Quick answer
Most businesses fund a new hire with a mix of cash flow and a facility that covers the months before the person pays their way. A line of credit or short business loan suits the ramp-up, sized on what you already earn. Budget for the full cost, not just salary: super now leaves your account every payday, plus leave, workers compensation, recruitment, equipment and, above the threshold, payroll tax.
Key points
- A new employee costs well beyond their salary once super, leave, insurance and equipment are added
- Since 1 July 2026, Payday Super means contributions leave with each pay run rather than quarterly
- Award minimums rose 4.75% from the first full pay period on or after 1 July 2026
- Fund the ramp-up period, not the whole salary: the hire should pay for itself once productive
- A line of credit you draw only as needed often suits hiring better than a lump-sum loan
The decision to hire usually arrives before the money does. You’re turning work away, or working nights to keep up, and you know another set of hands would pay for itself. The question is how to cover the stretch between the first pay run and the point where that person is earning more than they cost.
That stretch is what you’re financing. Not the job itself, just the gap.
What does a new employee actually cost?
The salary is only the most visible part. Before you approach any lender, work out the fully loaded figure for the first year.
| Cost | What to allow for |
|---|---|
| Base wage | At least the award rate for the role. Modern award minimums rose 4.75% from the first full pay period on or after 1 July 2026 |
| Superannuation guarantee | 12% of qualifying earnings, now paid with every pay run |
| Paid leave | Annual leave, personal leave and any leave loading the award requires |
| Workers compensation | A state-based insurance premium, priced on your industry and wages |
| Payroll tax | Only if your total Australian wages pass your state’s threshold. A new hire can be the one that tips you over |
| Recruitment | Advertising, agency fees or a referral bonus |
| Equipment and setup | Laptop, phone, tools, uniform, a vehicle for some trades, software licences |
| Training and supervision | Your own time, or a senior employee’s, while the new person learns |
The award covering the role sets the minimum pay, and the Fair Work Ombudsman’s pay calculator will find the right classification. Business.gov.au’s hiring section walks through the obligations, including the Fair Work Information Statement every new employee must receive.
Why Payday Super changed the hiring maths
Until 30 June 2026, many small employers paid super quarterly. That meant up to three months of contributions sat in the business account before they were due, quietly helping cash flow.
Payday Super removed that cushion. From 1 July 2026, contributions are due with each pay run, and business.gov.au explains they generally need to reach the fund within seven business days of payday. A new employee’s first contribution has a longer window of 20 business days. Late payments attract the super guarantee charge, which is not tax deductible.
For a business adding staff, the effect is simple: every pay run now costs about 12% more cash on the day than it used to, and there’s no quarterly float to lean on. If your hiring plan was built on the old timing, redo it. Our page on funding superannuation payments goes further into the cash flow side.
Matching finance to the hire
| Situation | Finance that tends to fit | Why |
|---|---|---|
| One hire, short ramp-up, steady revenue | Cash flow, backed by a business line of credit | You draw only in the lean weeks and pay interest only on what you use |
| Several hires at once to deliver a known contract | Working capital loan or invoice finance once you’re billing | The contract gives the lender comfort, and invoices become the security |
| A hire who needs a vehicle or tools | Equipment finance for the asset, cash flow for the wage | The asset secures itself, keeping the wage funding smaller |
| Building a whole new team for expansion | A term loan sized on current profit, plus a facility for the ramp-up | Gives a fixed repayment you can plan around |
Banks are usually the cheapest source for this kind of working capital, and an established business with tidy books should ask its bank first. If the bank wants property you don’t want to offer, or simply can’t move before your new starter’s first day, non-bank and fintech lenders assess hiring requests on turnover and bank statements.
Already know who you want to hire? Tell us about the role and the timing. It’s a short form, and enquiring won’t show up on your credit file.
How long before a new hire pays their way?
This is the number that decides how much to borrow. It varies a lot:
- A qualified tradesperson joining a busy business can often bill from the first week, once tools and a vehicle are sorted.
