Business owners should work with an advisor to determine the right kind of business finance for them, according to business.gov.au.
Line of credit
A line of credit is an amount of finance that is usually secured against property owned by the business owner. This type of loan is particularly flexible and the interest rates are low due to the collateral. On the flipside, business owners can lose their home if they fail to keep up with repayments.
Fully drawn advance
This type of advance gives business owners cash up front to invest in new equipment or other investment that boosts the capacity of the business. Unlike a line of credit, it is not used for short term cash flow.
The interest rate is usually fixed and the loan is often secured against the business owner’s property.
An overdraft is tied to a business account and provides working capital prior to income being received. Overdrafts can be either secured or unsecured.