Securing a business loan can be the key to growing your business, managing cash flow, or investing in new equipment. We make it easy by comparing over 40 options from bank and non-bank lenders and providing the educational resources you need to find the right fit for your business.
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.
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.
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.
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.
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.
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.
Read reviews and learn more about NAB business loans
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A business loan is money you borrow on behalf of your business, to cover expenses you can’t afford upfront. These loans are designed to meet your business’s specific needs, whether you're just starting out or looking to grow.
You can use a business loan for purposes like:
Expanding operations, like opening new locations or scaling production.
Managing cash flow for everyday expenses
Purchasing equipment like machinery or new software
Hiring staff
Consolidating existing loans for better terms.
When used wisely, a business loan can be a powerful tool to help your business grow and succeed.
Before diving into the specific types of business loans, let’s clear up a few important concepts that are important to understand.
Secured vs. unsecured loans. Loans can be secured or unsecured. A secured loan requires you to put up something as collateral, like property or equipment. An unsecured loan does not require collateral.
Fixed vs variable interest rate. A fixed interest rate means your interest rate stays the same throughout the life of your loan. A variable interest rate can fluctuate based on the RBA’s cash rate; so if the cash rate goes down, your loan’s rate will usually go down too (and vice versa).
In your personal life, your credit card works a bit differently than your mortgage, while your car loan has its own set of rules.
Business loans are no different—they come in all shapes and sizes. Here are a few of the most common loan types:
Term loans. A loan where you get a lump sum of cash upfront and pay it back over a set period of time. These can be short-term, long-term or anywhere in between.
Business overdraft and revolving credit. A loan that lets you access funds up to a certain limit, repay, and borrow again as needed. Great for managing cash flow.
Business credit cards. Similar to a revolving line of credit, but more focused on everyday business purchases and often with lower credit limits.
Equipment financing. A loan for a specific piece of equipment, with the equipment often serving as collateral for the loan.
Commercial property loans. Loans that help you purchase, refinance, or develop commercial real estate property.
Invoice financing. Also called accounts receivable financing, this lets you borrow money against outstanding invoices owed to you, with the invoices serving as collateral.
Merchant cash advance. A lump sum loan that is repaid through future sales.
Now, let’s see how these options stack up side-by-side:
Loan Type |
Security Options Available |
Interest Rate Options |
Typical Uses |
Term Loans |
Secured or Unsecured |
Fixed or variable interest |
Equipment purchase, business expansion |
Business Overdraft |
Secured or Unsecured |
Variable interest |
Managing cash flow, short-term expenses |
Business Credit Cards |
Unsecured |
Variable interest |
Everyday business purchases, operational costs |
Equipment Financing |
Secured |
Fixed or variable interest |
Purchasing or leasing business equipment |
Commercial Property Loans |
Secured |
Fixed or variable interest |
Buying, refinancing, or developing real estate |
Invoice Financing |
Unsecured (backed by Invoices) |
Fixed fee and/or percentage of invoices |
Bridging cash flow gaps, managing receivables |
Merchant Cash Advance |
Unsecured (backed by Future Sales) |
Fixed fee and/or percentage of future sales |
Funding based on future sales |
The difference between a high interest rate and a more competitive one can mean the difference between manageable monthly payments and financial burden that could hobble your business. So let’s look at what affects your interest rate, as well as levers you can pull to get that sucker down.
Business loan interest rates are highly correlated with the cash rate set by the Reserve Bank of Australia, which sits at 4.35% as of 13 August 2024. The cash rate is the rate banks charge each other to borrow money overnight. That means to make money from you, the bank will need to charge you a rate over and above the cash rate. According to our database, as of 14 August 2024, we’re seeing interest rates anywhere from 6.49% to 11.74% on variable rate loans and 6.19% to 13.69% on fixed-rate loans. Keep in mind, there are other factors that influence your rate. We’ll discuss those next.
In many ways, your interest rate reflects how much risk the lender believes they’re taking by lending you money. Generally, the riskier you are, the higher your interest rate—and vice versa. Here are some factors that help the lender assess their level of risk:
Credit history. The strength of your business’s credit record.
Financial health. Includes revenue, profitability, cash flow, and debt levels.
Industry. The level of risk associated with your particular industry.
Track record. The length and stability of your business’s operational history.
Collateral. Any assets you can offer to secure the loan.
Loan type. The specific nature and structure of the loan you’re seeking.
Your choice of lender can also influence the rate, along with external factors like the Reserve Bank’s cash rate.
How to get a better interest rate?
The good news is, there are steps you can take to bring your interest rate down. Here are some tips:
Shop around. Compare offers from different lenders to find the most competitive rates.
Negotiate with your lender. Don’t be afraid to ask for a better rate, especially if you have strong financials.
Offer collateral. Securing your loan with valuable assets can make you a less risky borrower, which may lead to a lower rate.
Consider a shorter loan term. Lenders may offer lower rates for loans with shorter repayment periods.
Make a larger down payment. Reducing the amount you need to borrow can lower your rate and overall loan cost.
