
Compare business loans in Australia
Business loans come in many shapes and sizes, and can be a lump sum or revolving credit. Compare your options to find the best deal for your business.
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- What is a business loan?
- What types of loans are there for businesses?
- How do I know which loan is right for my business?
- What is a good business loan interest rate?
- How do I compare business loans?
- Can I get a business loan for my start up or small business?
- Is my business eligible for a loan?
- Should I apply for a charge card instead of a business loan?
- Frequently Asked Questions about business loans
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Alternative finance options for small businesses during the COVID-19 outbreak
If your business has been affected by COVID-19, there are a number of options available to help you financially.
Banks are offering different relief measures including business loans with repayment holidays of up to 2 years. From 1 October 2021, businesses no longer need to have received JobKeeper payments to be eligible for the SME Recovery Loan Scheme; any SME with up to $250 million in turnover that has been impacted by the COVID-19 pandemic can apply. Applications close December 31, 2021.
The government also employed various tax relief measures, including an instant asset write-off that is available on business-related purchases until July 2022.
What is a business loan?
A business loan is a loan used to help a business run, whether that be through purchasing commercial real estate, meet operating costs, source equipment, or manage cash flow.
Business loans, or business finance, can come in lump sum form, or as revolving credit. They can also be secured or unsecured (usually by residential or commercial property), or have either fixed or variable interest rates. No one business is the same as another, and so the many different types of business loans are designed to meet different business needs.
Comparing your business loan options is an important step in finding the best loan for your business. Finder has collected as many products as possible so you can easily compare which product works best for you, regardless of your business size.
What types of loans are there for businesses?
Business finance comes in two forms: debt finance and equity finance.
Debt finance is offered by banks, credit unions or business lenders. It involves receiving a loan from a lender.
Equity finance is when someone invests money into your company in return for shares.
There are a range of short-term and long-term business debt finance options available. They include:
How do I know which loan is right for my business?
To work out which type of finance is the right fit for your business, consider the following questions:
Why does your business need the loan?
Are you looking to start a new business from scratch, upgrade your equipment or overcome a cash flow shortage? For example, if you're looking to invest in new business equipment, you'll want to consider your equipment finance options.
What's the state of your business finances?
The current financial performance of your business will not only affect the type of funding you need, but also your ability to qualify for different types of loans. Your credit history will also affect the range of financing options you are able to access.
What industry is your business in?
The industry you're in also affects your funding needs and finance options. For example, a retail store will have different financing requirements to a microbrewery, which will have different needs to a beauty salon.
Once you've answered these questions you'll have a better idea of which type of finance is right for you. Then it's time to start comparing the different loans and sources of funding available.
What is a good business loan interest rate?
A rate of around 6% p.a. could be considered a low rate. There may be loans with lower rates on offer, especially government-backed loans, which may come with a 2% p.a. to 4% p.a. rate. However, a number of factors will play into what rate you will actually receive, such as your business profile, including your risk profile, the security offered (if any), and any additional fees in the business loan.
It is important to account for establishment fees, monthly or annual account keeping fees, late fees, early repayment and early exit fees. High fees could risk offsetting any savings you stand to make.
How do I compare business loans?
You first need to work out what type of loan your business needs. You can then start comparing lenders and products. Here's what you need to keep in mind while comparing:
- Eligibility criteria. Check the lender's criteria and see if you meet them. This can help you narrow down your choices and find a loan you can apply for. If you don't meet the eligibility criteria, you shouldn't apply for the loan. Every loan application and rejection will appear on your company's credit file. This could downgrade your score. Click the "More info" button on the comparison table to find out the eligibility criteria of each lender.
- Cost. What can your business afford? Look at your income and expenses. How much can you comfortably repay without straining the cash flow of your business? If it's a loan for a startup, you'll need to rely on cash-flow projections.
- Interest rates and fees. After working out what you can borrow, you should start comparing the rates and fees of loan products. With some loans, the interest rate may be low but additional fees high. All these costs add up, so be sure to include both interest rates and fees in your calculations. Comparing can help you find the best loan product for your business.
- Repayment terms. Which repayment terms suit your business's cash flow? Lenders offer repayment terms with varying degrees of flexibility. Some may allow you to repay the loan daily, weekly or monthly. Find a loan product that gives you the flexibility you need to manage your business.
Can I get a business loan for my start up or small business?
Business loans exist for start ups, however approval may be challenging as lenders often require proof of revenue or sales. Ensure you meet the lender's eligibility criteria, have a clear business plan, and have all the supporting documentation on hand in order to maximise your chance of approval
Small businesses will generally find approval easier, as they will have enough of a financial history for the lenders to look through. Again, to maximise your chance of approval - ensure you meet the lender's eligibility requirements, have a clear goal for the funding, and all the supporting documentation.
With both start up business loans and small business loans, the amount you will be able to borrow will depend on your financial and credit history, the age and revenue of your business, and also if you are able to secure the loan against commercial or personal property.
Is my business eligible for a loan?
