Whether you're looking for a business loan for start up financing, to fund a new initiative or grow your company, Mozo compares current business loan rates to help you get the business loan that best suits you needs. You can use our business loans search tool to find and compare business loans features, like fees, repayment flexibility and rates.
Types of business loans
Business loans come in three types: secured, unsecured and commercial. These loan types have different features, interest rates benefits and drawbacks, so you’ll need to choose the one that best suits your financial circumstance.
- Secured business loans typically have lower interest rates, but carry the risk of losing your assets - such as a car or property - if you default on the loan.
- Unsecured business loans have higher interest rates to compensate the banks for the added risk. The more information you provide about the need for the commercial loan, the lower the risk to the lender and the more likely you are to snag a great small business loan rate. Head to our hub to compare unsecured business loans.
- Commercial loans offer a range of features such as overdrafts or a line of credit - but these financing options can come at a cost, be it monthly fees or higher rates.
Is a fixed or variable business loan interest rate better?
When you take out a business loan, you’ll get the option for either a fixed or variable rate option. There is no real answer as to which is the best business loan rate, as both have benefits and catches, for instance:
- Variable rate business loans can offer great flexibility such as fee free redraw facilities and the ability to make additional repayments. But if interest rates go up, so will your repayments, so it's important to budget for this possibility.
- Fixed rate business loans increasingly offer similar features such as redraw and early repayments, but typically charge at a higher rate than the market-leading variable business loans. Fixed rate business finance does give you the certainty to budget for repayments without worrying about interest rates changing.
Small business loans: Why is getting the best rate so important?
Having the right small business loan rate is incredibly important. A well managed cash flow is essential to the success of small business banking; you don't want surprises like an unexpected interest rise damaging your businesses ability to make repayments.
By snagging the best business loan rate possible, you minimise the interest you pay on the loan. This leaves you with more funds to spend on training staff, updating your office or whatever else your business needs. Use our business loan comparison tool to compare what features are available alongside your small business loan interest rate.
What should I know about short term business loans?
Many businesses will occasionally apply for a short term business loan to pay bills while waiting for a client to pay a large invoice or stock shipment. Just keep in mind that the repayment schedule for short term business loans is fast and you could have to make repayments on a daily basis.
So if you’re after a short term loan, use our comparison tool to compare some of the current business loan interest rates.
What should I compare in a business loan?
Finding the right business loan can be tricky, especially if you don’t know what to look for. When you start to compare business loan rates, you’ll also need to compare the following:
If you are approved for a business loan, there may a few fees you’ll need to pay, like:
- Upfront fees - An upfront fee is paid at the start of your loan and can either be a set amount or a percentage of your total loan amount, for instance 2% or 3%.
- Ongoing fees - An ongoing or service fee is the cost to keep your loan going and can be charged on a weekly basis.
One great benefit your business loan might come with are flexible repayment features, like:
- Extra repayments - Having the ability to make extra repayments to your loan can help you get debt-free faster, while cutting down on the amount of interest you pay. Just keep in mind that you may be charged a fee to do so.
- Redraw facility - And if you ever need to redraw any of these extra repayments to pay for an unexpected bill or expense, a redraw facility can come in handy.
Who offers the best business loan rates?
When it comes to finding the best business loan rate, you’ll generally have your choice of two lenders, a big bank or a non-bank lender. Most lenders will have loans that are available Australia-wide, but if you want to find a lender in your capital city like Sydney or Melbourne we have a page for you as well. Both lenders have their pros and cons and it’s up to you to decide which is right for your business.
- Big bank: One of the benefits of going with a big bank is that you’ll be able to go into a branch and speak to a manager. With a bank, there’s also more generous loan terms and amounts up for grabs, however, this does mean that you may have higher business bank loan rates and fees.
- Non bank lender: On the other hand, non-bank lenders, like peer-to-peer lenders generally don’t charge higher rates and fees. But we should mention that peer-to-peer lenders often give better rates and lower fees to borrowers with a clean credit history. They also may have a lower borrowing limits and shorter terms.
Where do I find the best business loan rate?
Right here! Our business loan comparison tool can help you compare business loan interest rates today. It not only compares interest rates, but fees and other loan features, helping you find the loan that best suits your businesses needs.