Short-Term Business Loans: A Growing Concern for Australian SMEs
In recent months, we’ve seen a worrying trend emerge across Australia’s small and medium business landscape: a rapid rise in unsecured, short-term business loans targeting SME owners through social media and online channels.
It’s not unusual to see offers like:
- “24-hour approval”
- “ABN only required”
- “Bad credit OK”
- “No impact on your credit score”
While these may look like fast cash flow solutions, the reality is far more concerning. These offers are often predatory in nature, with high interest rates, opaque fee structures, and short repayment terms that place immense pressure on already stretched business owners.
At Thane Commercial, we’re increasingly seeing SMEs caught in this trap — borrowing in desperation to make payroll, pay ATO tax debts, or cover late customer payments. Unfortunately, these quick-fix loans often lead to rolling repayments, compounding debt, and no clear path to financial recovery.
What’s Driving the Rise in Short-Term SME Lending?
Several factors are creating the perfect conditions for these non-bank lenders to thrive:
1. Changes to ATO Credit Reporting (from 1 July 2024)
The Australian Taxation Office is now disclosing overdue tax debts to credit agencies more actively, triggering panic borrowing among SMEs trying to protect their credit rating.
2. End of COVID-Era Deferrals
Many SMEs are now facing repayment deadlines on deferred obligations, and traditional lenders are not always stepping in to help.
3. Tighter Bank Credit
Australian banks have become more conservative, making it harder for SMEs to access traditional business finance.
4. Long Payment Cycles
Industries like construction, defence contracting, and manufacturing are seeing slower receivables, leaving SMEs with major cash flow gaps.
These challenges are leading many small business owners to turn to unregulated lenders offering fast approvals and minimal documentation — but with terms that can do more harm than good.
Is This Predatory Lending? Yes.
Let’s be clear — many of these practices are predatory lending.
These lenders target business owners in distress, offering quick access to cash but locking them into high-cost funding structures with little room to move. Because business lending isn’t covered by the same consumer protections, operators are exploiting that regulatory grey zone.
ASIC has already flagged predatory SME lending as a regulatory priority in 2024–25. But until enforcement catches up, the risk to businesses remains high.
Receivables Finance: A Smarter Working Capital Solution
Rather than relying on unsecured short-term loans, SMEs should explore Receivables Finance — a structured and scalable way to unlock capital from outstanding invoices.
Receivables Finance (also known as Debtor Finance) allows SMEs to:
- Access cash tied up in receivables
- Improve liquidity without taking on additional debt
- Avoid property-backed lending
- Align cash flow to the business cycle
- Fund growth, not just survival
When structured properly, Receivables Finance becomes a core part of an SME’s capital strategy — offering flexibility, cost control, and transparency.
Helping SMEs Avoid the Debt Trap
At Thane Commercial, we specialise in helping SMEs navigate funding decisions with independent, strategic advice. Our goal is to steer businesses away from short-term fixes and toward well-governed, long-term working capital solutions.
What can SMEs do?
- Ask the right questions before accepting any loan offer
- Seek independent advice, not just lender sales pitches
- Understand the true cost of capital over the full loan term
- Explore alternatives like Debtor Finance, Trade Finance, and Supply Chain Finance
Final Thoughts
Fast finance isn’t always smart finance.
If you’re an SME under pressure, the best solution isn’t always the fastest or easiest. What matters is finding the right structure for your business — one that supports resilience, flexibility, and growth.
Before accepting a short-term loan, talk to someone who understands the full picture. There may be a better path forward.
Get in Touch
Need advice on how to manage cash flow or restructure your working capital?
We’re here to help.
Neil Tunstall
Managing Director – Thane Commercial Pty Ltd