In a world where financial needs don’t always follow a strict schedule, evergreen loans are emerging as the go-to solution for Australians seeking flexible, ongoing access to credit. Unlike traditional term loans, evergreen loans offer a revolving line of credit that can be drawn down, repaid, and reused—fitting perfectly with the unpredictable nature of modern business and personal finance.
What is an Evergreen Loan?
Evergreen loans, sometimes called revolving credit facilities, provide borrowers with a set credit limit that can be accessed repeatedly. Unlike fixed-term loans that require full repayment by a specific end date, evergreen loans automatically renew—so long as the borrower meets the lender’s conditions. This structure makes them especially attractive to businesses and individuals who need ongoing liquidity or want to smooth out cash flow ups and downs.
- Revolving access: Borrow, repay, and redraw funds as needed up to your limit.
- No fixed maturity: The facility remains open—subject to regular reviews—instead of expiring on a set date.
- Interest on used amounts: You only pay interest on what you actually borrow, not the entire facility.
For example, a business might arrange a $200,000 evergreen loan to manage seasonal inventory purchases, drawing down funds in peak periods and repaying as sales come in—without the need to reapply for finance every year.
Why Evergreen Loans Are Trending in 2025
Several factors have driven the rise of evergreen loans in Australia this year:
- Economic uncertainty: With ongoing supply chain disruptions and inflation pressures, many SMEs are prioritising cash flow flexibility over fixed-term debt.
- 2025 lending policy updates: APRA’s revised guidelines, effective January 2025, require lenders to improve transparency and conduct annual reviews on revolving facilities. This has made evergreen loans more accessible and transparent for borrowers, with clearer fee structures and tighter credit assessments.
- Digital lending platforms: Fintech lenders are leveraging real-time data to offer faster approvals and dynamic credit limits, making evergreen facilities more tailored to individual needs.
Major banks like NAB and CBA have expanded their evergreen loan offerings for both businesses and high-net-worth individuals, while fintechs like Prospa and Moula are targeting SMEs with digital-first, revolving credit products. As of mid-2025, the RBA’s latest Credit Conditions Survey reports a 14% year-on-year increase in revolving business credit facilities, with evergreen structures accounting for much of this growth.
Who Should (and Shouldn’t) Consider an Evergreen Loan?
Evergreen loans aren’t for everyone, but they can be a game-changer for the right borrower. Here’s how to tell if they suit your situation:
- Best suited for: Businesses with fluctuating cash flow, property investors managing multiple projects, or individuals with variable income streams (e.g., freelancers, consultants).
- Not ideal for: Those with a tendency to over-borrow, or anyone who prefers predictable, fixed repayments and a clear debt-free date.
Key benefits include:
- Flexible access to funds when needed, reducing the stress of short-term cash crunches.
- Interest savings, since you only pay for what you use.
- No need to reapply each year if you maintain good standing.
However, risks exist:
- Potential for ‘evergreen debt’—where balances linger and interest costs accumulate over time.
- Annual reviews could lead to reduced limits or facility closure if your financials deteriorate.
- Variable interest rates may rise in line with RBA policy changes (the cash rate is currently at 4.35% but could shift in late 2025).
For example, a property investor in Sydney used an evergreen facility to fund renovations across multiple properties, drawing and repaying as sales settled. However, when rental yields dipped in early 2025, their lender reduced the limit during the annual review—highlighting the need for ongoing financial discipline.
How to Get the Most Out of an Evergreen Loan
If you’re considering an evergreen loan, here’s how to use it wisely in 2025:
- Compare lenders: Look beyond the big four—many challenger banks and fintechs offer competitive rates and digital management tools.
- Understand the fees: Watch for line fees, review charges, and early repayment penalties.
- Plan your usage: Use the facility for short-term, income-generating needs—not for long-term, depreciating expenses.
- Monitor reviews: Be prepared for annual reviews and have backup finance options if your situation changes.
With the right approach, evergreen loans can provide a safety net and a springboard for growth, but only if managed responsibly.
