Best Small Business Loans

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Business loans in Australia

Access to credit is essential for most Australian businesses. Among small businesses, the three most common business loan purposes are accessing working capital/smoothing over cashflow, purchasing inventory and buying equipment.

But small business loans can be used for any business purpose. The key is choosing the right kind of business finance to match the business need. And of course, finding the right lender for your business. This guide will help you do both.

Quick business loans summary

  • Available to businesses, sole traders and self-employed individuals
  • Provides fast access to vital cash flow for SMEs
  • Secured or unsecured loans available
  • Short and long-term options
  • Can be used for any business purpose
  • Offered by banks and specialist online lenders
  • Repayments schedule to suit your budget
Why businesses seek finance

What is a business loan?

A business loan allows a business to borrow funds to purchase an asset or access working capital. The business repays the loan, plus interest and fees, over a fixed term between one month and five years.

To qualify for a business loan, SMEs generally need to have at least six months' trading history and a minimum monthly revenue of $5,000. Typically a business can borrow money relative to the amount of revenue it generates.

Some lenders can approve and fund business loans up to $150,000 on the same day based on minimal application documents (e.g. only your bank statements).

There are two main types of small business loan:

Secured business loan

A business asset or residential property is used to guarantee the loan. Secured finance usually offers lower rates, lower fees and more flexibility because there is less risk for the lender. The lender can reclaim and sell the asset (collateral) if you default on your loan repayments.

Unsecured business loan

You do not offer any security as a guarantee on the loan. Unsecured business loans often offer faster and more straightforward approval but interest rates and fees tend to be higher. You also may not be able to borrow as much with an unsecured business loan.

How do business loans work?

Business loans work similarly to other types of common finance arrangements. Here are the main steps involved:

  • Start by comparing the various loan options and a range of lenders
  • Apply with a lender for a loan
  • The lender will assess your business’s borrowing potential based on its bank statements
  • The lender approves a loan with a term between one month and five years.
  • You select your preferred repayment frequency
  • You repay the loan amount (principal) plus interest and any fees until the loan is repaid in full.

Which type of business finance is best?

There is no one-size-fits-all business loan in Australia. There are different types of business loans, as well as lease options and ongoing credit facilities.

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

apply for car loan pre approval

I need fast access to business finance

Here are the most common options for businesses in need of quick approval and loan funding:

secured business finance

I need a business loan for a vehicle or equipment

There are various secured business loan and lease options for financing an asset:

Small business loans with Money Matchmaker

I have a specialised purpose for business finance

Some lenders offer business loans to cater for specific business goals and needs:

How to use a business line of credit

I need ongoing access to business finance

If a one-off loan isn't suitable, there are options for accessing a revolving credit facility:

Low doc home loans

I need support from a specialist lender

There are also loans designed to cater to borrowers who may not be eligible for standard business loans:

Best business loan rates

Business loan interest rates in Australia start from around 4-5%. The lowest business loan interest rates will be applied to business loans where the asset being financed will be used as security. For business finance with no security offered, rates start from around 12%.

The interest rate you get on your business loan will also be impacted by the overall level of risk your business represents to the lender. This will be based on factors like credit history; how long the business has been operating; its revenue, debt and overall financial situation; and what industry it operates in.

You can see the impact the interest rate will have on your loan repayments and overall cost using our business loan calculator.

Compare business loan interest rates

Type of Business LoanLowest fixed interest rates

Small business loans

From 5.00%

Unsecured business loan

From 12.00%

Business line of credit

From 5.00%

Business overdraft

From 7.5%

Equipment finance

From 4.49%

Invoice finance

From 1.5% (factor fee)

Fit-out finance

From 7.49%

Bad credit business loan

From 15.00%

These are estimates only. A lender will determine your business loan interest rate based on your application.

How to get the lowest interest rates on a business loan

A low interest rate is a good indicator of the total cost of a business loan. But it’s not the only factor.

The type of interest will make a significant difference too. There are 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): Factors in the interest rate but also fees charged on the loan.
  • Factor rate: Often used on short term loans. It’s not a percentage but rather a number the loan amount is multiplied by to arrive at the total to be repaid.
Comparing loan fees

Cheapest business loans

The cheapest business loans are generally offered to borrowers who are able to provide security on the loan, and have a strong business credit rating. These are strong indicators that the borrower will be able to comfortably make the repayment.

