Business Loans in Australia: Rates, Types, and How to Apply

A business loan in Australia costs between 5.5% and 25% per annum depending on the loan type, your business revenue, how long you've been trading, and whether you offer security. The gap between a secured term loan from a major bank and an unsecured line of credit from an online lender can be $15,000 or more in interest on a $100,000 loan over three years.

This guide covers the main loan types available to Australian businesses, current rates from major banks and alternative lenders, what you need to apply, and how to choose the right product for your situation.

Business lending in Australia breaks into several categories. Each serves a different purpose, and lenders price them according to risk.

Secured term loans carry the lowest interest rates because you pledge property, equipment, or other assets as collateral. If you default, the lender seizes the asset. The big four banks (CBA, ANZ, Westpac, NAB) offer secured business term loans from 5.5% to 9% for established businesses with property security. Loan terms run 1 to 30 years depending on the asset.

Unsecured business loans require no collateral, but the lender charges a higher rate to compensate. Online lenders like Prospa, OnDeck, Moula, and Lumi offer unsecured loans from $5,000 to $500,000 at rates between 9.9% and 25%. Approval takes 24 hours to 3 business days. These lenders assess your bank statements and cash flow rather than requiring property as security.

Business lines of credit work like a credit card. You draw down funds as needed and pay interest on the amount used. CBA's BetterBusiness line of credit charges a variable rate from 8.5%. Prospa's line of credit charges a monthly fee of 2% to 3.5% on the drawn amount. Lines of credit suit businesses with uneven cash flow: you borrow during quiet months and repay when invoices come in.

Invoice financing lets you borrow against unpaid invoices. The lender advances 80% to 90% of the invoice value within 24 hours, then collects payment from your customer. Fees run 1% to 3% of the invoice value per month. Earlypay, Scottish Pacific, and Octet offer invoice finance in Australia. This suits B2B businesses with long payment terms (30 to 90 days) and reliable customers.

Equipment finance covers vehicles, machinery, and technology purchases. The equipment itself serves as security, so rates sit between 5.5% and 12%. Most equipment finance runs as a chattel mortgage or finance lease. ANZ, Westpac, and specialist lenders like Angle Finance offer terms from 1 to 7 years.

Rates shown are advertised minimums. Your actual rate depends on your business financials, time in operation, industry, and credit history. A new cafe with 6 months of trading history won't qualify for CBA's 5.99% secured rate. That rate targets established businesses with property equity and two or more years of profitable trading.

Banks and alternative lenders evaluate different criteria, but the core questions overlap: Can you repay the loan from business cash flow? How long have you been operating? What does your credit history look like?

Major banks want two years of financial statements (profit and loss, balance sheet), six months of business bank statements, a current BAS (Business Activity Statement), details of existing debts, and an ABN registered for at least two years. They run a credit check on the business and the directors. A personal credit score below 600 makes bank approval difficult. The underwriting process for business loans mirrors life insurance assessments in its scrutiny of financial history.

Online lenders lower the bar. Prospa requires 6 months of trading history and $5,000 or more in monthly revenue. OnDeck requires 12 months and $100,000 in annual revenue. Moula needs 6 months and $50,000 in annual turnover. These lenders connect to your bank feeds through open banking (CDR) or read-only access to your transaction data. They assess cash flow patterns, not asset collateral.

The trade-off is price. Lower barriers to entry mean higher interest rates. A Prospa loan at 15% on $100,000 over 2 years costs $16,200 in interest. A CBA secured loan at 6.5% on the same amount over 5 years costs $17,100 in total interest but spreads payments over a longer period with lower monthly repayments.

Secured loans cost less in interest but carry more personal risk. If you pledge your home as security for a business loan and the business fails, the lender can sell your home to recover the debt. This is a real scenario, not a theoretical one. ASIC data shows that 60% of small businesses that cease trading do so within the first three years. Protecting your business with product liability insurance can help shield you from unexpected claims that compound financial pressure.

Unsecured loans protect your personal assets but cost more. The lender may still require a personal guarantee from the business directors. A personal guarantee means you're liable for the debt if the business can't pay. This isn't the same as offering your house as security (the lender can't take your property), but they can pursue you through the courts for the outstanding balance.

Choose secured lending when you have equity in property or equipment, you need a large loan ($250,000+), you want the lowest possible rate, and your business has stable long-term cash flow. Choose unsecured lending when you need funds fast (24 to 72 hours), you lack property security, the loan amount is under $150,000, or you want to keep personal assets separate from business risk.

