We assess over 150 business loan products for their rates, fees and important features, assigning them a score out of 10.
| Type of loan | Loan amounts | Features and repayments | Pros and cons |
|---|---|---|---|
| Business overdraft | Loan amounts will vary based on the lender and your business' financials. You may be able to get an overdraft of up to $750,000. | - Linked to an existing business account - Available once you use up funds in your account - Unsecured loan - Variable interest rates - Ongoing account, minimum repayments required |
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| Line of credit | Loan amounts will vary based on the lender and your business' financials. It could go up to $15 million or higher. | - A line of credit allows you to draw cash as and when you need it. - You pay interest only on the money you use, not the entire loan amount. - Regular, minimum repayments on your balance |
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| Secured business loans | Loan amounts vary, with some lenders offering up to $100 million while others don't have maximum borrowing amounts. | - Borrow a large sum of money, using an asset as security. - Fixed or variable interest rates. - Regular loan repayments over a period of time. |
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| Unsecured business loans. | Loan amounts could range up to $1 million, although it varies according to the lender. | - Borrow without security - Faster applications - Higher interest rates than secured loans. |
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| Invoice financing. | You could borrow up to 80–90% of your unpaid invoices. Maximum facility sizes vary widely by lender - see the table above. | - Get funding against your unpaid invoices - No asset required as the loan is secured against your unpaid invoices - Get quick access to funding. - Fees apply, and your invoices repay the advance. |
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A business loan with a lower interest rate saves you money by reducing your interest charges.
Secured business loans have lower rates than unsecured loans.
Business loans often come with application or establishment fees charged as a percentage of your loan amount. Monthly fees can also add up and make the loan more expensive.
Factor fees into your comparison and try to find a loan with lower fees.
The amount a sole trader can borrow depends on their business income. But lenders have minimum and maximum loan amounts for their loans.
Check if a loan will let you borrow as much (or as little) as you need before applying.
Does a business loan let you choose fortnightly or monthly repayments? Does the lender offer fast loan approval? Can you repay the loan early without penalty?
Comparing all of a loan's features gives you a clearer idea of how suitable it is for your business needs.
Sole traders might use a business loan to:
"When you take out a business loan, lenders require that you use the funds for business purposes and not personal use – so you can't take out a business loan and then use that money to buy a car for personal use, or spend it on rent or personal bills. Some lenders may also request access to your bookkeeping software to get evidence of your profit and loss."
Every lender requires slightly different documents, but most lenders require some or all of the following:
If you haven't been running a business as a sole trader long enough to have the financial information a lender requires, you have a few options:
A business term loan of up to $1,000,000. No security needed and flexible loan terms available.
A variable rate business overdraft account to help you manage your cashflow. Borrow up to $1,000,000.
Finance your used or new equipment for any business needs from $2,000 to $1,000,000.
Increase your working capital with a business line of credit from Macquarie Bank.
Looking to purchase new equipment for your business? Find out how you could benefit from a vehicle and equipment loan from St.George. Compare and apply today.
Lumi offers a variety of short-term unsecured tailored business loans for SMEs, so you can find the loan that fits your business goals and your specific company.
Benefit from flexible loan terms and loan amounts through over 80 lenders from Valiant Finance.
Apply for a loan of up to $250,000 and have the approved money in your account within three days with NAB's QuickBiz Loan.
Do you need finance to help your small business grow? Moula offers loans of between $5,000 and $250,000 with flexible eligibility criteria – apply online by providing your business data and find out if you've been approved in 24 hours.
Banjo Loans offers convenient small business financing of up to $2,000,000 and you'll receive your loan within 24-48 hours upon approval.
