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BEST SMALL BUSINESS LOANS COMPARISON

  • Compare your best business loan options from 50+ lenders
  • Great rates on loans from $5,000 - $1m
  • Hassle-free, fast access to funding

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Business Loans with Money Matchmaker

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Why compare business loans with Money

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How does a business loan work?

A business loan allows your business to borrow funds to purchase assets or access working capital for day-to-day operations and growth opportunities.

The business repays the loan, plus interest and fees, over a fixed term. Typically a business can borrow an amount of money relative to the level of revenue it generates.

  • Borrow anywhere from $5,000 to $1m+
  • Loan terms from 1 month - 7 years
  • Fixed interest rates starting from 7.50% p.a. (excellent credit)
  • Available to businesses, sole traders and self-employed individuals
  • Can be used for any business purpose
  • Weekly, fortnightly or monthly repayments to match your cash flow

You can get a business loan as a lump sum or an ongoing line of credit which you can draw on whenever you need, up to a limit.

There are two main types of business loan

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Secured business loan

A secured business loan is backed by a commercial asset or residential property which acts as collateral to secure the loan. In some cases, you may be able to use commercial property (e.g. your business premises) as collateral. Secured finance usually comes with lower interest rates and more repayment flexibility because there’s less risk to the lender. The lender can reclaim and sell the asset(s) if you default on your loan repayments.

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Unsecured business loan

An unsecured business loan is not backed by an asset or collateral. Because the loan isn't tied to any security, interest rates on unsecured business loans tend to be higher to offset the lender’s risk. That’s because if you default on the loan, the lender may not be able to recoup its losses. Your maximum borrowing amount may also be lower compared to a secured business loan.

What are the best interest rates on business loans?

Business loan interest rates in Australia start from around 7.50-15% p.a. for secured loans and 12-20% p.a. for unsecured business finance. But rates can be higher than this on some business loans.

Your business’s personalised interest rate will be based on the lender’s criteria and their assessment of how risky it is to lend to you.

Compare business loan interest rates

Business loan option

Small business loans

Rates starting from

7.50-15% p.a.

Business loan option

Unsecured business loan

Rates starting from

12-20% p.a.

Business loan option

Business line of credit

Rates starting from

8-15% p.a.

Business loan option

Business overdraft

Rates starting from

8-15% p.a.

Business loan option

Asset & equipment finance

Rates starting from

7.50-15% p.a.

Business loan option

Invoice finance

Rates starting from

3-12% p.a.

Business loan option

Fit-out finance

Rates starting from

7.50-15% p.a.

Business loan option

Bad credit business loan

Rates starting from

18-20% p.a.

Business loan option Rates starting from

Small business loans

7.50-15% p.a.

Unsecured business loan

12-20% p.a.

Business line of credit

8-15% p.a.

Business overdraft

8-15% p.a.

Asset & equipment finance

7.50-15% p.a.

Invoice finance

3-12% p.a.

Fit-out finance

7.50-15% p.a.

Bad credit business loan

18-20% p.a.

Please note: These are indicative rates based on Money.com.au’s analysis of bank and non-bank business lenders. It may not necessarily reflect the actual rate you’ll pay.

10 factors that impact your business loan rate

1

The finance type

Secured business loans generally come with lower interest rates, as there is less risk for the lender. A fixed-term loan could also come with a different interest rate than an ongoing line of credit.

2

Type of security

For a secured loan, the asset being used as security will be considered. For example, for a business loan to purchase a vehicle, the age and condition of the asset will likely be taken into account. Newer assets that are in good condition will attract lower rates.

3

Business turnover

Businesses with a high level of annual turnover (e.g. $5m+) will qualify for lower business loan rates than a lower-turnover business.

4

Time in business

Established businesses with a few years of trading history generally get lower rates than newer businesses. A minimum of 12 months' trading history is a common lender requirement.

5

Industry

Some lenders tailor their rates based on the industry the borrower operates in. As you’d expect, businesses in lower-risk industries often qualify for lower rates.

6

Whether you're asset-backed

If the borrower providing a personal guarantee is asset-backed (i.e. owns a property), they’ll generally qualify for lower rates than a business borrower without assets.

7

Credit score

With a lot of lenders, a credit score below 600 will make getting a business loan more difficult, with higher rates applying for low credit score borrowers who are approved.

8

Credit defaults and dishonours

If there are defaults, court orders or insolvencies in the borrower’s credit history, higher rates will likely apply. Likewise, if bank statements show the borrower has recent dishonoured payments or has been overdrawn on their account, this could impact the rate offered.

