Quick answer
Tradies and construction businesses usually borrow for three things: vehicles and equipment, materials and wages while waiting on progress payments, and tax bills after a big year. Vehicle and equipment finance suit the gear, a line of credit or invoice finance suits payment gaps, and property-secured loans suit larger needs. Lenders look at contracts, bank statements, licences and how reliably head contractors pay.
Key points
- Vehicle and equipment finance use the asset as security — ideal for utes, tippers and tools.
- Progress-payment gaps suit a line of credit or invoice finance.
- Steady bank statements and current licences make lenders comfortable.
- Set tax aside from every progress payment to avoid an ATO surprise.
Sparkies, plumbers, chippies, tilers, concreters, landscapers, builders — trade businesses keep Australia running, and they have a very particular relationship with money. Big outlays up front, payment in stages, a ute that is the office, and tax bills that land just when a big job has drained the account. The right finance smooths all of that out.
How does money move through a trade business?
Most trades follow a similar rhythm:
- Quote and win the job.
- Buy materials and book labour — often before any money comes in.
- Claim progress payments as stages are completed, usually on 14- to 30-day terms (sometimes longer).
- Wait for retentions to be released at the end of the defects period.
- Pay BAS, PAYG and super on the ATO’s timetable, regardless of when customers paid.
That gap between paying for the job and getting paid for it is where most trade businesses feel the pinch — especially when they’re growing and taking on bigger work.
Which loan types suit tradies?
| What you need | Loan type that fits |
|---|---|
| A new or second ute, van, tipper or trailer | Vehicle finance |
| Excavators, compressors, scaffolding, tools | Equipment finance |
| Materials and wages before progress payments | Business line of credit or working capital loan |
| Cash tied up in invoices to builders | Invoice finance |
| A big tax bill after a strong year | ATO debt funding |
| Several debts that have piled up | Business debt consolidation |
| A larger amount, or credit issues | Secured business loan |
| A workshop fit-out or yard | Fit-out finance |
What do lenders look for in a trade business?
- Steady bank statements. Deposits that match your stated turnover, and a business account kept separate from personal spending.
- Licences and insurances. Current trade licences and the right cover for your work. business.gov.au’s construction industry page is a handy reminder of the regulatory side.
- Who pays you. Builders and developers with a good payment track record are reassuring; one late-paying head contractor is a risk.
- Contracts and work in hand. A pipeline of signed work supports growth borrowing.
- ATO position. Lodgements up to date and any tax debt disclosed up front.
What does it look like in practice? (illustrative)
A Brisbane electrical contractor with three staff wins a fit-out contract for a medical centre — bigger than anything he’s done. He needs a second van, extra test equipment and an apprentice, and the builder pays 30 days after each monthly claim.
He finances the van and equipment with a chattel mortgage, so the assets secure themselves. A line of credit sized on his bank statements covers wages and materials for the first two claim cycles. As the claims are paid, the line of credit is cleared and stays available for the next big job. Illustrative only.
How do tradies avoid the classic cash traps?
- Set tax aside from every payment. Move GST and a slice for income tax into a separate account the day money lands.
- Invoice the day a stage finishes. Every day you wait is a day added to the gap.
- Agree payment terms in writing. business.gov.au’s payment terms guidance covers setting clear terms and following up overdue accounts.
- Don’t fund gear with short money. A ute on a six-month loan is a cash-flow headache; match the term to the asset’s life.
- Watch customer concentration. If one builder makes up most of your work, have a plan B.
- Keep retentions in your forecast — they’re your money, but not for a while.
What about tax time for tradies?
A great year often produces a large tax bill the following year, plus higher PAYG instalments. If you’ve spent the cash on growth (new staff, new gear), the bill can arrive at an awkward moment. Funding it with a loan can be smarter than letting an ATO debt grow — but setting it aside as you go is better still. If a big bill is already looming, see paying a tax bill or talk to us about it.
How do lenders view subcontractors versus head contractors?
Subcontractors are usually assessed on the strength and payment history of the builders they work for, the spread of their work and their own bank statements. Head contractors and builders are looked at more closely on their contracts, margins, cost-to-complete and cash management across several jobs at once. In both cases, lenders like to see that the business isn’t relying on one client for everything, and that it gets paid reasonably close to the agreed terms.
What documents will you need?
- Photo ID, ABN or ACN, and current trade licence details
- Recent business bank statements
- BAS and financials for larger amounts
- Supplier quotes or invoices for vehicles and equipment
- Contracts or a work schedule for growth borrowing
- An aged debtors list if considering invoice finance
Which other pages are worth reading?
- Buy equipment — every way to fund gear, compared.
- Hire staff — funding the cost of an apprentice or new team member.
- Repayment structures explained — balloons, residuals and more.
Ready to fund the next big job?
You build things for a living. We’ll help you build the finance around your next job, your next vehicle or your next hire — in a shape that fits how trade businesses actually get paid.
Enquiring is free and involves no credit check. Your details stay with our team and aren’t dished out to a string of lenders, and a real person will call. Please give accurate figures for turnover, trading time and any property so we can match you first time. See if you qualify.
Frequently asked questions
What is the best loan for a tradie?
It depends on the job. Vehicle or equipment finance suits utes, vans and tools; a line of credit suits waiting on payments; and a property-secured loan suits larger needs like a big tax bill or buying another business.
Can a new tradie business get finance?
Yes, usually through vehicle or equipment finance, where the asset is security, or a property-backed loan. Unsecured loans generally need some months of trading first.
How do lenders view subcontractors who rely on one builder?
They'll look closely at that relationship — how long it's lasted, how reliably the builder pays and whether there are contracts in place. Relying on one head contractor isn't a deal-breaker, but diversity of clients helps.
Can I get finance to cover a late progress payment?
Yes. A line of credit, invoice finance or a short-term loan can bridge the gap. Talk to us early, before wages and suppliers fall behind.