Why 2020 could be the best year to take out a business loan

For many Australians, January presents the perfect time to take control of their finances and set goals for the year ahead. And given the year of financial flux that was 2019, plenty of Aussie businesses and households are likely only just catching up now.
With three Reserve Bank rate cuts in June, July and October, interest rates across a number of consumer financial products including home loans, personal loans, savings accounts and term deposits fell sharply in the second half of 2019.
But did 2019 provide any good news for Australian businesses looking to secure some extra funding in 2020 by way of a business loan?
Australian businesses rely on additional funding to cover a range of needs, with recent data from the Australian Bureau of Statistics revealing that businesses took out $872 million in new lending in October 2019 alone and over $9 billion for the year to October 2019.
Well, a combination of historically low interest rates plus the increasing competition in the business lending sector could make 2020 one of the best years yet to take out a business loan. Here’s a quick breakdown.
Further cuts to business loan rates
With the official cash rate dropping from 1.50% to a historic low level of 0.75% in 2019, it perhaps won’t be a surprise to learn that business loan interest rates also decreased over the past year.
In fact, the average interest rate of the 11 business loans on offer from major and challenger banks being tracked in the Mozo database dropped by 0.45% - from 5.52% on January 1, 2019 to 5.04% on January 1, 2020.
2019 was simply representative of a longer trend that correlates with Reserve Bank interest rate cuts over recent years though.
As the chart below shows, since Mozo started tracking business loan rates back in 2011 the average rate in our database has maintained a relatively consistent downward trajectory. The exception is a period between 2017 and 2019 which coincides with a lack of movement on the official cash rate from the RBA.

As a result, and with interest rates at comparatively low levels, 2020 could be one of the best times in recent years for businesses to borrow money in Australia. And the landscape could improve even more in the coming months for businesses looking to borrow money if the Reserve Bank decides to pull the rate cut trigger again.
According to Mozo Banking Expert, Peter Marshall, there’s a realistic chance that the RBA may make a move at their first meeting of 2020 on February 4.
“A 0.25% interest rate cut in February from the Reserve Bank certainly isn’t out of the question. I wouldn't expect the majority of banks to pass on any cut in full though, with a 0.10% or 0.12% cut the more likely option my opinion,” he said.
Increased competition
Apart from falling interest rates, one of the largest changes to the business lending landscape in Australia in the last decade has been the emergence of a number of new challenger and online lenders.
Online lenders like Capify, Prospa and Moula have all sprung up in recent years and found success by offering businesses faster funding processes and less stringent application requirements among other factors.
Challenger bank Judo Bank, which was only founded in 2016, has also found success in the business loans space by targeting small and medium-sized businesses.
While these newer players still represent a relatively small share of the market, particularly compared to the big four banks, the growing awareness of these lenders as a viable option among Aussie businesses was born in a recent report.
According to the Australian Banking Association’s 2019 SME Lending Economic Report, Australian businesses approached ‘finance companies’ 37.4% of the time when looking for finance compared to 64% of the time for banks.
Small businesses were even more likely to approach finance companies, with businesses employing 0-4 staff approaching finance companies 42.4% of the time compared to 56.6% of the time for banks.
RELATED: 5 of the best business loans for 2020
The same report also showed an encouraging sign for businesses looking for finance, with 94% of small business loan applications approved by banks in the study.
Ready to start 2020 by finding a business loan to match your business needs? Check out some of the hot offers in the table below, or browse through a number of offers from both banks and online lenders using Mozo’s dedicated business loans comparison tables.
Compare business loans
Boost Business Loan
Whether you’re looking for a quick cash boost for your business or are ready to invest in growth, ScotPac offers a range of unsecured and secured loans from $10,000 up to $500,000. For loan terms of 6 months to 3 years. No application or account keeping fees to pay. Funds available in 24 hours or less once approved. Repayment options available.
Interest Rate
Upfront Fee
Funding speed
On applicationDetails on applicationFrom 24 hoursBoost Business Loan
Whether you’re looking for a quick cash boost for your business or are ready to invest in growth, ScotPac offers a range of unsecured and secured loans from $10,000 up to $500,000. For loan terms of 6 months to 3 years. No application or account keeping fees to pay. Funds available in 24 hours or less once approved. Repayment options available.
- Interest Rate
- On application
- Upfront Fee
- Details on application
- Ongoing Fees
- $0
- Late payment fee
- -
- Transaction fee
- -
- Early repayment penalty
- -
- Other fees
- -
- Loan type
- Loan
- Security type
- Secured or Unsecured
- Minimum loan amount
- $10,000
- Maximum loan amount
- $500,000
- Minimum loan term
- 6 months
- Maximum loan term
- 3 years
- Repayment frequency
- Weekly
- Repayment types
- -
- Minimum trading period
- 1 year
- Minimum annual turnover
- $120,000
- Application speed
- From 24 hours
- Approval speed
- From 24 hours
- Funding speed
- From 24 hours
- Extra repayments allowed
- -
- Redraw allowed
- -
- Other benefits
- All industries supported.
- Other restrictions
- Loans up to $100K: No upfront collateral required Loans between $100K to $200K: Borrower must be a property owner Loans over $200K: Borrower must be a property owner, and the loan will be secured
Prospa Plus Business Loan
Prospa uses risk-based pricing to determine your interest rate. They look at factors including your industry, years in business, cash flow, creditworthiness and the overall financial health of your business.
Interest Rate
Upfront Fee
Funding speed
Interest rates vary based on risk.3.5%from 24 hoursProspa Plus Business Loan
Prospa uses risk-based pricing to determine your interest rate. They look at factors including your industry, years in business, cash flow, creditworthiness and the overall financial health of your business.