Each lender will look at your application with their own eligibility criteria, so be sure to check before you apply. In general, most lenders will be looking at least at the following:
Age of the business
You'll usually need to have been operating for at least six months to a year for most unsecured business loans offered by alternative lenders and banks, but some do offer unsecured startup finance. Invoice factoring and equipment loans have less stringent criteria on business age, but you'll need to have been operating for at least one year for business overdrafts or lines of credit.
Turnover
Your business may need to be making a certain amount of turnover in order to be eligible for a loan. This revenue may be monthly or yearly and can range from $50,000 to $200,000+ p.a. Other lenders simply require you to connect your business's accounting software or financials as part of the application process so they can calculate a loan your business can afford.
Credit profile
The lender may check the personal credit histories along with the company's credit (unless you're a startup). If the business has unpaid defaults or tax debt, you may need to find a bad credit business loan. However, most invoice financing companies do not require perfect credit histories.
ABN/ACN
You'll need to have an Australian Business Number (ABN) or Australian Company Number (ACN) to qualify for any form of business finance.
Should I apply for a charge card instead of a business loan?
If you're looking for business finance, you could opt for either a business loan or a charge card. But there are significant differences between the two you may want to consider. These include:
Business credit card | Business loan | |
---|---|---|
Funding | A specified amount of money that you can spend as a flexible, ongoing, revolving line of credit | One defined lump sum or multiple set payments |
Repayment | Minimum monthly repayments | A set repayment schedule |
Eligibility | Typically has strict requirements | Many options with less strict requirements are available |
Interest rates | Varies, most offer purchase rates of between 10-20% p.a. | Can be a monthly or annual rate. Typical annual rates for secured loans range between 3-10% p.a. |
Fees | Annual fees, late repayment fees and more may apply | Signup fees, late repayment fees and more may apply |
Other features | Rewards points, complimentary insurance and link-ups to accounting software | Typically has no special features other than online account management |
Advantages | Flexible funding, continuously available money and bonus features | Many different options, can be closely tailored and a choice of many providers |
Disadvantages | Typically cost more than standard loans | Has few special features, loan quality varies widely |
If you're looking to apply for a charge card, we've curated a list of cards for you to compare:
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Frequently Asked Questions about business loans
Still have questions? We've done our best to answer the most common questions people have about business loans.
You can get a business loan from as little as $5,000 up to $100,000,000. How much your business can borrow will depend on the following:
- The lender
- The type of business loan you're applying for
- Your annual turnover
- The business purpose of the loan
- Your personal and company credit rating
- How long your business has been trading
- Whether you have a deposit/security
Smaller loans require less documentation and may have less strict lending criteria. For larger business loans, you will need to provide more documentation. This can include a detailed business plan, financial statements, proof of revenue, and an asset or cash security or deposit. The cost of these loans will also vary. To get an idea of what you can expect to pay, you can use our business loan calculator.
This depends on various factors including the lender (banks versus non-banks). Your business credit score and your business's financial position also play a role.
Banks have strict lending criteria. They will ask for a lot of documentation to support your application. This can make the application process lengthy and extremely difficult. Banks are regulated by both the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA). As a result, they have to conform to the standards set by both authorities. Non-banks, meanwhile, have more relaxed rules around eligibility. They are regulated only by ASIC, so they can be more lenient when it comes to their eligibility criteria.
As a general rule, unsecured loans are the hardest loans to get. This is because there is no security or collateral involved, making the loan riskier for the lender. You will only be considered if your business's credit profile is excellent. You will also need to make enough money that the lender sees it as likely you can pay back the loan.
The more money you are looking to borrow, the more difficult it will be to find a loan. The larger the loan, the higher the risk, even with security. Your business and revenue will need to be large, too. If you offer an asset as security, it will have to match the loan amount you're applying for. Your loan amount cannot exceed the value of your asset.
Smaller business loans should be easier to apply for. This is especially the case if the loan is secured. For instance, invoice financing is secured against your outstanding invoices. Vehicle or equipment finance are secured against the asset purchased, and these will be easier to be approved for than a lump sum payment.
Additionally, if you have a good and established relationship with your bank, you may be able to get a line of credit without too much hassle.
Yes, lenders may look at the personal credit scores of the individuals registered as business owners or on the board of directors. This is especially true if your business is young and does not have enough credit history for lenders to make an informed decision.
Business loan applications can affect your personal credit score, however generally this will only be damaging if you apply for many business loans in a short amount of time. This is another reason why it is important to compare your options first and ensure you meet the eligibility criteria, rather than apply for as many as possible.
