Reviewing Business Loan Rate Options
There are a range of business loan options available for Australian businesses and rates are determined by the type of finance you’re after along with your business’s trading history and credit profile.
Basic eligibility for ABN holders is at least 6 months of trading combined with steady or growing monthly revenue of at least $5,000 per month.
Quickly compare business loan rates for the most common loan types. Rates can change monthly, and the below chart outlines the potential differences in rates based on loan type.
|Type of business finance||Starting rate (as of 01.12.23)|
|Unsecure Business Loan||From 12.04%|
|Small Business Loan||From 12.04%|
|Equipment/Asset Loan – Commercial||From 7.49%|
|Equipment/Asset Loan – Consumer||From 7.24% (Variable) 7.29% (fixed)|
|Line Of Credit||From 14.95%|
|Invoice Finance||From 14.25%|
|Fit Out Loan||From 14.95%|
|Bad Credit Business Loan||From 19.99%|
|Commercial Business Loan (purchase a business)||From 12.99%|
|Term Loan||From 14.95%|
|Personal Loans||From 6.52% Secured 6.75% Unsecured|
Important: Whilst rate is a key determining factor in finance, it isn’t always the most important. The difference in repayments up to 1% can be miniscule. Other important considerations are flexibility, terms & fees.
Rate difference example
$10,000 unsecure loan
3 year term
Monthly repayment = $311.11
$10,000 unsecure loan
3 year term
Monthly repayment = $319.44
The difference in monthly repayments is $8.33 and roughly $300 overall.
^The above example is general in nature and has not taken into account your objectives, financial situation or needs. Outcomes are based on individual circumstances. Certain solutions may not be appropriate or available to all consumers. Check with a financial professional before making a decision.
What Determines Getting the Best Business Loan Rate
Each lender has its own criteria to determine a risk profile for each borrower. This will establish how much they are willing to lend to you in addition to rate and terms.
- Time in Business: It’s very simple, the longer you are business the better. With 2 plus years being an ideal time frame for many lenders. Although there are still good options available for businesses operating only 6 months and even 1-day ABNs in certain circumstances. Learn more about start up funding and grants here.
- Credit History: The higher the better. There are options available for no credit files or for those with less than perfect credit. The weaker the credit profile, the higher the rate and options are reduced. There are however low doc business loan options available.
- Business Revenue: The healthier your financials the better for rates, approvals, and terms. Proving you can easily handle repayments reduces your risk profile and makes it easier for lenders to say yes.
- Industry: Lenders also have risk profiles on industries. However, if you have strong business activity it will go a long way in getting financed.
There are other determining factors with the above being the stronger of the criteria for many lenders.
Checklist To Ensure an Easy Application
ABN holders looking for the lowest business loan rate for their business should have or be able to answer the below. The more organised you are, the quicker your approval. A combination of the below will be needed based on the type of finance you’re after.
- ABN type or business structure (sole trader, partnership, etc)
- Industry & main location of operation
- Bank statements to highlight turnover
- Profit & Loss statement from your accountant
- Time in business
- Loan amount and term
- How the funds will be used, secure or unsecure
- Proof of identity (drivers’ licence, passport, Medicare card etc)
- ATO Portal access
- Possibly personal income tax return
- Deposit or not
- Recent Business Activity Statement (BAS)
Some lenders may require additional information depending on your situation and or business structure. Whilst business funding can be straightforward, it can also be confusing. Accessing the right loan can provide large savings and in some cases the flexibility of a loan may be the most important factor. Access ABN approved finance options here.
A Quicker Way Compare Genuine Business Finance
If you are unsure of which finance is best for your business or if you want to accurately compare the market – Using a broker is a great way to accomplish this. Most brokers have access to 40+ lenders and are familiar with their products.
There are a range of benefits to a broker’s service, including:
+ They are FREE
+ They know what the lowest business loan rates for each lender are in addition to how to get approved.
+ They can establish which lenders you genuinely qualify for without impacting your credit score.
+ One enquiry with them gets you access to all the lenders on their panel.
+ They work for you and not the banks
+ They can answer and questions or concerns on different finance types
+ They may have access to broker only rates not available to the public
Common Business Loan Rate Questions
What is the average interest rate for a business loan?
The average rate is determined by the type of loan your after. The above rate table highlights the sharpest rate in market for the different type of business borrowing available. Currently it ranges from 7.24% up to 15.99% plus.
We have access to market leading rates across Australia’s leading brands in commercial finance, not to mention exclusive broker only rates. We provide full disclosure of rates available to each enquirer based on their particular background and circumstances.
In most cases, we are able to provide the lowest or most competitive rate attached with the best features and terms. We do have direct relationships with over 70 lenders.
What business loan interest rates does Comparison Australia have?
Unlike most comparison websites that only promote lenders that advertise with them, which represents a minimal percentage of the market – Comparison Australia is broker driven! Giving business owners access to robust lending panels that cover most of if not all the market at any given time.
What bank gives the lowest interest rate on a business loan?
This can change from month to month on different lenders appetite for lending. Often times non-bank or specialist lenders provide lower rates and flexibility compared to bigger banks.
What type of loan is best for business?
This depends on how the funding will be used. In general, secured finance has a much lower rate than unsecure finance.
How much is a business loan in Australia?
The overall costs of a loan is based on rate, term and fees. This can vary greatly based on the borrower. In general terms below are examples of costs associated with business loans. Not all fees are associated with each loan.
– Origination/application fee: Often a set dollar amount or percentage of the loan
– Annual fee: Often a set dollar amount or percentage of the loan
– Brokerage fee: Often a percentage of the loan
– Account management fee: Often a set dollar amount or percentage of the loan
– Late or default fees: Generally a set amount