Why repayments are the wrong thing to worry about in a crunch
When a business borrows because cash is tight, the last thing it needs is a new monthly repayment, or worse, a daily debit. Yet that is exactly what most lenders offer. A cash flow lender takes money out of your account every day or every week from day one. A bank wants principal and interest every month. The loan that was meant to ease the pressure ends up adding to it.
Equity Tap structures loans differently. Interest for up to the first six months can be prepaid or added to the loan, so there are no scheduled repayments in that period. Interest is not waived; it is simply dealt with up front or at the end, so your cash stays in the business when it matters most.
Two ways to have no scheduled repayments
1. Prepaid interest
With prepaid interest, the interest for an agreed period (up to six months) is calculated at the start and taken from the loan at settlement. The amount you receive in your account, the net advance, is the loan amount less that prepaid interest and any costs shown in your term sheet. You then have no scheduled interest payments for the prepaid period.
2. Capitalised interest (added to the loan)
With capitalised interest, the interest is added to the loan balance as it accrues instead of being paid each month. You receive more of the loan amount at settlement, and the total repayable at the end reflects the interest that has been added. Again, no scheduled payments during that period.
How the numbers work (without the numbers)
We never quote rates on this site because every loan is priced on the client's individual circumstances, aiming for the sharpest rate available for that situation. What we can explain is the structure, so you know what to look for in your term sheet.
| Prepaid interest | Interest added to the loan | Monthly interest only | |
|---|---|---|---|
| Scheduled payments in the period | None | None | Monthly interest |
| Net advance at settlement | Loan amount less prepaid interest and costs | Loan amount less costs | Loan amount less costs |
| Total repayable at the end | Loan amount | Loan amount plus added interest | Loan amount |
| Suits | Owners who want a fixed, known payout figure | Owners who need the most cash in hand now | Owners with steady cash flow |
Your term sheet shows the loan amount, the net advance, the total repayable and the full cost before you proceed. If anything is unclear, we will walk you through it line by line. That is part of being an ethical business lender.
Who uses no repayments business loans
- Businesses in a cash flow squeeze who need breathing space while customers pay or a season turns. See our business cash flow crisis guide.
- Owners clearing daily-debit loans who want to stop the bleeding without replacing it with another payment. See business debt consolidation loans.
- Businesses waiting on a lump sum, such as a property settlement, business sale, insurance payout or large contract payment.
- Owners paying the ATO who need the debt cleared now and the business left with working capital. Read ATO tax debt business loans.
- Developers and builders whose project income arrives at completion, not month by month.
An example
For example, a manufacturer who has just won a large order needs to buy materials and pay staff for four months before the customer pays. A loan with interest prepaid for the term lets the business fund the order without a single scheduled repayment, then repay the loan in full when the customer pays. The owner knows the payout figure from day one.
What we look at
Because there are no repayments during the period, we focus on two things: the equity in the property offered as security, and the strength of your exit. Equity Tap lends from $50k to $5m for one to twelve months, secured by a first or second mortgage or caveat over Australian residential or commercial property. We don't need tax returns, BAS or bank statements for a property-secured loan, and we don't order a valuation before approval.
What we do need:
- ID for the borrowers and guarantors.
- The property address and details of any existing mortgage.
- The purpose of the loan.
- Evidence of the exit, such as a contract, sale agreement, refinance in progress or receivables.
From call to cash
Conditional approval can often be given on the phone and a term sheet issued in about 30 minutes once we have your scenario. The term sheet will show the repayment structure you have chosen. Eligible loans can settle in as little as 24 hours. Our same-day business loan approval page explains what speeds things up.
After the no-payment period
If your term runs longer than the prepaid or capitalised period, interest after that is usually paid monthly as interest only, unless we agree another structure. The principal is repaid at the end from your exit. We will set this out clearly before you sign.
Talk to us
Keep your cash working in your business, not going out the door in repayments. Apply online or call 1300 123 024. Brokers can send scenarios through our broker page.
Business-purpose lending only. Approval, timing and terms depend on the scenario.
Frequently asked questions
Can I really get a business loan with no repayments?
What is the difference between prepaid and capitalised interest?
How much will I actually receive in my account?
Do I need to show cash flow to get a no repayments loan?
What happens after six months?
Can I use a no repayments loan to pay out daily-debit loans?
Brokers: send the scenario through the Equity Tap broker channel and you will deal with the same lending team.