- Interest Rate
- Interest rates vary based on risk.
- Upfront Fee
- 3.5%
- Ongoing Fees
- $0.00
- Late payment fee
- $0.00
- Transaction fee
- -
- Early repayment penalty
- $0.00
- Other fees
- -
- Loan type
- Loan
- Security type
- Secured
- Minimum loan amount
- $150,000
- Maximum loan amount
- $500,000
- Minimum loan term
- 3 months
- Maximum loan term
- 3 years
- Repayment frequency
- Weekly
- Repayment types
- Principal & Interest
- Minimum trading period
- 3 years
- Minimum annual turnover
- $1,000,000
- Application speed
- 10 Minutes
- Approval speed
- Same-day approval
- Funding speed
- from 24 hours
- Extra repayments allowed
- yes
- Redraw allowed
- no
- Other benefits
- -
- Other restrictions
- -
Unsecured Business Loan
Business Loans from $5,000 to $5,000,000 with high approval rates. Access to funds on loans up to $500,000 in as little as 3 hours. Cash flow friendly repayments and open minded offers.
Interest Rate
Upfront Fee
Funding speed
On Application3%, starting at $399from 3 hoursUnsecured Business Loan
Business Loans from $5,000 to $5,000,000 with high approval rates. Access to funds on loans up to $500,000 in as little as 3 hours. Cash flow friendly repayments and open minded offers.
- Interest Rate
- On Application
- Upfront Fee
- 3%, starting at $399
- Ongoing Fees
- no
- Late payment fee
- $50.00
- Transaction fee
- -
- Early repayment penalty
- no
- Other fees
- -
- Loan type
- Loan
- Security type
- Unsecured
- Minimum loan amount
- $5,000
- Maximum loan amount
- $5,000,000
- Minimum loan term
- 3 months
- Maximum loan term
- 1 year
- Repayment frequency
- Weekly, flexible
- Repayment types
- Principal & Interest
- Minimum trading period
- 4 months
- Minimum annual turnover
- $144,000
- Application speed
- 10 Minutes
- Approval speed
- within 1 hour
- Funding speed
- from 3 hours
- Extra repayments allowed
- yes
- Redraw allowed
- no
- Other benefits
- Daily repayments available.
- Other restrictions
- Fast Business Loans for amounts up to $500,000 are funded in 3 hours, Small Business Loans can take 24 hours.
Mortgage Secured Commercial Loan
Use your property as collateral to meet your business needs. Offers repayment terms up to 30 years for residential security and 15 years for commercial/rural security. Provides interest rates that are tailored to your business needs. Choose from Principal & Interest, Interest Only, or Interest in Advance repayment options.
Interest Rate
Upfront Fee
Funding speed
On applicationOn applicationVariesMortgage Secured Commercial Loan
Use your property as collateral to meet your business needs. Offers repayment terms up to 30 years for residential security and 15 years for commercial/rural security. Provides interest rates that are tailored to your business needs. Choose from Principal & Interest, Interest Only, or Interest in Advance repayment options.
- Interest Rate
- On application
- Upfront Fee
- On application
- Ongoing Fees
- $0
- Late payment fee
- $20.00
- Transaction fee
- $0
- Early repayment penalty
- $0 for variable loans, break cost may apply for fixed loans.
- Other fees
- On application
- Loan type
- Loan
- Security type
- Property Secured
- Minimum loan amount
- $500
- Maximum loan amount
- -
- Minimum loan term
- -
- Maximum loan term
- 30 months
- Repayment frequency
- Monthly, Quarterly, Half-yearly, Annually
- Repayment types
- Principal & Interest, Interest Only
- Minimum trading period
- Varies
- Minimum annual turnover
- Varies
- Application speed
- Varies
- Approval speed
- Varies
- Funding speed
- Varies
- Extra repayments allowed
- yes - variable loans only
- Redraw allowed
- yes - minimum $500 (variable loans only)
- Other benefits
- -
- Other restrictions
- Minimum Deposit of 20% is required for mortgages secured by residential property, 35% for commercial property and 40% for rural property. Loan term limited to 15 years for commercial or rural security.
Read reviews and learn more about Regional Australia Bank business loans
Self Managed Super Fund Loan
A loan to help your fund grow. Borrow for up to 25 years for residential properties or 15 years for commercial or rural properties. No monthly service fees, so you can save more for your retirement. Approval fee applies.
Interest Rate
Upfront Fee
Funding speed
On application$1,500VariesSelf Managed Super Fund Loan
A loan to help your fund grow. Borrow for up to 25 years for residential properties or 15 years for commercial or rural properties. No monthly service fees, so you can save more for your retirement. Approval fee applies.
- Interest Rate
- On application
- Upfront Fee
- $1,500
- Ongoing Fees
- $0
- Late payment fee
- $20.00
- Transaction fee
- $0
- Early repayment penalty
- $0
- Other fees
- On application
- Loan type
- Loan
- Security type
- Property Secured
- Minimum loan amount
- $100,000
- Maximum loan amount
- -
- Minimum loan term
- -
- Maximum loan term
- 25 months
- Repayment frequency
- Monthly
- Repayment types
- Principal & Interest
- Minimum trading period
- Varies
- Minimum annual turnover
- Varies
- Application speed
- Varies
- Approval speed
- Varies
- Funding speed
- Varies
- Extra repayments allowed
- yes
- Redraw allowed
- no
- Other benefits
- -
- Other restrictions
- Minimum Deposit of 20%-30% is required for mortgages secured by residential property, 35% for commercial property and 50% for rural property. Loan term limited to 15 years for commercial or rural security.
Read reviews and learn more about Regional Australia Bank business loans
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