Quick answer
A no term business loan is a short-term, property-backed loan without a fixed repayment schedule. Instead of weekly or monthly repayments, interest is usually capitalised and the loan is repaid when a specific event happens, such as a property sale, a contract payment or a refinance, within an agreed maximum period. It suits businesses that know money is coming but not exactly when.
Key points
- No fixed weekly or monthly repayments.
- Repaid when a sale, payment or refinance lands.
- Has a maximum period, even without a fixed term.
- Secured against residential or commercial property.
- Repayments
- Usually none until the exit event
- Security
- Residential or commercial property
- Speed
- $20k to $250k possible same day (property-secured)
- Purpose
- Business purposes only
Some businesses know money is coming but can’t say exactly when. A builder’s last two townhouses are on the market. A manufacturer is waiting on a large payment from an overseas customer. An owner is selling a block of land that’s under contract but needs a long settlement. A standard loan with fixed weekly repayments doesn’t fit any of these, because the cash to repay arrives in one lump at an uncertain date.
A no term business loan is designed for exactly that. You borrow against property now, make no regular repayments, and repay the loan in one go when the money arrives, within an agreed maximum period.
How a no term loan works
| Feature | How it usually works |
|---|---|
| Security | First or second mortgage, or caveat, over property |
| Repayments | None scheduled; interest is capitalised or prepaid |
| Maximum period | Set in the contract, often up to 12 months |
| Early repayment | Allowed, sometimes after a minimum interest period |
| Exit | Sale, contract payment or refinance |
The “no term” label can be misleading. There’s always an outer limit. The flexibility is in when you repay within that limit, not whether you repay.
When it fits
- Waiting on a sale of property, equipment or a business.
- Waiting on a large payment that’s approved but not yet paid.
- Cash flow would be crushed by weekly or monthly repayments while waiting.
- The timing is uncertain but the source of repayment is solid.
When the timing is known and short, a caveat loan or bridging loan may be simpler and cheaper. If repayments from trading are realistic, a standard loan usually costs less in total.
What lenders want to see
Because there are no regular repayments to show the loan is affordable, lenders lean heavily on the property security and the exit:
- Enough equity to cover the loan plus all the interest that could build up over the maximum period.
- A specific exit, with evidence: a sale contract, an agent’s appraisal and listing, a payment approval or a refinance pathway.
- A backup plan if the exit is delayed.
The cost of capitalised interest
Capitalised interest grows over time, and interest can be charged on interest already added. That’s fine for a short wait, but it adds up if the exit takes longer than expected. Before you sign, ask the lender for the total amount owing if you repay at three months, six months and at the maximum period. Seeing those three dollar figures side by side makes the trade-off clear.
An illustrative example
A Ballarat builder has finished a three-townhouse development. One has sold; two are listed. Meanwhile, he needs $300,000 to start the next project’s slab and frame before his finance for that project kicks in. Weekly repayments would strain the business. A no term loan secured by a second mortgage over the two unsold townhouses gives him the money now, with interest capitalised. The second townhouse sells four months later and the loan is repaid from the proceeds.
Before you commit
- Ask for the total repayable at several points in time, in dollars.
- Check the maximum period and what happens if you go past it.
- Confirm whether partial repayments reduce interest straight away.
- Get your solicitor to read the contract, particularly the default clauses.
No term loan or standard loan?
The choice usually comes down to where the money to repay will come from. If it will come from normal trading, spread across months, a standard loan with regular repayments is simpler and almost always cheaper overall. If it will come from a single event, such as a sale, a large payment or a refinance, a no term loan matches the shape of the cash. Forcing a single-event repayment into a weekly schedule means the business carries repayments it can’t comfortably afford while it waits, and that pressure can damage the very sale or contract that was meant to repay the loan. Matching the loan to the shape of the money is the whole idea.
Waiting on money that’s definitely coming?
Tell us what you’re waiting for, roughly when, and what property is available. Enquiring is free and involves no credit check, and your details aren’t sent around a group of lenders. A real person reads it and calls you to talk through whether a no term loan is the right fit.
Please be accurate on the form about the property and the money you’re expecting, because the exit is the heart of this kind of loan. Start your enquiry.
Frequently asked questions
Does a no term loan really have no end date?
No. There's always a maximum period in the contract. 'No term' means there's no fixed repayment schedule and you can repay whenever the money arrives within that period.
How is interest charged?
Usually it's capitalised, meaning it's added to the loan and paid when the loan is repaid. Some lenders prepay interest from the loan amount at the start.
What happens if the money I'm waiting on doesn't come?
You'd need another exit, such as a refinance or sale, before the maximum period ends. Talk to the lender early if your exit is delayed.
Can I repay part of it early?
Often, yes. Partial repayments reduce the interest building up. Check the contract for any minimum interest period.
Who uses no term loans?
Builders and developers waiting on sales, businesses waiting on large contract payments, owners selling an asset, and businesses with ATO or legal deadlines and a clear source of repayment.