You’ll also need to consider other factors that can affect the total cost of the loan to your business, including:

  • The loan term (the longer it is the more expensive the loan will be)
  • Loan establishment fees
  • Monthly or annual fees
  • Late payment penalties
  • Fees for repaying the loan early
  • Loan discharge fees
How to qualify for a loan in Australia

How to qualify for a business loan

The minimum requirements for a small business loan in Australia are:

  • An ABN
  • A GST-registered business
  • Citizen or permanent resident
  • A minimum business-operating time of six months
  • Can provide business bank statements

Business loan lenders will usually check both your company credit history and your personal credit score to check if you qualify. The lender will also assess your business based on additional information you provide when you apply.

How to apply for a business loan

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

Specialist lenders are known for providing fast approval. You can apply online and often be approved the same day, as these lenders often require minimum information and documents (usually just bank statements) to assess your ability to repay the loan amount.

They’ll want to know:

  • Your monthly and annual turnover
  • How long you have been operating
  • The structure of your business
  • The location of your business
  • The sector your business operates in
  • Personal details — especially where you are required to provide a personal guarantee
  • How much you wish to borrow and for how long
  • Details of the asset you wish to purchase

If you require more than $150,000, you will need to also provide:

  • Profit and loss statement (provided by your accountant)
  • Business balance sheet
  • A business plan outlining how you will use the funds

What should your business plan show?

  • How the funds will increase revenue for your business
  • Financial projections for the business if approved for finance
  • Details of business expenditure and how you plan to successfully repay the loan
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Top 5 reasons business loan applications are declined

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

  • Your business financials do not illustrate an ability to service the loan amount
  • A business owner or director has bad credit
  • Your business revenue is too dependent on a small number of customers
  • The outlook for your market sector is poor
  • Your business hasn’t been operating for long enough

Ensuring you apply for the right type of business loan (and with the correct documentation) is the easiest way to avoid this.

Shopping around for the right loan can save you thousands of dollars in interest and fees.

Business Loan guides and resources

Learn more about your business finance options and how to get the funding you need to grow your business.

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Frequently asked questions about business loans

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Yes. Business loan brokers can be found all across Australia. If you need a business loan and would like professional assistance in comparing your options and making an application, you can find business finance brokers in all major Australian cities; Sydney, Melbourne, Brisbane, Perth, Adelaide, Newcastle, and Canberra.

A business can qualify for a small business loan if it can provide a lender with bank statements that illustrate its ability to comfortably repay the loan amount.

Yes, you have to provide bank statements to a lender when applying for a small business loan. This will allow a lender to quickly assess your business revenue and determine if you can comfortably repay the total loan amount and interest.

The main difference between a small business loan from a bank and a specialist lender is the application process. The approval process is generally quicker with a specialist online lender.

Currently, small business loan interest rates in Australia range between 4% to 30%. Due to the number of lenders and loans available in Australia, the average interest rate varies. This is why it is important to ensure you compare lenders to find the best rate for your business.

No, you do not need a deposit for a business loan. It’s important to note that a deposit is not the same as security (collateral) and you will need to provide collateral if applying for a secured business loan.

Yes, you can get a small business loan If you have a poor credit rating. If you need to apply for a loan and have defaults or are an ex-bankrupt, you may wish to consider a bad credit business loan.

If you apply for a small business loan online with a specialist lender, you can often be approved for finance in under 24 hours.

Yes, a small business loan does not always require security. If you do not have collateral or do not want to provide security on a business loan, you can apply for an unsecured business loan.

In most cases, lenders will allow you to repay your loan early. If you plan on repaying your loan amount early to reduce the amount of interest you pay, check with your lender to ensure you won’t incur any fees or penalties for doing so.

In some cases it's possible to get a loan to help with setting up a new business. However, it can be more difficult to secure finance for a brand new business as it will likely be seen as a greater risk to the lender than lending to an established firm.

Written by

Shaun McGowan founder

Loans Expert

Shaun McGowan

Reviewed by

Sean Callery Editor


Sean Callery


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