9

ATO lodgements up to date

Borrowers with no outstanding ATO payments due will typically be offered lower business loan rates. If you are in arrears with the ATO but the payments are manageable you may still qualify but with a higher interest rate.

10

Loan amount and duration

This isn’t always the case, but some lenders will vary rates based on the loan amount and duration of the loan. Again, the common theme is that greater risk means higher rates.

If you have a strong business loan application, you may also be eligible to apply for larger loan amounts, with longer loan terms and lower fees.

How to structure your business loan

Andrew Beckett

Andrew Beckett , Commercial Finance Broker

"The two key things to consider are: When do I get paid by my clients? What can I afford to repay on a daily, weekly or monthly basis? Once you know when you get paid and how much, subtract any relevant expenses and outgoings and your remaining amount should cover your loan repayments by at least 120%. Most lenders use what's called a 'debt to service cover ratio' and often look for the coverage to be at least 1.2x."

Andrew Beckett , Commercial Finance Broker

Who’s eligible for a business loan?

Generally, the minimum eligibility requirements for a small business loan in Australia include:

  • Australian citizenship or permanent residency
  • An active ABN or ACN
  • Your business must be GST-registered (depending on the lender)
  • At least six to 12 months of trading history
  • A minimum annual business turnover of $75,000 - $100,000
  • The ability to provide financials or bank statements
  • A good credit score — the minimum business credit score is 475; for company directors, it's about 500 (it could be less if you're a homeowner).
  • Operate in a non-excluded industry (some lenders won’t lend to the likes of gambling-related businesses, debt collection companies and tattoo studios).

How to apply for a business loan

You can get a small business loan with banks, specialist online lenders or through a finance broker.

Specialist lenders are known for providing fast approval. For example, you could be pre-approved for finance within a few minutes and unconditionally approved within 24 hours.

That’s because these lenders often require minimum information and documents to assess your application.

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What you'll be asked about your business

Its location, structure, monthly and annual turnover, how long you’ve been operating for and in what sector.

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What you'll be asked about the loan you want

How much you want to borrow and for how long (your loan term), plus details of the asset you wish to purchase (if applicable).

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Financial documentation you’ll need to provide

Business bank statements from the last six to 12 months, BAS statements and/or tax returns (optional), ABN registration information.

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For loans above $150,000, you'll also need to provide

Profit and loss statements, business balance sheet, a business plan outlining how you will use the funds to generate revenue, plus details of business expenditure and how you plan to repay the loan.

What are the most common business loan purposes?

According to Money.com.au borrower data, the top reasons businesses in Australia apply for a loan are: Buying vehicles or transport (41%); day-to-day capital (29%); machinery or equipment (10%); other purposes e.g. office fit outs, purchasing another business (20%).

Business loan purposes

The average small business loan amount in Australia is $94,845, with loans for buying existing business ($261,944) and machinery or equipment loans ($181,434) attracting the largest amounts.

Compare the best business loan options

The type of finance that will suit best depends on your business, what it needs funds for and how soon.

Ready to compare business loans?

Get your best offers from multiple lenders. There's no obligation and checking your rates won't impact your credit score.

More FAQs about business loans in Australia

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  • ABR Finance
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  • Angle Finance
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  • ANZ
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  • APositive
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  • Azora Finance
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  • Banjo Loans
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  • Bizcap
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  • Capify Australia
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  • Capital Finance
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  • CSA Private Mortgages
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  • Drive Finance Solution
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  • Dynamoney
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  • Earlypay
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  • Eastwood Securities
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  • Fifo Capita
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  • Finport Finance
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  • Fleet Partners
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  • Flexi Commercial
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  • Funda Business Finance
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  • Funding
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  • GRENKE
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  • Group And General
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  • HomeSec
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  • In Front Australian Business Solutions
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  • Invoice Money
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  • Lend Asset Assist
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  • Lumi
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  • Moneytech
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  • Morris Finance
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  • Moula
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  • Multipli
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  • Nova Cash Flow Finance
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  • Octet Finance
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  • Off Panel Lender
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  • Prospa
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  • Rentset
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  • Resimac
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  • ScotPac Business Finance
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  • Selfco
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  • Semper Asset Management
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  • Shift
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  • Speedy Finance
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  • Strive Financial
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  • TradePlus24
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  • TruePillars
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  • Westlawn
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  • Westpac
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  • Your Manager

Currently, small business loan interest rates in Australia range between 7.50-15% p.a. Interest rates will be higher for unsecured business loans. The average interest rate for business loans varies as there are multiple lenders and loan products available in the market. That’s why it’s important to compare your options to find the best rate for your business.

