finance, growth and success needs. Our team provides the business fuel to propel your business sustainably in the future.

So, if you’d like to find out more about the breadth and depth of our financial facility capability or just have more questions about how business finance works and could work for you, contact your closest ScotPac office today.