Work on credit and financial health (longer-term). While it takes time, improving your credit score and overall financial health can lead to better rates down the line.
Fees are another reality of business loans, and a favourable fee structure can mean the difference between a manageable loan and an unexpectedly costly one. Here are a few fees to be aware of and what to look out for:
Fee Type |
What It Does |
When It Takes Effect |
Application Fee |
Covers the cost of processing your loan application |
When you apply for the loan |
Origination Fee |
A one-time fee for setting up the loan |
When the loan is approved and funded |
Service/Monthly Fee |
Ongoing fee for managing the loan account |
Monthly, throughout the life of the loan |
Prepayment Penalty |
Charged for paying off the loan early |
If you pay off the loan before the term ends |
Late Payment Fee |
Charged if you miss a payment or pay late |
When a payment is missed or delayed |
Exit Fee |
Charged for closing the loan account early |
If you close the loan before its term ends |
Drawdown Fee |
Charged for each withdrawal from a line of credit |
Each time you draw funds from the credit line |
It's important to remember that not every fee applies to every loan. For example, drawdown fees don’t apply to term loans, so you won't find a drawdown fee on those.
Additionally, not every lender charges all possible fees—for instance, you’ll often find lenders advertising no application fee.
Most lenders will publish their fee schedule somewhere visible on their website, so make sure you’re familiar with all the fees involved in any loan you’re considering.
A business loan should be a useful tool rather than unnecessary drag. So make sure you choose one that aligns with your goals and offers payment terms that you can handle. With that in mind, here are some tips to help you choose the best business loan for your needs:
Define the purpose. Make sure the loan aligns with your business goals. What exactly are you funding?
Determine the amount. Figure out how much you need—enough to achieve your goals but not so much that it strains your finances.
Assess the impact. Will the loan's benefits outweigh its costs? Ensure the repayments are manageable within your budget.
Compare lenders. Shop around for a good deal by using our comparison table above to compare rates and terms.
Understand the terms. Get clear on the repayment schedule and any fees. Knowing these details upfront can prevent surprises later.
Plan for contingencies. Have a primary repayment plan and a backup if things don’t go as expected.
While some lenders may advertise lower rates than others, the true cost of a loan can vary widely depending on specific factors unique to each business.
At the end of the day, the cheapest business loan is typically the one that combines the lowest interest rate with minimal fees, and is paid off in the shortest amount of time.
Read on below for the quick fire answers to some of the most commonly asked business loans questions.
How much you can borrow with a business loan depends on a range of different factors, from your business performance to your credit history. You'll also need to decide how much you want to borrow for your business.
But according to our database, business loans can start out as little as $5,000 all the way up to $10,000,000 depending on the bank and on your particular situation.
Some providers may let borrowers use business loans to start their business, while others may have conditions regarding how long the business has been in operation and the amount of revenue it makes per year. You can visit our business loan providers page to check for yourself, or for more information, read our guide on business loans for startups.
A bad credit score could make it hard for you to get a business loan, there are still ways you could be approved. Bad credit may always leave you at risk of a higher interest rate, as your business may be considered a risky borrower.
It’s always a sensible move to work on improving your credit score by paying off any overhanging debt, but business loans will also look at your business record, which means looking into any commercial debts or tax bills as well.
A business loan can actually have a direct impact on your personal finances and, as the person applying for the loan, can relate directly to your credit score.
When you apply for a business loan, the lender will typically access both your personal and business credit files to check whether or not you’re in the right financial position to service that loan. This process is known as a ‘hard inquiry’ and it will leave a mark on your credit file. While one or two hard enquiries shouldn’t be much of a concern, having an excessive amount recorded within a short span of time could hurt your personal and business credit score.
To avoid accumulating too many hard enquiries, you may want to limit the number of loan applications you make by comparing business loans first. You should also make sure you are clear on any requirements before submitting applications.
Whether or not you have a guarantor on your business loan depends on your financial circumstances. If you don’t have a hefty cash deposit or enough equity in your residential property to put up as security for your business loan, then having a guarantor is another way to help you get approved. Besides making it easier to access extra finance, a guarantor could also bring other benefits like increased borrowing power and better interest rates.
Your lender may request a guarantor in order to reduce risk to themselves and ensure the loan gets repaid. Guarantors have an obligation to pay back the whole debt if the business defaults.
Guarantors can be first-party or third-party: the former simply means the borrower themselves provide security (i.e. a secured loan), while the latter means that another person or entity is brought into the loan agreement and agrees to put up an asset such as their residential property as security.
Whether or not you need a deposit depends on the type of loan and what you’re using the funds for.
If you’re buying something outright, like a business or property, it often works like a mortgage, where you need to place a down payment (typically 20-30%) to reduce the loan amount and demonstrate your commitment.
Borrowing large sums for expansion, development, or growth may not require a formal deposit per se, but lenders may expect you to demonstrate that you have some of the money on hand—often around 20-30% of the amount you’re borrowing.
Some other business loans, like smaller loans, credit cards and unsecured loans, there may not be a deposit required at all.
Just be aware that for some loans, you may have to put something up as collateral. But this isn’t the same as a deposit.