The Australian Government's SME Guarantee Scheme encourages lenders to extend credit to small businesses by guaranteeing up to 50% of the loan amount. If the borrower defaults, the government covers half the loss. This scheme covers unsecured loans up to $5 million with terms up to 10 years. Participating lenders include CBA, NAB, Westpac, Judo Bank, and several non-bank lenders.

Export Finance Australia provides loans and guarantees to businesses that export goods or services. The Export Market Development Grants (EMDG) program reimburses eligible marketing and promotion expenses for businesses entering new export markets.

State governments run their own programs. The NSW Small Business Innovation & Research program offers grants up to $100,000. The Victorian Government's Business Growth Fund provides loans from $50,000 to $500,000 at reduced rates for regional businesses. Queensland's Business Growth Fund covers similar ground. Check business.gov.au for a current list of grants and concessions by state.

Non-bank lenders often quote a factor rate rather than an interest rate, and the two numbers are not comparable. A factor rate of 1.20 on $50,000 means you repay $60,000. That looks like 20%, and because you repay it across six months while the balance falls, the annualised cost lands far higher.

The comparison that matters is total cost of credit against how long you hold the money. Two offers with the same headline can differ by thousands once fees and term enter.

Short-term products are not automatically the wrong choice. Bridging a confirmed receivable for six weeks at a high annualised rate can cost less in dollars than a five-year loan you carry long after the need has passed. Funding ongoing operating losses that way is how a business ends up refinancing the same debt at a worse rate every quarter.

A 3% establishment fee on $200,000 is $6,000 paid before the business sees a dollar, and it does not appear in the interest rate. Ask every lender for the total amount repayable over the full term with all fees included, in writing, and compare that single figure.

Almost every unsecured business loan in Australia comes with a director's personal guarantee, and plenty of secured ones do too. The guarantee sets aside the limited liability of the company for that debt: if the business cannot pay, the lender pursues you.

Where the guarantee is supported by a mortgage over your home, the exposure is the house. Read whether the guarantee is limited to a stated amount or unlimited, and whether it extends to future facilities as well as this one, because an all-obligations guarantee signed once can cover borrowings you take years later.

Two questions are worth asking before signing. Can the guarantee be released once the business meets an agreed trading history or a loan-to-value threshold, and will the lender accept a limited guarantee capped at the current facility. Both are negotiable more often than lenders volunteer, and neither gets offered to a borrower who does not ask.

Before taking commercial debt, check what is available without it. The federal grants and programs finder lists current federal and state support by industry and by purpose, and the state programs turn over often enough that a search from two years ago is out of date. Grant funding does not have to be repaid and does not sit on your balance sheet, so an application that takes a fortnight can be worth more than any rate you negotiate.

Instant asset write-off provisions change the arithmetic on equipment finance as well. Where an asset qualifies, the deduction lands in the year of purchase rather than across the depreciation schedule, and that timing can matter more to cash flow than the interest rate on the loan funding it. Confirm the current threshold and eligibility with your accountant before you commit, since the rules have changed repeatedly.

Speed and price move in opposite directions, and the gap is wide enough that the urgency of your need should decide where you apply before the rate does.

A business that knows it needs $150,000 in six weeks can go to a bank and save five figures in interest over the term. The same business finding out on a Friday that it needs the money by Monday pays for that timing, and the premium is real rather than a penalty.

The planning move is to arrange a facility before you need it. An approved overdraft or line of credit sitting unused costs a small annual fee and removes the situation where a merchant cash advance is the only thing available.

Gather your documents before approaching any lender. You need your ABN and business registration details, 6 to 24 months of business bank statements, your two most recent tax returns (business and personal), a current BAS, a profit-and-loss statement, and a brief explanation of what you'll use the funds for. Having these ready cuts weeks off the approval timeline.

Apply to two or three lenders in the same category (e.g., two online lenders, or two banks). Multiple applications within a short window count as a single credit inquiry for scoring purposes. Compare the offered rates, fees, repayment structures, and any early repayment penalties before signing. Understanding credit card approval timelines helps if you also need a business credit card for day-to-day expenses.

Watch for establishment fees (1% to 3% of the loan amount), monthly account-keeping fees ($10 to $30), early repayment fees (some lenders charge the remaining interest), and late payment penalties. A loan with a 9.9% headline rate and a 3% establishment fee on $100,000 costs $3,000 upfront before a single repayment. Factor every fee into your total cost comparison.

Use a business loan broker if you want someone to run the comparison for you. Brokers like Lend, Max Funding, and Savvy access panels of 30 to 60 lenders and match you to the best option. They earn a commission from the lender, so the service costs you nothing upfront. Confirm with the broker whether they charge the borrower any fees before engaging.