Plain-English definitions of the terms lenders and brokers use - written and maintained by a licensed finance broker. Free to cite with attribution.
Written and reviewed by John Pierre Saliba, Director and Senior Finance Broker, MFAA Accredited. Last reviewed 18 September 2026.
Definitions maintained under our editorial standards.
A revolving line of credit attached to a business, letting it draw funds up to an approved limit, repay as cash comes in, and draw again without reapplying. Interest is charged only on the drawn balance; a line fee applies to the limit. In Australia, non-bank overdrafts under $150,000 are typically unsecured and assessed on bank statements.
A revolving credit facility functionally equivalent to a business overdraft: an approved limit you draw against and repay, with interest only on the drawn balance. Banks tend to say "overdraft"; non-bank lenders tend to say "line of credit". The mechanics are the same.
The portion of an overdraft or line of credit you have actually used. Interest is calculated on the drawn balance only - a $100,000 facility with $30,000 drawn accrues interest on $30,000.
A fee charged on the full approved limit of a facility whether you draw it or not - typically 0.5% to 2% p.a. in the Australian non-bank market. It is the price of having the money on standby, and the only ongoing cost of an undrawn overdraft.
A one-off setup fee charged when a facility is first put in place. Some lenders waive it; others charge a flat amount or a percentage of the limit.
Finance approved without property or other assets pledged as collateral. In Australia, unsecured business overdrafts are standard under $150,000, assessed on business cash flow through bank statements.
Finance backed by collateral - usually property or a general security agreement. Security buys a lower rate and higher limits at the cost of slower approval, heavier documentation and the asset being at risk.
A charge a lender registers over all of a company's present and future assets, rather than one specific asset. Common on larger bank facilities; registered on the Personal Property Securities Register (PPSR).
The interest the ATO charges on unpaid tax debts, set quarterly. The GIC is 11.43% p.a. for the July to September 2026 quarter, and since 1 July 2025 it is no longer tax deductible - unlike interest on commercial business finance used for business purposes.
An ATO notice that can make a company director personally liable for unpaid PAYG withholding, GST and superannuation guarantee amounts. A non-lockdown DPN gives 21 days to act; a lockdown DPN attaches personal liability immediately.
The Australian rule, live since 1 July 2026, requiring employers to pay superannuation at the same time as wages rather than quarterly - removing the quarterly cash flow buffer businesses previously relied on.
Any credit facility where repaid funds become available to draw again without a new application - overdrafts, lines of credit and credit cards are all revolving. Repay-and-redraw operates within the lender's minimum repayment terms.
A staged invoice submitted during a construction or services contract for work completed to date. The gap between paying crews weekly and progress claims paying 30+ days later is the classic construction cash flow squeeze.
A personal promise by a company director to repay the company's debt if the company cannot. Standard on most unsecured business finance in Australia - "unsecured" refers to assets, not to the absence of a guarantee.
Assessment based on 6 months of business bank statements instead of tax returns and financial statements. The standard non-bank method for facilities under $150,000. "Low doc" means reduced paperwork - genuine "no doc" finance does not exist from legitimate lenders.
Australia's most widely used credit score, ranging up to 1200. Non-bank business lenders generally look for 550 or above; revenue consistency and bank statement health usually carry more weight than the score alone.
The record left on a credit file each time a formal finance application is made. Multiple enquiries in a short window lower the score and signal distress - the reason brokers submit one application to one matched lender.
The cash a business needs for day-to-day operations - wages, stock, rent and suppliers - as distinct from capital for long-term assets. Working capital finance bridges the gap between paying costs and getting paid.
A lump sum borrowed and repaid on a fixed schedule over a set term - for business loans in Australia, typically 3 to 36 months. No redraw: once repaid, the facility ends.
Drawing again on a revolving facility after repaying part of the balance. On a $100,000 overdraft with $60,000 repaid, the $60,000 is available again without a new application.
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