$20,000 business loans

Learn how to compare a business loan

What’s involved with a $20,000 loan?

When you take out a loan for any amount up to $20,000, you'll naturally have to repay the borrowed sum, plus associated fees and interest within a set time frame. Depending on the loan you take out, this time frame could be as little as one month, or over as long a period as seven years.

Once you apply, the lender in question reviews your application, and upon the loan’s approval it releases the funds. You then have to make payments in accordance to the payment schedule agreed upon by you in the loan’s contract.

How you use the loan’s proceeds varies according to the kind of loan you take. Loans that are tied to a guarantee – secured loans – are usually more restrictive in what they can be used for. For instance, with a secured car loan, lenders will normally stipulate whether they will let you finance a used car.

With business loans, you generally have to spend at least a fixed percentage of the borrowed amount towards business expenses.

The features to look out for when you’re borrowing up to $20,000

When looking for up to $20,000 business loans, you’ll come by numerous options, and what you have to bear in mind is features of loans can vary considerably.

• Secured or unsecured. If you can provide some form of asset to obtain a secured loan, you can often look forward to a lower interest rate when compared to taking an unsecured loan. Security can come in the form of a car, other vehicle, real estate, machinery, or even equipment. Whether you take out a secured or unsecured business loan depends a lot on what you're looking to finance.
• Interest rate. Some loans attract fixed rates of interest and some others charge variable interest. The difference is that while the interest rate of a fixed rate loan remains the same for the entire loan term, a variable rate loan's interest can increase or decrease in accordance to the prevailing market conditions.
• Loan amount. Lenders have set maximum loan amounts, including some that have set amounts for the first time you take out a loan. Make sure you'll be able to apply for the amount your business needs.
• Fees and charges. The fee structure of loans can vary from one offering to the next, but some of the common fees you can expect to pay include application fees, disbursement fees, settlement fees and early termination fees. Some financial institutions offer certain fees waivers as well.
• Repayment flexibility. Financial institutions that give you the ability to make weekly, fortnightly, or monthly payments are easy to find. With certain loans, you can make additional payments without paying penalties, and you can also pay some loans off ahead to time without worrying about prepayment penalties.

How to find the best $20,000 loan for you – Tips on your comparison

When you’re out there looking for up to $20,000 business loans, you can use knowledge to your advantage in different ways, and here are some tips that you can rely on to take you forward.

• If you can secure your loan with an asset you might want to consider doing it – lower rates and fees are a benefit some secured loans offer
• Don’t apply for the first loan that comes your way. Make sure you compare business loan interest rates and features of loans available to you
• Choose your loan term carefully. If you can afford to make higher repayments over a shorter loan term you can save in the form of interest
• Go through all associated fees and charges of any loan you wish to apply for as this can save surprises and heartache down the road
• Understand all the features of the loan you wish to apply for. For instance, if a loan allows additional repayments, find out if it allows you to redraw these funds as well
• Make sure you deal with reputable lenders, because, sadly, the Australian lending marketplace is not devoid of its share of unscrupulous lenders

What to keep in mind before borrowing

Before you apply for up to $20,000 business loans, take the following into account:

• Establish if you really need the loan and if your business can afford the repayments
• Do you meet all the eligibility criteria? This needs to be made sure of before applying
• Take time to go through all the fees and charges associated with the loan you're looking at taking out
• Establish if you can afford to take the loan in the first place, and take your budget into account when it comes to making periodical repayments.

Need to manage cash flow?

If your business has outstanding invoices, one of your options could be invoice financing. It's a type of business loan that comes with reduced risk, no asset requirement or no interest payments.

Compare invoice financing products below.

Frequently asked questions about $20,000 business loans

• Can I get a business loan under $20,000 without a credit check?

  Some lenders may offer small business loans or short-term financing options without a formal credit check, but they usually charge higher interest rates or require other forms of security. Most mainstream lenders will still review your credit history to assess your eligibility.

• What documents do I need to apply for a small business loan under $20,000?

  You'll generally need to provide proof of identity, business registration details, recent bank statements and evidence of revenue. Some lenders may also ask for your ABN, financial statements, or a business plan if you're a start-up or sole trader.

• Can start-ups qualify for loans under $20,000?

  Yes, some lenders cater specifically to start-ups, although funding options might be limited if you haven't been trading long. You might need to provide personal guarantees, a business plan, or alternative security to demonstrate your ability to repay the loan.

• How fast can I get approved for a business loan under $20,000?

  Approval times vary depending on the lender. Online lenders can often assess and fund applications within 24 to 48 hours, while banks and traditional providers may take several days. Having your documents ready can help speed up the process.

• Can I pay off my business loan early?

  Many lenders will allow you to repay your loan early, but some may charge an early repayment or break fee. It's best to check the loan's terms and conditions before signing to understand any potential costs.

• Are unsecured business loans under $20,000 available?

  Yes, some lenders offer unsecured loans under $20,000, meaning you won't need to use an asset as collateral. However, unsecured loans generally have higher interest rates since they pose more risk to the lender.

• How can I compare business loans under $20,000?

  When comparing small business loans, look at the interest rate, fees, repayment flexibility, loan term and eligibility requirements. Also, consider the lender's reputation and how quickly they can release funds.

• Can I use a business loan under $20,000 for cash flow?

  Yes. Many small businesses use lower-value loans to manage short-term expenses, cover wages, purchase stock or equipment, or keep cash flow steady during slow periods. Make sure the loan amount and repayment terms match your budget and business goals.

Written by

Elizabeth Barry

Journalist

Elizabeth Barry is an experienced journalist with over 10 years of expertise in personal finance, contributing to outlets like the ABC, Sydney Morning Herald, and 7News. She holds a Master of Arts in Creative Writing and a Bachelor of Arts in Communication from the University of Technology Sydney, and has earned multiple award nominations, including a Highly Commended recognition at the 2017 Lizzies. Elizabeth began her career at Finder in 2013, progressing through roles to become Lead Editor, where she oversaw a wide range of personal finance coverage until 2024. See full bio

Elizabeth's expertise

Elizabeth has written 202 Finder guides across topics including:

• Banking
• Personal finance
• Investing