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How much does a business loan cost?

Not sure what your business can afford? Find out exactly how much a business loan could cost you with this guide.

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Deciding to get a business loan, whether your business is established or a startup, is a big financial decision. A loan gives you access to funds that can get your business moving, but first you must determine whether your business can actually afford the loan or not.

There are a range of business loans, each with different interest rate and fee structures, which can make it hard to compare costs. In this guide you'll find out how you can work out whether a business loan is an affordable option for you and your company.

How much does a business loan cost?

The cost of a business loan depends on the lender and the product for which you are approved. A business loan that is less risky for a lender, such as a loan secured with real estate, is likely to come with a lower interest rate and fees. Loans that are more flexible, such as lines of credit, or that are higher risk, such as unsecured loans, tend to come with higher rates and fees.

Loan typeTypical fees
Business overdraft
  • Establishment fee
  • Monthly or account-keeping fees
  • Facility fees
Line of credit
  • Line fee
  • Establishment fee
  • Monthly or account-keeping fees.
Short-term business loan
  • Establishment fee
  • Service fees
Credit card
  • Annual fee
  • Reward program fees
  • Late payment fees
  • Fee for exceeding your credit limit
Cashflow lending
  • Establishment fee
  • Monthly fees
Invoice financing
  • Establishment fee
  • Line fee
  • Monthly fee
Trade finance
  • Establishment fee
  • Line fee
  • Monthly fee
Fully-drawn advance
  • Establishment fee
  • Monthly fees
Business vehicle finance
  • Establishment fee
  • Document fees
Equipment finance
  • Establishment fee
  • Document fees

Loans that offer flexibility with repayments and shorter loan terms tend to come with higher rates that are charged daily, rather than monthly. Business lenders charge a range of different fees and interest rates depending on the loan type you choose. These are explained in detail below.

Valiance Finance Logo

Get access to a wide range of business finance options with Valiant Finance. Fill out this form to speak to an expert.

Valiant Finance works with a large panel of lenders that can help you find a loan for your business.

  • Access to 60+ lenders
  • Dedicated credit specialists
  • Various loan options available

Valiance Finance Lender Logos

Business lenders you can compare

Data indicated here is updated regularly
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Valiant Finance Business Loan Broker
$5,000
$1,000,000
3 months to 5 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 70 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
Prospa Business Loan
$5,000
$300,000
3 months to 3 years
3% origination fee
Small business loans are available from $5,000 - $300,000 on terms of up to 3 years. At least twelve months trading history and a monthly turnover from $6,000 is necessary.
Max Funding Unsecured Business Loan
$2,000
$300,000
1 month to 1 year
$0 application fee
An unsecured business loan from $2,000 that offers convenient pre-approval and no early repayment fees.
OnDeck Business Loans
$10,000
$250,000
6 months to 2 years
3% of loan amount
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
ANZ Secured Business Loan
$10,000
$10,000,000
Up to 15 years
$600
Benefit from a low rate when you secure this loan with property and/or business assets. Loans from $10,000 available.
Westpac Business Loan
$5,000
$1,000,000
1 to 30 years
$0 application fee
Purchase a new vehicle, equipment or support your cash flow with a business finance solution from Westpac.
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What fees should you expect with a business loan?

Lenders charge various fees, so keep an eye out for any of the following when you apply:

  • Establishment or application fee. This fee is paid to cover the setting up of the loan.
  • Document fees. This fee covers the production of documentation and the time spent preparing your file.
  • Monthly fee. You pay this fee for the day-to-day management of your loan.
  • Withdrawal fee. If your loan is issued with a Visa or debit card, you may pay a fee for every transaction executed with your card, especially if you're withdrawing from another bank's ATM.
  • Annual fees. Business credit cards come with annual fees to cover the administration of your credit account. These fees vary according to your card type and its features.
  • Electronic transaction fee. This fee is charged when you transfer money electronically.
  • Late payment fee. This fee will be charged for late payments. Usually you have five days after the due date before this fee is levied.
  • Early repayment fee. If you make additional repayments, you may be charged a fee for shortening the loan term and decreasing the interest you'd ordinarily be paying the lender.
  • Line fee. This is charged by a lender to keep open a line of credit.
  • Early exit fee. If you settle the whole balance before the end of the loan term, you may be charged fees.
  • Amendment fees. Your lender may charge these fees if you request changes to your loan agreement. For example, if you'd like to extend the loan period or decrease monthly payments, you will be charged a fee to cover the administrative costs of making the change.

What interest rates are charged on a business loan?

Depending on your loan type, you could be charged any of the following interest rates:

  • Fixed interest rate. This rate remains the same for your whole loan term, which in turn keeps your repayments the same. However, you may not be able to repay your loan early without penalty.
  • Variable interest rate. Your interest rate fluctuates throughout your loan term and your repayments can change. You are usually able to repay the loan early without penalty.
  • Variable and fixed interest rate. Usually offered with mortgage equity loans or full drawn advances, this option gives you the flexibility of a variable rate as well as a fixed interest rate when you need it.
  • Factor rate. This is a decimal figure that is essentially a payment multiplier. The interest does not compound and is charged to the principal loan amount. It's often applied to unsecured, short-term business loans.
  • Discount rate/fee. This type of cost structure is used by invoice factoring companies. The discount rate is a percentage and is charged to the value of the invoice.

Naritas Commercial Finance

Naritas logo
If you're considering a commercial loan, compare the options from Naritas Finance.

  • Apply in less than 30 minutes.
  • Regulated by ASIC
  • Get access to 24/7 Customer Support

What should I keep in mind when comparing business loan costs?

Taking the time to compare business loans will help you narrow down the loan options available, as well as the lenders most likely to approve your application. Make sure that your business is able to afford repaying a loan before submitting an application.

Besides the associated fees, you should also consider:

  • Loan amount
  • Loan term
  • Possible penalties

It's important to make sure that your business profile corresponds to the lender's criteria. Remember that a loan application shows up on your credit report whether you're approved or not.

Need to manage cash flow?

Invoice financing is a type of business loan that comes with reduced risk, no asset requirements or interest payments. This type of loan is secured by outstanding invoices.

Compare the invoice financing products below.

Data indicated here is updated regularly
Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Timelio Invoice Finance
$10,000
$100,000,000
Up to 4 months
$0
Get up to 100% of the value of your invoices without having to wait for customer payments, and with no minimum turnover or operating history required.
ScotPac Invoice Finance
$10,000
$150,000,000
From 1 year
No set amount
Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $10,000 in invoices.
ScotPac Selective Invoice Finance
$10,000
$1,000,000
1 to 3 months
$500
Finance your unpaid invoices on demand with terms of 1 - 3 months. 95% of invoice is paid upfront, with no minimum trading history required.
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Picture: Shutterstock

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