Need a loan to cover payroll or new hires? Who lends for wages

A loan to cover payroll is funding used to pay wages, super and other staff costs before the income those staff generate arrives. For most employers wages are the biggest regular outgoing, and they leave the account on a fixed cycle whether customers have paid or not. That makes payroll the point where timing gaps bite hardest, and it is also where choosing the right lender type makes the biggest difference to cost.

When does it make sense to borrow for wages?

Borrowing for payroll works when the wages produce income you can see coming. Good reasons include:

• A contract win where extra people start now but the client pays 30 to 60 days after you invoice.
• Seasonal hiring ahead of your busiest months.
• Growth hiring, where a new salesperson, technician or manager takes a few months to pay for themselves.
• A one-off disruption, such as a large customer paying late or a delayed project milestone.

It is a warning sign when the business needs to borrow every month just to meet wages with no change in income ahead. In that case, a loan only delays the decision, and a lender will usually spot the pattern in your bank statements.

Which lenders fund payroll and hiring?

Your payroll situation	Where to look	Facility	Lender relies on
Staff work on jobs invoiced to businesses	Invoice finance providers	Invoice finance	Your customers’ unpaid invoices
Recurring gap between pay day and customer payments	Banks, non-bank lenders	Line of credit or overdraft	Trading history, guarantee, sometimes property
Short squeeze, strong bank statements	Online lenders	Cash flow loan	Turnover and account conduct
Card-heavy venue or shop	Revenue-based providers	Merchant cash advance	Daily card takings
Planned hiring for growth over a year	Banks, non-banks, private lenders	Term loan or property-secured loan	Financials or property equity

Invoice finance deserves special mention for service businesses. Labour hire, cleaning, security, IT services and trades that bill other businesses often carry six to eight weeks of wages before the first payment arrives. An invoice facility advances most of each invoice soon after it is raised, and the limit rises as you take on more work. A fixed loan does not do that.

How does Payday Super change payroll cash flow?

Under the ATO’s Payday Super changes, which began on 1 July 2026, the super for each pay run has to land in your staff’s funds no later than 7 business days after payday. The guarantee itself is unchanged at 12% of qualifying earnings. Before the change, many employers paid super quarterly, which meant several weeks of super sat in the account as an informal buffer. That buffer has gone.

In practical terms, every pay run now carries its super with it. If your forecasts were built around quarterly super, update them. Lenders reviewing your bank statements from mid-2026 onward will see super leaving more often, and a credible forecast that already reflects it makes their job easier.

Award wages also moved: the Fair Work Commission’s 2026 Annual Wage Review lifted modern award rates by 4.75 per cent from 1 July 2026. If your prices or contract rates have not kept pace, a lender will notice the squeeze on margin.

If your payroll timing has shifted and you want to know what facility fits, ask a specialist which lender suits your pay cycle — it takes about a minute.

An illustrative payroll example

This scenario is illustrative and invented, with tidy numbers. A commercial cleaning company wins a contract that needs six extra cleaners from the start of the month. Their wages and super come to about $28,000 a month. The client pays 45 days after month-end invoices, so the company will pay roughly three months of wages, around $84,000, before the first payment lands. A bank overdraft of $20,000 will not stretch that far. An invoice financier sets up a facility on the company’s existing and new invoices, advancing most of each invoice when it is issued. The wages are covered from the second month, and the facility shrinks again if the contract ends.

What do lenders ask for when you borrow for wages?

1. Bank statements, usually the last three to twelve months, showing payroll and income patterns.
2. BAS and your ATO position, because PAYG withholding and super are part of the wages picture.
3. A payroll summary: headcount, pay frequency and total cost per cycle, including super.
4. Contracts or purchase orders for the work the new staff will do.
5. An aged debtors list if you are using invoice finance.
6. A short cash flow forecast showing when the gap closes.

Being up to date with the ATO matters. Lenders see overdue PAYG withholding and super as a sign that payroll has already been funded at the tax office’s expense. If you are behind, say so upfront; our page on ATO tax debt explains how lenders view it.

Payroll finance options side by side

Option	Strength	Limitation
Invoice finance	Grows with your invoicing	Only works for business customers on terms
Line of credit	Draw and repay each pay cycle	Limit is fixed until reviewed
Short-term loan	Simple lump sum for a defined gap	Repayments start straight away
Revenue-based advance	Repayments flex with takings	Usually a higher total cost
Property-secured loan	Larger amounts for a hiring plan	Valuation and settlement take time

How can you reduce the gap before borrowing?

Some of the gap can be closed without a lender. Invoice weekly instead of monthly on labour-heavy contracts, ask new clients for a mobilisation payment, align pay cycles with customer payment dates where awards and agreements allow, and chase overdue invoices early. business.gov.au’s cash flow guidance also recommends planning for known quiet periods, which applies to wages as much as anything else. Our page on seasonal cash flow covers that planning in more detail, and working capital loans explains the wider set of cash-flow facilities.

What does a new hire really cost before they pay their way?

Owners often underestimate the cash a new employee absorbs before they are fully productive. When you size a loan for hiring, add up more than the salary:

• Wages for the ramp-up period, which for a sales or technical role can run several months.
• Super with every pay run, now that Payday Super applies.
• PAYG withholding that must be paid to the ATO on your usual cycle.
• Workers compensation insurance and any payroll tax once you pass your state’s threshold.
• Recruitment, onboarding and training costs.
• Tools of the trade: a vehicle, laptop, phone, uniform or equipment.
• Leave entitlements that build up from day one.

A lender will not ask you to itemise all of this, but working it out yourself stops you borrowing too little. Running short halfway through a ramp-up period is far more stressful than asking for the right amount at the start.

Should you use a revolving facility or a lump sum for wages?

Match the facility to the shape of the gap. If wages run ahead of income every month because customers pay on terms, a revolving facility such as invoice finance or a line of credit fits, because it rises and falls with your billing. If the gap is a single event, such as funding six months of a new manager’s salary until a new division gets going, a term loan with a fixed end date is cleaner and easier to budget. Mixing the two up is costly: a lump sum used for a permanent timing gap runs out and needs replacing, while a revolving line used for a one-off cost tends never to get paid down.

Who finds payroll finance most useful?

Labour-heavy industries carry the biggest wage bills relative to their cash on hand: cleaning, childcare, hospitality, security, health practices and the trades. If your business is in one of these, a revolving facility sized to two or three pay cycles is often more useful than a one-off loan. You can explore every other purpose on the funding-for hub.

Want your wages covered properly?

Tell us your pay cycle, headcount, what the money is for and when the income behind it arrives, and a lending specialist will match you with the lender type that fits. Start your enquiry here. Asking won’t trigger a credit check, your details are not circulated to a pile of lenders, and a real person looks at your situation. Answer the form accurately and we can get the match right on the first attempt.