Can I borrow to hire staff or cover wages?

Why does hiring create a cash gap?

Because the costs arrive first. A new employee needs wages from their first pay cycle, super alongside those wages, and often tools, a vehicle, uniforms or software. Their contribution to revenue builds more gradually as they learn the systems, meet customers and get up to speed. For some roles that ramp-up is a few weeks; for others it’s months.

That gap between cost and payback is exactly what business finance is designed for — as long as the demand behind the hire is real.

What does hiring actually cost?

business.gov.au’s guide to hiring employees lists the costs to plan for. In lending terms, they fall into two groups:

Upfront	Ongoing
Recruitment and advertising	Wages at the correct award or agreement rate
Onboarding and training time	Super contributions
Tools, equipment, vehicle, uniform	Payroll tax, if you’re over your state’s threshold
Software licences, phone, workspace	Workers’ compensation insurance
	Leave entitlements building up

The upfront costs are a one-off; the ongoing costs continue whether the hire has ramped up or not. That’s why the funding should cover the ramp-up period, not just the first pay run.

How does Payday Super change payroll planning?

From 1 July 2026, Payday Super requires employers to pay super at the same time as wages, with contributions reaching employees’ super funds within 7 business days of payday, according to the Fair Work Ombudsman. Previously, many businesses paid super quarterly, which meant super cash sat in the account for weeks.

For cash flow, the change is significant:

• Super now leaves the account every pay cycle, not every quarter.
• The quarterly “float” some businesses relied on is gone.
• A new hire’s full cost — wages plus super — hits cash flow immediately.

If your payroll timing was built around quarterly super, it’s worth re-running your cash flow forecast. The ATO’s Payday Super pages explain the employer obligations in detail.

When does borrowing to hire make sense?

Borrowing to hire works when there’s evidence the hire will generate revenue:

• Signed contracts or purchase orders you can’t fulfil with the current team.
• Turning away work or running long waiting lists.
• Owner time maxed out, with sales or quotes going unanswered.
• A clear role — you know exactly what the person will do and what it’s worth.

It’s riskier when the hire is speculative (“we’ll find the work once they’re here”) or when borrowing is covering ordinary payroll month after month. That second pattern points to a deeper cash flow issue — see covering a cash flow gap and the guide seven questions that show a cash crunch is coming.

Which finance suits hiring?

• Line of credit — draw as each pay cycle needs, repay as the new hire’s work is invoiced and paid. Good for uneven payroll pressure.
• Unsecured term loan — a defined amount for a planned hiring round, repaid over the ramp-up and beyond. Typically $5,000 to $500,000 for trading businesses.
• Property-secured loan — larger expansions, like a second crew or a new site, especially when combined with equipment or fit-out costs.

Our page on how repayments work explains the structures. If you’d like to talk through which fits your hiring plan, send a 60-second enquiry — no credit check when you first enquire.

How do I size the funding for a hire? (Illustrative example)

Illustrative only — invented business and figures.

A Sydney restaurant is turning away weekend bookings and wants to add a second chef and two front-of-house staff.

1. Upfront: recruitment, uniforms and some extra kitchen equipment — a modest one-off.
2. Ongoing: wages and super for three people, now paid every pay cycle under Payday Super.
3. Ramp-up: the owner estimates it will take around three months for the extra covers to cover the extra wages.

The funding is sized to cover the upfront costs plus the shortfall during those three months, with a buffer. A line of credit fits well: drawn during the ramp-up, then reduced as weekend revenue grows.

How can I tell when the new hire has paid off?

Set a simple measure before they start, so you know whether the funding has done its job. Useful markers include:

• Revenue per week from the work the new person handles — jobs completed, covers served, hours billed.
• Work no longer turned away — bookings accepted, quotes answered, contracts fulfilled.
• Owner time freed — hours you’ve moved from doing the work to winning or managing it.
• Overtime reduced for the existing team.

Check the measure monthly against the cost of the role, including super and on-costs. Once the hire is covering their own cost, the funding can be reduced — a line of credit can simply be paid down. If after the planned ramp-up the numbers still don’t stack up, you’ll know early enough to adjust hours, the role or the plan, instead of discovering it a year later. The guide first-year business money questions has a wider set of checks for growing teams.

What do lenders want to see for a hiring loan?

• Business bank statements showing current trading.
• Evidence of demand — bookings, contracts, orders, waiting lists.
• A simple cost estimate for the hire and the ramp-up period.
• Payroll and super status — lenders like to see that super and PAYG are up to date.

Grow the team with the cash to back it

Hiring is one of the best uses of business finance when the work is already there. Enquiring doesn’t involve a credit check, your details aren’t passed along a chain of lenders, and a real person helps you size funding to the ramp-up rather than guessing. Please describe the roles and the demand behind them accurately on the form — it’s the fastest way to the right structure.

Talk to us about funding your next hire →