- A salesperson may take months to build a pipeline, and longer in industries with slow buying cycles.
- An apprentice or trainee costs more in supervision than they produce for the first stretch. The Australian Apprenticeships Incentive System can offset part of that for eligible employers, but the payments arrive in instalments after six and twelve months, not up front.
- An administrator or operations hire may never bill directly. The return is your own time freed up, so be honest about whether you’ll actually use that time to win more work.
Sizing the loan: a five-step method
- Calculate the fully loaded monthly cost using the table above.
- Estimate the extra gross profit the hire will generate each month, starting low.
- Find the break-even month, the point where extra gross profit covers the full cost.
- Add up the monthly shortfalls until then. Add a margin for a slow start or a quiet season.
- Check serviceability. Your current profit, before the hire adds anything, should still cover your existing repayments plus the new ones. The cash runway calculator shows how long your buffer lasts if things run behind.
Worked example: an electrical business adds a second sparky
An illustration only. A two-person electrical contracting business in Toowoomba turns over about $650k and has been knocking back commercial jobs for six months. The owner wants to hire a licensed electrician and take on a first-year apprentice.
| Item (first year) | Amount |
|---|---|
| Licensed electrician wage, super, leave and insurance | $118k |
| Apprentice wage, super, leave and insurance | $52k |
| Second van, fitted out | $72k |
| Tools, test equipment, phones and uniforms | $14k |
| Recruitment and training courses | $6k |
The van goes on equipment finance over five years. The electrician is billing within a fortnight, so the gap there is short: about six weeks of wages before the first invoices are paid on 30-day terms. The apprentice takes longer to contribute. The owner models a combined shortfall of about $38k across the first four months, then sets up a $50k line of credit to cover it, drawing only when the account runs low. Any apprentice incentive payments that come through later go straight back onto the line.
The lender approves the line on the strength of two years of steady turnover. It doesn’t rely on the new staff at all.
Bringing the hire and the funding together
Hiring well is one of the best things an owner can do, and it’s rarely worth delaying because the timing of cash is awkward. Have your fully loaded cost, a realistic ramp-up period and recent bank statements ready, and the conversation with any lender gets much easier.
When you’re ready, our form takes roughly a minute. Asking doesn’t touch your credit score, and we won’t scatter your details across dozens of lenders. Someone on our team reads your situation, then phones to talk through the options. If you give us accurate turnover and wage figures, we can point you to a fit on the first call rather than the third.
Frequently asked questions
Can I get a business loan to pay a new employee's wages?
Yes. Lenders fund hiring as working capital. They won't look at the new person's future output so much as at whether your current profit can cover the extra wage and the loan repayments together. A line of credit or a short-term loan sized on your turnover is the most common structure.
How much does an employee cost on top of their salary?
Superannuation guarantee is 12% of what the ATO now calls qualifying earnings. On top of that you'll typically budget for paid leave, leave loading if the award requires it, workers compensation insurance, recruitment, equipment, training and, if your wages bill is over your state's threshold, payroll tax. Many owners find the true cost lands well above the headline salary.
What is Payday Super and how does it affect cash flow?
From 1 July 2026, employers must pay super with each pay run, and it generally needs to reach the employee's fund within seven business days of payday (longer for a new employee's first contribution). Businesses that used to hold super until the quarterly deadline no longer have that float, so each pay run costs more cash on the day.
Are there government incentives for hiring apprentices?
Yes. The Australian Apprenticeships Incentive System offers payments to eligible employers, including the Priority Hiring Incentive for apprentices in priority occupations and the Key Apprenticeship Program incentive for some housing and clean energy trades. Amounts and eligibility change, so confirm the current settings with an Apprentice Connect Australia provider before you count on them.
Should I hire a contractor instead of an employee to save cash?
It depends on the work, not on the cash. Whether someone is legally an employee or a contractor turns on how the relationship actually operates, and getting it wrong can leave you owing super and penalties. If the role is ongoing and you direct the work, plan to fund it as an employee.