Finance for tradies - what finance to apply for before you hit a cashflow crisis


Business Finance


Sarah Eifermann


April 27, 2022

Finance for tradies - what finance to apply for before you hit a cashflow crisis

When working in trades you quickly learn how important your equipment and having the right reliable vehicle is for the success of your livelihood.

However, these items can quickly become a large ongoing investment, on top of ensuring you have the cash flow to continue to work and provide quality services, the financial pressures required for trades can quickly lead to stress and cash flow challenges.  

Knowing what loans are out there to help your business prosper is an important part of your overall business journey as a tradesperson, if you are not aware and do not have the broad scanning ability to see what may or may not happen then you could end up in financial despair, without the ability to finish jobs, service existing clients, pay suppliers, find new clients, fund a vehicle, or buy new tools required for the works at hand.  

In this article we hope to clarify some loan options, to help you make better decisions and learn the importance of having broad scanning when it comes to managing your tradie business and keeping it in the best financial shape. The ability to look ahead and plan for the moments when you need the cashflow will help you save time, decrease stress, and allow you the ability to provide great ongoing service.

Term Loan –

These types of loans are commonly used by small businesses that need extra cash to fund business growth, to purchase equipment or any other type of fixed asset to keep their business on track.  

The interest rate is often lower for term loans, and you can choose to repay the loan with interest over a period of months or years.  

Line of Credit –

A line of credit is a pre-set amount of money that you and your lender agree upon. It can be accessed at any time  

Having this arrangement allows you use it when and if you need it without having to apply for another loan. It is a lot more flexible than a fixed-term loan and you only pay interest on the amount you have used.

This type of finance can significantly help a self-employed person whose expenses can be unpredictable or whose monthly income may be irregular. It can be used for anything from purchasing new equipment to financing a new vehicle.

Invoice/Debtor Finance –

The last thing a tradie wants to have to do is chase money, especially when you may need new tools or supplies for your next job. According to research from St George Bank (St.George Bank Tradie Economy Report) one of the top concerns for tradies was being paid on time and the flow on effect of their cashflow. This is where Invoice/Debtor finance could ease the worries.

Using Invoice/Debtor Finance allows you access to the funds from your own invoice as soon as you have processed it. It saves waiting for what is owed and allows you to put the cash immediately back into your business and keep moving forward. Having this as an option means steady cashflow, allowing you to be better prepared to weather any changes or market fluctuations that may occur.

Equipment Finance –

Exactly how it sounds, Equipment Finance helps to finance the equipment you need for your business. This can cover anything from tools, machinery, vehicles and yellow goods, internal fit outs and furniture and manufacturing and industrial equipment, and much more.

The Interest rates for this type of loan vary dramatically depending on the lender so it does pay to do your research and see what is out there. They are also usually secured against the asset itself which keeps the interest rates lower.  

For the self-employed Tradie, choosing the right finance option is key to maintaining healthy cashflow for your business.

If you find yourself requiring finance but not sure which option is best for your business and goals, feel free to give Sarah a call at SFE Loans –
M: 0421 079 415

For more tips on loans and finance for tradies take a read at our previous blogs –  

How Do You Choose The Right Loan For Your Business Needs

Equipment Asset Finance – What Should You Be Aware Of?

Don’t Let Your Equipment Hold You Back