Key takeaways
- Prepaid interest can mean no scheduled payments for up to six months on eligible facilities, but interest is not waived and it affects total cost and net proceeds.
- Compare the net cash received after fees and prepaid interest, not only the headline loan amount.
- Short terms make the exit (sale, refinance or incoming business funds) central to the facility.
- Enquiring and the initial assessment do not involve a credit check, and past credit issues are weighed against the whole scenario.
What does "no scheduled repayments" actually mean?
It means interest for an initial period is paid up front from the loan, so no scheduled payments fall due during that period. For eligible facilities, up to six months of interest may be prepaid into the loan. You can read more about this structure on the page for business loans with no scheduled repayments for up to six months.
The key point is that interest is not waived. It is paid early rather than removed, and it affects total cost and net proceeds. Whether a facility is eligible for prepaid interest depends on the lender's policy and the facility itself.
How does prepaid interest change the cash you receive?
Prepaid interest and fees come out of the facility, so the cash that reaches your account is lower than the headline loan amount. Interest is not waived, and it affects total cost and net proceeds.
A useful habit is to compare the net cash received after fees and prepaid interest, and to ask for the total repayable. Two facilities with the same headline amount can leave a business with quite different usable funds.
No interest rate or rate range is published here, so ask the lender for current figures in writing before deciding anything.
How does a facility like this work, step by step?
The process below is a general outline based on how Equity Tap describes its facilities. Details depend on the lender's current policy.
- Business purpose is identified. The facility is for business purposes and is secured by property.
- Security is considered. Residential or commercial real estate may be considered as security.
- The lender assesses the scenario. Credit history is considered in the context of the whole scenario.
- Prepaid interest is set up, if eligible. Up to six months of interest may be paid into the loan, which is why no scheduled payments fall due in that period. Interest is not waived and affects total cost and net proceeds.
- The exit is carried out. Exits include sale, refinance or incoming business funds.
What type of facility does this apply to?
This structure applies to business-purpose, property-secured facilities from $50,000 to $5 million, over one to twelve months. It is a short-term product, not a long-term loan.
Borrowers can include micro businesses, sole traders and larger Australian companies. Equity Tap is a direct private lender that has lent its own money since 2022, Australia wide. For related reading, see secured business loans.
For wider background on borrowing, Moneysmart and business.gov.au publish general information on business loans and funding options.
Why does the exit plan matter?
Because terms are short, from one to twelve months, the exit is central to how the facility works. Exits include sale, refinance or incoming business funds.
Ask what happens if the exit slips, and what that could mean for the total repayable. A sale that takes longer than expected or a refinance that is delayed can change the overall cost. This is general information, not personal advice, so it is worth testing any plan against delays before going further.
Do credit checks and past issues rule you out, and how long can settlement take?
Enquiring does not involve a credit check, and neither does the initial assessment. Past defaults, arrears or a low credit score are considered in the context of the whole scenario. They are not treated as an automatic yes or no.
Eligible, straightforward loans may settle in as little as 24 hours after approval, documents and final checks. That describes an eligible scenario only. It is not a promise of an outcome or a settlement time, and every application depends on the lender's assessment.
Who can this suit, and when is it not the answer?
In general terms, a short property-secured facility with prepaid interest may suit a business that has a clear exit and equity in property. It is general information, not a recommendation.
It may not be the answer when there is no realistic exit, or when the cost of prepaid interest and fees would leave too little net cash for the purpose. A business that can comfortably meet regular payments may also find other structures worth looking at. business.gov.au offers general information on finance and funding options. If tax is a factor, the ATO publishes business guidance.
What should you compare before proceeding?
| What to check | Why it matters |
|---|---|
| Net cash received after fees and prepaid interest | The amount you can actually use may be lower than the headline amount |
| Total repayable | Shows the full cost, because interest is not waived |
| Exit plan and delay risk | Sale, refinance or incoming funds drive repayment on short terms |
| Prepaid interest period and eligibility | Up to six months may apply, but only on eligible facilities |
What questions should you ask before you start?
- What is the net cash received after fees and prepaid interest?
- What is the total repayable?
- What happens if the exit slips?
- How long does any prepaid interest period last, and is the facility eligible?
You can also check a lender's credit licence details using ASIC's credit licensee resources. Consider tax implications with the ATO or a professional adviser.
What is the next step?
If you would like to see whether your scenario fits, you can start your application and ask about the points above. Have details of the property, the purpose of the funds and your intended exit ready, and starting takes only a few minutes. Eligibility depends on the lender's assessment.
No obligation. Eligibility is subject to assessment.
This is general information only and does not take into account your objectives, financial situation or needs. All applications are subject to lending criteria, assessment and approval. Fees and charges may apply.
Frequently asked questions
Does a business loan with no scheduled repayments mean I don't pay interest?
How does prepaid interest affect the amount I actually receive?
Can I get a business loan with no scheduled repayments if I have a low credit score or past defaults?
What happens if my sale or refinance takes longer than planned?
How quickly can a property-secured business loan settle?
General information only, not legal, tax or financial advice.