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End of Financial Year: Time for a Business Loan?

A person sitting at a desk with a computer and papers considering loan options

The end of financial year (EOFY) is a time for businesses to get their finances in order and take advantage of tax deductions. Here we look at some of the reasons to consider getting a business loan before the end of financial year.

Take advantage of the instant asset write-off

As 30 June is the end of the Australian tax year, many business owners are taking advantage of the instant asset write-off. Before the instant asset write-off was introduced, businesses had to depreciate the value of assets over several years.

There is no dollar limit on the instant asset write-off (also called temporary full expensing) until 30 June 2023. From 1 July 2023, a limit of $20,000 per asset will come into effect. So the end of the financial year in 2023 will be the last chance for temporary full expensing.

Between 1 July 2023 and 30 July 2024, SMEs with an aggregated turnover of less than $10 million can immediately deduct the full cost of eligible assets costing less than $20,000. The $20,000 threshold will apply to each asset, so businesses will be able to write off the cost of multiple assets.

There is a broad range of assets you can purchase before the end of the fiscal year to take advantage of the instant asset write-off, including:

  • Tools and equipment (electric drills, sanders and saws)
  • Computers, laptops and tablets
  • Office furniture 
  • Office equipment (coffee machines, copiers)
  • Motor vehicles (cars, trucks, vans and tractors).

The problem many small businesses face is not having the cash to buy the assets they need, especially for high-cost assets. Small business loans are one way to get the funds needed to purchase assets before the EOFY.

Online business loans are a fast way for small businesses to access the funds they need to take advantage of the instant asset write-off. A registered tax agent or accountant can help you determine the costs and benefits of using the instant asset write-off before the end of financial year.

Get discounts with EOFY sales

Many wholesale and retail businesses reduce the prices of their products before the end of the financial year. Some businesses might want to reduce their inventories before the end of financial year to reduce the time and cost of doing a stock take. Others might want to get ready for new models to be introduced. Whatever the reason, you can find many types of wholesale and retail products offered at a discount before the end of financial year. For example, if you sell retail products, some suppliers might offer discounts for purchases before 30 June. Some suppliers might increase their prices in the new financial year, so buying earlier can help your business save money.

If you need computers or IT assets, many of these are on sale before the end of financial year. Besides getting the products at a discount, you can write off computers and equipment at tax time. 

Whether you are buying inventory or equipment, a business loan can give you the cash you need to make the purchase before the end of the financial year.

Plan for growth at the end of financial year

The end of the financial year is a good time to reflect and plan for the next year. A business loan can be part of your growth plan. Marketing, for example, is one activity that can spur business growth. Of course, marketing initiatives require money to be implemented. These marketing activities could include creating a new website, starting an online ad campaign or printing brochures.

Another growth initiative can be renovating your current location or expanding to new locations. Regardless of the type of business, this can be expensive.

A business loan can be a way to implement plans for the new financial year.

Hire more staff

Growing businesses will often need more staff to meet the needs of growth. Although additional employees can help increase business income, there can be a gap between hiring more people and seeing financial results. For example, hiring a new salesperson will lead to increased sales but it can take time for this to happen. If a business sells a product or service with a long sales cycle, it can take some time before the investment in sales staff starts to pay dividends. For this reason, a business loan can be the solution for hiring new people who will eventually improve your bottom line.

Challenges of getting a business loan before the end of the financial year

If you want to secure a business loan before the end of the financial year, you may encounter some obstacles. First, if you apply for a traditional business loan from a bank, you will likely be required to provide collateral, typically in the form of residential property. Even if you have the necessary collateral for a bank business loan, you could still face a wait of up to six weeks to receive approval. If you need to move fast to buy the asset and have it delivered before the end of the financial year, this time-frame won’t work.

For these reasons, more small businesses have been turning to online business lenders. Moula, for example, does not require collateral for business loans. So if you don’t own residential property or don’t want to use it as security, you can still get a small business loan. Another positive of online business loans is the ease and speed of applying and getting an answer. With Moula, an online business loan application can be completed in under ten minutes. In most cases, you find out if you have been approved for the loan within 24 hours.

Learn more about small business loans from Moula. Also, check out Frequently Asked Questions on How to Get a Business Loan.

If you want to get an estimate of loan principal and interest repayments, use our Business Loan Calculator.


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