Here are the three main ways lenders will advertise — and apply — interest on business loans:

Simple interest rate: Only shows the interest charged on the loan each year (or it’s sometimes charged monthly) as a percentage of the loan balance. APR (annual percentage rate): This is the total cost of borrowing (including interest and fees) expressed as an annual percentage. Factor rate: Often used on short-term loans. This is the interest rate on a loan presented in decimal form instead of a percentage.

Business loans generally come with standard fees, including:

Establishment fees: $150 - $550 Monthly account keeping fees: $0 - $10 Extra repayment fees: Depends on loan amount & loan term Early payout fees: $0 - $450 Fees can significantly impact your borrowing costs, so consider negotiating with your lender to minimise them. Some lenders may even waive certain upfront fees to win your business.

Yes, you can use a finance broker to help you find the best rates on business loans and handle the application process for you, potentially increasing your chances of approval. That’s because:

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  • Brokers have established partnerships with a wide range of lenders
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  • They understand the specific eligibility criteria of lenders on their books
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  • They have experience handling business loan applications and can ensure yours meets the mark.
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  • Finance brokers are typically paid as a percentage of your loan amount by the lender.

Yes, most business loan applications require submitting your latest bank statements for the business, usually as electronic copies. This is the quickest way for lenders to assess your business revenue and determine if you can comfortably repay the total loan amount and interest.

If you can’t provide business bank statements, you may have to apply for a low doc business loan, for which you’ll be asked to provide an accountant's letter verifying your business income.

The application process for a small business loan is typically faster with a specialist lender than with a bank lender. That’s because specialist online lenders have less stringent eligibility criteria and use technology to assess your business information, credit report, and bank transactions.

No, you generally don't need an upfront deposit for a business loan. But, there are instances when a lender may require a 10-20% deposit. This usually applies if your business has been trading for less than two years or if you don't own property and want to borrow more than $150,000.

It's important to note that a deposit is not the same as security (collateral), and you must provide collateral if applying for a secured business loan.

New businesses or startups can apply for a business loan, but typically face higher interest rates to offset the lender’s risk of financing a business with little or no trading history.

Remember that you must still be able to provide financial documentation showing you can service the loan in full. Alternatively, some lenders may request work contracts as proof of ongoing work to assess your loan serviceability.

Newer businesses generally need finance to plug gaps in their cash flow and help get their business off the ground.

Yes, you can still qualify for a business loan if you have a poor credit rating (or no credit rating), although it will likely need to be through a specialist lender. Bad credit business loans are similar to standard unsecured loans but usually feature higher interest rates.

In most cases, lenders will allow you to repay your loan early, although early termination fees may apply. If you plan on repaying your loan amount early to reduce your interest payable, check with your lender up-front whether you’ll incur fees or penalties for doing so.

Make sure that early termination fees on a business loan don't offset the interest savings you’d make by paying off the loan sooner.

Yes, you can generally refinance your business loan, although early termination fees may apply. Refinancing involves paying off your current business loan with a new one. You can refinance by getting a new loan from another lender or by switching your current loan with your current lender.

According to CPA Australia, common reasons why a business may choose to refinance include:

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  • To get a lower interest rate
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  • To borrow more money
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  • To consolidate debts

Be sure to check that the fees you’d pay in the refinancing process don’t cancel out the benefit (e.g. getting a lower interest rate) of refinancing in the first place.

There are a few reasons you may be declined for a small business loan, including:

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  • Your business financials don’t reflect your ability to service the loan amount.
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  • A business owner or director has bad credit or there’s no active credit history.
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  • Your business revenue is too dependent on a small number of customers.
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  • The outlook for your market sector or industry is poor.
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  • Your business hasn’t been operating for long enough.
Sean Callery Editor Money.com.au

Written by

Sean Callery

Sean Callery is the Editor of Money.com.au. He has over 15 years of international experience. He is qualified with a Certificate IV in Finance and Mortgage Broking (FNS40821) and is compliant to provide general advice in Tier 1 General Insurance (RG 146) products.

Shaun McGowan Money.com.au founder

Reviewed by

Shaun McGowan

Shaun McGowan is the founder of Money.com.au. He's determined to help people and businesses pay as little as possible for financial products, through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.

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