Quick answer
Startups can borrow, but the options depend on stage. Before revenue, debt usually relies on security: founders' property, the equipment being bought, or an expected R&D tax incentive refund. Once revenue is regular, revenue-based finance, unsecured loans and lines of credit open up, typically after six to twelve months of trading. Equity remains the main fuel for high-risk growth; debt works best for costs with a clear, near-term way to repay.
Key points
- Most unsecured lenders want six to twelve months of trading and regular deposits before they'll assess a startup on cash flow
- R&D tax refund advances let eligible companies borrow against a refund they expect after lodging their tax return
- Proposed R&D tax incentive changes from 1 July 2028 would lift the refundable threshold to $50 million but limit refunds to a company's first 10 years
- Debt suits costs with a defined payback, such as equipment, stock or bridging to a funding round; equity suits open-ended growth
- Founders' home equity remains the most common way an early-stage company gets a meaningful bank or non-bank loan
Startup founders hear plenty about angel rounds, accelerators and venture capital. Debt gets less airtime, partly because lenders and startups seem to want opposite things: lenders want predictable repayment, and startups by definition are still working out what’s predictable.
Yet many Australian startups use debt well. The trick is matching the type of borrowing to the stage of the company and to what the money is for. This page takes the industry view: how lenders see startups, which facilities exist at each stage, and where the R&D tax incentive fits in.
If you’re opening a more traditional new business, like a café or trade business, our startup business loans page focuses on that path.
How do lenders see startups?
Through the lens of what can repay them. Credit policies run on evidence: trading history, bank statements, financial statements and security. An early-stage startup has little of the first three, so the conversation turns to the fourth, and to the founders.
Most unsecured and fintech lenders set a minimum trading period, commonly somewhere between six and twelve months, plus a minimum monthly turnover. Banks usually prefer two years of financial statements for unsecured business lending. A company with a new ABN and strong ideas but no deposits in its account will be declined by those policies, however promising it is. That’s not a judgement on the idea; it’s a mismatch of products.
Our pages on borrowing with an ABN under six months and under twelve months go through those trading thresholds in more detail.
What funding fits each stage of a startup?
| Stage | What lenders can rely on | Debt that may fit | Usually better funded by |
|---|---|---|---|
| Idea to prototype | Founders’ assets | Loan secured on a founder’s property | Founders’ savings, grants, friends and family |
| Building, pre-revenue | Expected R&D refund, equipment | R&D refund advance, equipment finance | Angel or seed equity |
| Early revenue | Bank statements, recurring revenue | Revenue-based finance, small unsecured loans | Seed equity plus debt for defined costs |
| Scaling | Revenue history, receivables, contracts | Lines of credit, invoice finance, larger term loans | Series A equity alongside debt |
The broad principle: debt suits costs with a clear payback (equipment, stock for confirmed orders, bridging to a refund or a signed round), while equity suits spending whose return is uncertain or years away. Our debt vs equity comparison sets out the trade-offs.
Founders weighing a loan against a raise can send us a quick enquiry and we’ll talk through what’s realistic.
How does R&D tax incentive finance work?
The R&D tax incentive offsets part of the cost of eligible research and development. For smaller companies below the turnover threshold, the offset can be refundable, meaning a loss-making startup can receive cash rather than just a reduced tax bill. The catch is timing: the refund arrives only after the income year ends, the R&D activities are registered and the tax return is lodged and processed.
Specialist lenders bridge that wait by advancing part of the expected refund, secured against it. Some will advance against R&D spending during the year, before the return is lodged. Our profile of Fundsquire shows how one such lender structures it.
Before relying on a refund advance, check three things:
- The claim’s quality. If the ATO or the Department of Industry later disallows activities, the refund shrinks and the loan doesn’t. A well-documented claim prepared with a specialist adviser is the real security.
- The timetable. Registration, lodgement and processing all take time. Map when the money will actually arrive, then add a buffer.
- The total cost in dollars. These facilities usually carry fees and charges that look small per month but add up across a long wait.
What changes are proposed from 2028?
