The Cost of FundTap vs Traditional Business Loans

When businesses compare funding options, cost is usually the first question. But comparing costs across different types of products is not always straightforward — because the pricing models are fundamentally different.

Here is a practical comparison that shows the real cost of each option for working capital needs.

How Each Product Is Priced

Bank term loan: Interest charged on the outstanding balance, expressed as an annual rate. Typical small business loan rates in Australia and New Zealand: 7–15% per annum. You pay interest on the full amount borrowed for the full term, whether you are actively using all of it or not.

Business overdraft: Interest charged on the drawn portion of the facility, typically 12–20% per annum. Only pay interest on what you use, but rates are higher than term loans.

FundTap: A flat fee on each invoice funded, expressed as a percentage of the invoice value. No annual rate — you pay a transaction fee for the specific period the invoice is outstanding. You pay nothing when you are not using it.

A Practical Example

Let us say you need $50,000 in working capital for 45 days.

Bank overdraft at 15% per annum: 45 days of $50,000 = approximately $925 in interest charges.

FundTap at a typical rate: A fee on the funded invoice for the 45-day period. For a $50,000 invoice, this might be approximately $1,000–$1,500 depending on the specific terms.

The cost is broadly comparable for short-term needs — but with a critical difference: FundTap does not require a credit facility, property security, or a lengthy application process. It is available within hours versus weeks.

The Hidden Costs of Bank Loans

Bank loan costs extend beyond the interest rate:

• Application fees: Often $500–$2,000+ to set up a facility
• Annual facility fees: Ongoing charges for maintaining a credit line
• Security and valuation costs: If property security is required
• Time cost: Weeks of management time spent on the application process
• Opportunity cost: Time spent on funding applications is time not spent on the business

The True Cost Comparison

When you account for setup costs, time to access funds, and the flexibility of each product, FundTap is competitive for working capital needs — and often significantly better when you factor in everything beyond the stated rate.

For a small business that needs $50,000 for 45 days because a client has long payment terms, FundTap provides the funds within hours at a predictable cost, with no security requirement, no ongoing fees when not in use, and no long-term commitment.

The right comparison is not just the rate. It is the total cost of accessing the right amount of money at the right time for your specific need.