The problem with solving a two-month need with a 20-year loan
Many business owners only need money for a short window. Payroll is due before a big invoice is paid. A supplier is offering a deal on stock that will sell within the quarter. A property sale has exchanged but won't settle for ten weeks. The ATO wants payment now, and the business will catch up over the next few months.
The traditional answer is to refinance the home or commercial property and take on a 20 to 30 year loan. That means weeks of paperwork, a valuation, a credit assessment, years of financials and, at the end of it all, a long-term debt to solve a short-term problem. A bank refinance commonly takes up to three months or more, and you may not even be approved for the amount you need. By then the opportunity has gone or the penalty has landed.
A short-term business loan flips that around. Equity Tap lends from $50k to $5m for one to twelve months, secured by property, so you borrow for the time you need the money and repay it from a known exit.
Five benefits of short-term business lending
- You only carry the debt while you need it. Take two months if you need two months. When your exit arrives, the loan is repaid and the security is released.
- Speed. Conditional approval can often be given on the phone and a term sheet issued in about 30 minutes. Eligible loans can settle in as little as 24 hours.
- Your long-term finance stays untouched. With a second mortgage or caveat, your existing first mortgage stays where it is, along with its rate and terms.
- Repayments that suit a short window. Pay interest only, or have interest for up to the first six months prepaid or added to the loan so there are no scheduled payments in that period. See no repayments business loans.
- Assessed on the exit, not on old paperwork. We don't need tax returns, BAS or bank statements for a property-secured loan. We need to understand the purpose and how it will be repaid.
Short-term loan or long-term refinance?
| Short-term secured loan | Long-term refinance | |
|---|---|---|
| Term | One to twelve months | Commonly 20 to 30 years |
| Time to funds | As little as 24 hours for eligible loans | Commonly up to three months or more |
| Valuation | None ordered before approval | Usually required |
| Financials | Not needed for property-secured loans | Years of financials usually required |
| Effect on existing mortgage | Can sit behind it as a second mortgage | Replaces it, often with break costs |
| Best for | Timing gaps, urgent bills, opportunities, bridging to an exit | Permanent long-term funding |
A short-term loan is not a replacement for long-term finance. It is the tool for the gap. Many of our borrowers use a short-term loan to get the money now and then refinance to a bank once their financials are in order, the dust has settled, or the property has been sold.
Common exits
Every short-term loan needs a clear exit. We will talk this through with you on the first call. Typical exits include:
- A refinance to a bank or another lender once the business is ready.
- Business cash flow over the term, for example after a seasonal peak.
- Sale of the business, or sale of equipment or stock.
- Settlement of a property sale (see property sale advance).
- Receivables from a large contract or progress claims.
- An insurance payout or another confirmed lump sum.
Our exit strategy guide goes deeper into what makes an exit strong.
Examples of short-term needs
For example, a wholesaler who has been offered a container of stock at a discount, with buyers already lined up, might borrow for three months and repay when the stock sells. A builder waiting on a progress payment might borrow for six weeks to keep trades paid and the job moving; our one-month business loans page covers very short terms like this. A business owner with an ATO payment plan that has gone sideways might borrow for six months to clear the debt and repay from cash flow and a refinance.
In each case the loan is sized and timed to the problem, not stretched over decades.
What we need to get you moving
- Photo ID for the borrowers and guarantors.
- The address of the property offered as security and details of any existing mortgage.
- What the money is for.
- Evidence of your exit, such as a contract of sale, a refinance in progress or a receivables schedule.
Pricing
Each loan is priced on the client's individual circumstances, aiming for the sharpest rate available for that situation. The full cost is shown before you proceed. Because you only borrow for the time you need, you are not paying for money you no longer use.
Talk to us
If your need is short, your loan should be too. Apply online or call 1300 123 024 and we will tell you on the call whether a short-term loan fits. Brokers can send scenarios through our broker page.
Business-purpose lending only. Approval, timing and terms depend on the scenario.
Frequently asked questions
What is a short-term business loan?
Why not just refinance my home loan?
Can I repay a short-term loan early?
What is the shortest term I can borrow for?
Do short-term business loans need monthly repayments?
What happens if my exit is delayed?
Brokers: send the scenario through the Equity Tap broker channel and you will deal with the same lending team.