The 2026–27 Budget announced a rebuild of the R&D tax incentive, with exposure draft legislation released for consultation in September 2026. As at October 2026, the measures are not yet law, and they’re due to apply from 1 July 2028. As proposed, they would:
- raise the aggregated turnover ceiling for refundable claims to $50 million, up from $20 million
- limit cash refunds to a company’s first 10 years of operation, or 15 years for eligible therapeutic goods R&D
- raise the minimum spend to claim from $20,000 to $50,000
- remove eligibility for supporting R&D activities
For a young company, the first point widens access and the second rarely bites. The third and fourth could shrink smaller claims, which in turn would cut the amount an R&D lender is prepared to advance. Founders planning multi-year programs should model both versions of the rules.
What other risks do lenders weigh?
Cash runway. Lenders want to know how many months the company can operate if new funding doesn’t arrive. The cash runway calculator gives a quick answer.
Founder dependence. If the business is essentially one or two people, the lender is really assessing them. Expect personal guarantees.
Burn without milestones. Debt raised to extend runway with no defined event (a signed round, a contract, a refund) is the hardest to approve and the riskiest to take.
Investor rights. Some shareholder agreements require investor consent before the company borrows or grants security. Check yours before you apply.
Documents to prepare
- Company and ABN details, cap table and shareholder agreement
- Bank statements since trading began
- Management accounts, budget and cash flow forecast
- Evidence of revenue: customer contracts, subscription metrics or sales data
- For R&D advances: the R&D registration, adviser’s estimate of the claim and expense records
- For equipment: supplier quotes
- Founders’ personal financial position, especially for property-secured loans
Illustrative example: a hardware startup between a refund and a round
This is a hypothetical scenario. A Melbourne startup designs sensors for commercial refrigeration. It has two years of R&D behind it, a handful of paying pilot customers and early recurring revenue, but not enough for a bank or a fintech to lend on cash flow alone.
The founders need around $400k over the next six months: tooling for a production run and wages while they close a seed extension. Their R&D adviser expects a sizeable refund for the last financial year, with lodgement only weeks away.
They take an advance against the expected refund to cover wages, finance the tooling through equipment finance secured on the tooling itself, and leave the founder’s home out of it. When the refund arrives, the advance is repaid. The seed extension closes three months later, and with steady revenue now showing in the bank statements, the company becomes eligible for a modest line of credit for the first time.
Building finance into your startup plan
Starting something new is exciting, and every founder knows the moments when the plan and the bank balance don’t quite line up. Knowing what you can access before you need it makes those moments far less stressful.
The form is a sixty-second exercise, and submitting it won’t register on your credit report. Your cap table and plans aren’t paraded in front of every financier in the country, and you won’t be hounded by callers afterwards. A member of our team reads about your stage and runway, then calls you personally. Be straight with us on months trading, monthly revenue and the milestone the money gets you to, so our first suggestion is one you can actually use.
Frequently asked questions
Can a pre-revenue startup get a business loan?
Only with something other than revenue to rely on. That's usually property owned by a founder, the equipment being financed, an expected R&D tax incentive refund, or a confirmed grant. Unsecured lenders generally won't assess a company that isn't yet trading.
What is an R&D tax refund advance?
It's a short-term loan secured against the refund an eligible company expects under the R&D tax incentive. The lender advances part of the expected refund before the tax return is processed, and is repaid when the ATO pays. Its value depends entirely on the claim being sound.
Is revenue-based finance a good fit for a SaaS startup?
It can be, once you have steady recurring revenue. Repayments are taken as a share of monthly revenue, so they ease if sales dip. The total cost is usually a fixed amount agreed up front, so compare it in dollars against the growth it funds.
Do startup loans need a personal guarantee?
Almost always. With little trading history, lenders look to the founders as well as the company. Expect directors to guarantee most facilities, and read our guide on personal guarantees before signing.
Should a startup raise equity or borrow?
It depends on what the money is for. Borrowing keeps ownership intact but needs repayment on a schedule, which suits defined costs. Equity costs a share of the company but doesn't need repaying, which suits uncertain, longer-term growth. Many startups use both at different stages.
Will the 2028 R&D changes affect startups now?
Not for current claims. The proposed changes are not yet law and are due to apply from 1 July 2028. Companies planning R&D programs beyond that date should ask their adviser how the new rules might change the size and refundability of future claims.