Debtor Finance vs. Business Loans: Which Is Best for Cash Flow?

Cash flow is the lifeblood of every business. Whether you’re waiting on invoices to be paid or trying to cover expenses, having fast access to working capital is critical. Two popular solutions are debtor finance and business loans—but which one suits your needs best?  At Capital Plus Finance, we specialise in helping Australian SMEs unlock…

Cash flow is the lifeblood of every business. Whether you’re waiting on invoices to be paid or trying to cover expenses, having fast access to working capital is critical. Two popular solutions are debtor finance and business loans—but which one suits your needs best? 

At Capital Plus Finance, we specialise in helping Australian SMEs unlock working capital through flexible finance solutions. In this guide, we break down the pros, cons, and best use cases for both. 

 

What is Debtor Finance? 

Debtor finance—also called invoice finance—lets you access funds tied up in your unpaid customer invoices. Rather than waiting 30, 60, or even 90 days to get paid, you can get up to 85% of the invoice value within 24 to 48 hours. 

You continue to manage your customer relationship, and once the customer pays the invoice, the remaining funds (minus fees) are released to you. 

Best suited for: 

  • B2B businesses that issue invoices on terms 
  • Companies with strong sales but slow-paying clients 
  • Trades, transport, labour hire, and wholesale industries 

Benefits: 

  • Improves cash flow predictability 
  • Scales with your business turnover 
  • Doesn’t require property as security 
  • Keeps your equity intact 

 

What is a Business Loan? 

A business loan provides a lump sum that’s repaid over a fixed period—anywhere from 6 months to 5 years. It’s often unsecured, meaning you don’t need to offer property as collateral, but stronger applications may access better terms. 

Best suited for: 

  • One-off investments (new equipment, renovations, stock) 
  • Cash flow gaps during growth phases 
  • Marketing or hiring campaigns 

Benefits: 

  • Predictable repayments 
  • Can be used for nearly any business purpose 
  • Can help build credit profile 
  • Often fast approvals (within 24–48 hours) 

 

Key Differences 

Feature  Debtor Finance  Business Loan 
Funds Access  Ongoing, per invoice  One-off lump sum 
Security Required  Uses invoices as security  May be unsecured or secured 
Flexibility  Grows with sales volume  Fixed amount 
Speed  Within 24–48 hours  1–3 business days 
Repayment Type  Customer pays invoice  Set repayments 
Best For  Managing receivables  Project-based funding 

 

Which One Is Right for You? 

If your business regularly invoices clients and experiences cash flow delays, debtor finance might be the better solution. It grows as your business grows and doesn’t add debt to your balance sheet. 

If you need a specific amount of money upfront and want set repayments, a business loan offers simplicity and certainty. 

 

How Capital Plus Finance Can Help 

Every business has different needs. That’s why we partner with over 50 lenders across Australia—giving us access to flexible, competitive funding solutions tailored to your industry and goals. 

Whether you need a quick working capital boost, a scalable invoice finance facility, or help figuring out which option fits your needs—we’re here to help. 

 

Let’s Chat 

Want help choosing between debtor finance or a business loan? 

👉Book a meeting   with a Capital Plus Finance expert and let’s find the right solution for your business today. 

Get in touch…

Location

Suite 407, 2-8 Brookhollow Avenue
Norwest NSW 2153

Phone | Email

1300 294 887

[email protected]

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