Many businesses use a combination of debt finance and equity finance to fund their operation, however there are some key differences to compare:
Equity finance Debt finance Repayments No repayments involved. You don't have to pay back the money you've raised, but you will be sharing your profits either in the short term or the long term. You have to make regular repayments to the lender, which will include interest charges and ongoing fees. As a result, you'll be paying more than you borrowed. Turnaround time It will take time to raise finances, and it may involve presenting to multiple investors. Depending on the type of loan you apply for, you could get funding within a few days. Stake The investor will have a stake in your business. You will no longer have 100% control or ownership. You will have to take their input into account when making a decision. There may be times when their strategic interest may not overlap with yours. Their expectation of the return on investment and when they expect it may be different from your projections. The lender does not have a stake in your business whatsoever. Your only obligation is to repay the loan. Your relationship with the lender effectively ends once you repay the loan. Credit score Your credit score does not play a role in your ability to attract investment. Nor will your credit score be affected, as there are no loan repayments involved. Your credit score will determine your ability to get a loan. The total cost of the loan may also be influenced by your credit score. Not making repayments on time will eat into your credit score, affecting your ability to get credit in the future. Assets You give up equity or shares in exchange for investment. You don't lose assets in case your business fails. You retain your stake in your business, but you risk losing your assets if you default on your loan. Tax benefits You don't get any tax benefits with equity financing. Interest paid on debt is seen as a business expense. It is tax-deductible.
Elizabeth Barry is senior editor for Finder's global financial niches. She has written about finance for over six years and has been featured in a range of publications and media including Seven News, the ABC, Mamamia, Dynamic Business and Financy. Elizabeth has a Bachelor of Communications and a Master of Creative Writing from the University of Technology Sydney. In 2017, she received the Highly Commended award for Best New Journalist at the IT Journalism Awards. Elizabeth's passion is writing about innovations in financial services (which has surprised her more than anyone else).
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i am recently retired man. i am on aged pension. i need business loan to purchase established business. i want to put some $25000 –$ 35000/ in to it from super annuation funds. i am regularly getting aged pension from centrelink.please guide me the lenders who are liberal in granting business loan to me.
Hi Vinod!
Thanks for reaching out to us.
To apply for a business loan, generally, you will need a summary of your business’ financials, a business plan, financial forecasts (including cash flow forecasts), and your personal information. However, many new lenders simply request to log into your business’ accounting software to get this information for themselves.
You may refer to our list of Centrelink business loans to know which lender may consider you for a loan. Please click the name of the lender or the “More info” link to be redirected to our review page and learn more about the lender’s loan offer, rates, and requirements as well as the pros and cons of using their loan service. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.
Hope this helps.
Regards,
Nikki
my question is l am looking for information for a business online banking account, what will be the monthly fees be to have this online account? l have obtained information from NAB and CWB that the account will be zero a month for an online account when you do not use the branch, all banking is done online. to have an OD attached to this online banking business account the fees are below for an unsecured amount.
for OD facility NAB is 14.5% with 1.75% annual fees
for OF facility with CWB 14.75% with 1.75% annual fees
what is will the account fees be with ANZ and Westpac
l cannot see where l find these on your site.
also how long back did a zero fee for online banking start with an online banking account, what year?
Hi Claire,
Thank you for your questions.
1. l am looking for information for a business online banking account, what will be the monthly fees be to have this online account?
Depending on the type of account, some banks have nil monthly fees, others may charge as much as $20. You may refer to our list of business bank accounts to compare your options. Most banking accounts these days can be done easily online.
2. What is will the account fees be with ANZ and Westpac?
You can find more information about ANZ business accounts and its fees from our comparison table. For Westpac, Depending on the account, they charge $10 monthly account fee for their Westpac Business One Account – Low Plan and $20 for Westpac Business One Account – High Plan
3. How long back did a zero fee for online banking start with an online banking account, what year?
I’m afraid we don’t have information in that regard. But most banks offer cheaper if not zero fees on some of their online bank accounts to their customers helping them save money on monthly charges.
Hope this helps.
Cheers,
May
small business unsecured loan of 300,000. to buy an existing profitable business , with low fixed interest , no early payout fee ,over 5years approx. Have financial statements of business and $800,000. assets of my own , so could be secured loan.
Hi Tom,
Thank you for your inquiry.
Buying a business is a great undertaking and requires a lot of work. If you haven’t already, you might find our guide in buying a business useful. On the page is a comparison table you can use to find the right lender for you. Once done comparing, you may tick the “Go to Site” or to request a call click the available “Enquire now” button. Before applying for a loan, it would be good to check their eligibility requirements as well as their terms and conditions.
Best regards,
Rench
Hello,
Just wondering if there are any finance options available for me. Right now all I have is my business plan and projections from my account. That’s it, no assets, no defaults on my credit score however I do have 3 inquiries(Business related). I’m looking for funding for my equipment, without the equipment we can’t start. Is there any chance at all for me?
Regards,
Mike.
Hi Mike,
Thanks for contacting finder.
You may visit these links https://www.finder.com.au/business-loans and https://www.finder.com.au/equipment-finance for you to get a better look on the business loan, equipment funding and funding options available to you, and how you can determine the best type of financing for your business.
Cheers,
Joanne
Is there a possibility of being funded without collateral and a guarantor? Low doc, etc..?
Hi Trevor,
Thank you for your inquiry.
You may want to consider the following low doc loans.
– Low Doc Personal Loans
– Low Doc Home Loans
I hope this information has helped.
Cheers,
Harold