18 to 24-month business loans: the long end of short-term

When does a business need two years rather than one?

An 18 or 24-month term is chosen when the exit simply can’t happen faster. That usually comes down to one of four things:

• The asset takes time to sell. Commercial property, rural land or a business sold as a going concern can take many months to market, negotiate and settle.
• The bank needs a longer record. A business recovering from a loss year, or one that has cleared ATO debt, may need two sets of clean financial statements before a bank will lend.
• The project is long. A development, fit-out or major contract with payment milestones stretched across more than a year.
• The turnaround is real but gradual. Margin improvements or cost cuts that need several quarters to show in the numbers.

In each case, a shorter loan would almost certainly need extending — and an extension negotiated late usually costs more than choosing the right term at the start.

What’s the catch with a longer short-term loan?

Time. The time-based cost of any short-term facility builds up month by month. Over two years that adds up to a meaningful sum, and the difference between a loan that lets you exit early without penalty and one that doesn’t becomes significant.

There’s also a behavioural risk. A two-year facility can quietly become “the way the business is funded” rather than a bridge to something better. That’s how short-term debt turns into expensive long-term debt. The fix is milestones:

Month	Milestone to check
6	Is the exit on track? Any evidence gathered (valuations, forecasts, contracts)?
12	Financial statements for the year done; first conversations with a bank or buyer
18	Exit process formally under way: refinance lodged, property contracted, final claims submitted
21–22	Money expected, leaving a buffer before month 24

Our exit strategy builder generates a countdown like this for your own dates.

How do payout terms change the maths over two years?

Picture two illustrative quotes for the same amount over 24 months. One has lower fixed fees but charges a minimum of 18 months’ interest. The other has higher fixed fees and charges strictly by the day. If you exit at month 24, the first is cheaper. If you exit at month 12, the second may be far cheaper because you stop paying the day you repay.

This is exactly what the short vs long term comparator is built for: enter the dollar cost of each quote and your likely exit month, and it shows which costs less at that point and where the lines cross.

If you’ve got a quote in hand or a project in mind, see what we can structure — no credit check is run when you enquire.

Secured or unsecured over 24 months?

Longer terms and larger amounts are more commonly property-secured. First mortgages, second mortgages and caveats over residential or commercial property are available from $20,000 to $5,000,000. The security lets the lender offer a longer term to a business that doesn’t yet fit bank criteria.

Unsecured options for trading businesses typically run from $5,000 to $500,000 and are more often shorter than two years. For more detail, see secured short-term loans and unsecured short-term loans.

How do you use two years to become bankable?

If the exit is a bank refinance, treat the first year as preparation:

1. Ask your accountant what the bank will want and by when your next financial statements will be ready.
2. Keep ATO lodgments and payments up to date — a clean ATO record matters.
3. Avoid taking on extra short-term debt during the term; stacking loans is a red flag to banks (see avoiding debt stacking).
4. Approach the bank six to nine months before the loan falls due, not six weeks.

The refinance to a bank loan page goes through this in more depth.

A note for company directors

If a longer loan is needed because the business is struggling, be clear-eyed about it. ASIC’s guidance for directors explains the duty to prevent a company from trading while insolvent, and to consider whether new debt can be repaid. A well-planned 24-month facility with a genuine exit is a legitimate tool; borrowing to delay an unavoidable outcome isn’t. Get advice from your accountant if you’re unsure which you’re facing.

What evidence supports a two-year application?

Because the term is long, a lender will want to see that the exit is more than a hope. The stronger the evidence, the more options open up.

Exit route	Evidence that helps
Bank refinance	Accountant’s letter on when financials will be ready; notes from an early bank conversation
Property sale	Recent appraisal from a local agent; realistic campaign timeline; details of any existing mortgage
Business sale	Broker engagement, information memorandum or heads of agreement
Project completion	Signed contracts, payment schedule, progress to date
Trading turnaround	Management accounts showing the improvement has started; a monthly forecast

It also helps to show what you’ll do at each milestone if the exit is behind schedule. A lender reading a plan that says “at month twelve, if the bank hasn’t committed, we’ll list the warehouse” knows the borrower has thought about the downside — and that makes a long short-term loan far easier to approve and to live with.

Talk through a longer term

Tell us what the two years need to achieve and a lending specialist will look at the structure, the dollar cost and the milestones with you. There’s no credit check to ask the question, and your enquiry goes to one person rather than being shopped to lenders at large. Accurate details on the form — especially property, existing debts and your expected exit — let us give you a realistic answer first time.