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Small business loans

Compare small business loans to give your business the financial boost it needs.

If you’re looking to fund the growth or expansion of your small business, there are several loan options available to help you reach your financial goals. However, finding the best small business loan can be a difficult task, so let’s take a look at how to compare your finance options and make the right choice.

How much can I borrow with a small business loan?

Small business loans are specifically designed to meet the financial needs of small businesses. As a result, they’re usually smaller in size than many other types of business financing, providing the funding necessary to achieve a wide range of financial goals. Loan amounts between $5,000 and $250,000 are available from a variety of lenders.

Is my small business eligible for a loan?

Lenders consider a number of factors when assessing your eligibility for a small business loan. While the exact criteria will vary from one lender to the next, their decision is based on considerations such as:

  • Turnover. Your small business may need to have a minimum amount of turnover to satisfy a lender’s eligibility criteria. Depending on the lender, this could be calculated on a yearly or monthly basis – for example, while one lender might require your business to have an annual turnover of at least $100,000, another might need to see evidence of monthly sales exceeding $10,000.
  • Age of business. Your business may need to have been operating for a minimum period of time in order to be considered for a loan. Established businesses are considered a much lower lending risk than new startups.
  • Business financials. In addition to turnover, lenders will request a range of other financial information about your small business. This could include details of your existing bank accounts and loans, previous tax returns, profit/loss statements and future financial projections.
  • Credit profile. The lender will investigate your business’s credit history and will also check all directors’ credit profiles. If your credit history is less than perfect, a bad credit business loan may be the solution.

Small business loans you can compare today

Rates last updated February 18th, 2018
Name Product Min Loan Amount Max. Loan Amount Loan Term Application Fee Product Description
Prospa Business Loan
$5,000
$250,000
0.25 to 2 years
$0
Apply for up to $250,000 and receive your approved funds within one business day. Note: Businesses must have a turnover of more than $5,000 per month and be able to demonstrate 6 months of trading history.
Moula Business Loan
$5,000
$250,000
0.5 to 1 years
$0
Small business loans of up to $250,000 approved and funded within 24 hours.
Transparent fees and rates. Note: Business must have been operating for at least 12 months and have monthly sales of at least $5,000.
Spotcap Loans
$10,000
$400,000
2 years
$0
Take advantage of a fixed interest rate and no upfront fees with this business loan, available up to $400,000. Note: Business must have been operating for at least 18 months and have turnover over $200,000.
Sail Unsecured Business Loan
$5,000
$100,000
1 year
2.5% origination fee
Apply for up to $5,000 even if you have bad credit. Note: Business must have been operating for at least 6 months and have turnover over $50,000.
OnDeck Business Loans
$10,000
$150,000
0.5 to 2 years
$0 (2.5% origination fee)
Apply online for up to $150,000 with OnDeck and receive approved funds in one business day.
businessloans.com.au Flexible Business Loan
$5,000
$500,000
0.5 to 1 years
1.5% Initial draw down fee
A 100% online business loan with amounts available from $5,000. Flexible eligibility criteria and transparent rates and fees.

Compare up to 4 providers

What types of small business loans are available?

Whatever your financing requirements, there’s a wide range of small business loan options available:

  • Line of credit. This flexible option allows you to access a revolving line of credit as necessity dictates. You can draw on your account balance up to an approved limit, and you only need to pay back the money you borrow (plus fees and interest) rather than the entire approved amount. A line of credit is worth considering if you need to better manage your cash flow or cover an unexpected expense.
  • Business overdraft. A business overdraft is attached to your business banking account and lets you overdraw on your account up to a specified limit. This can help you better manage cash flow for your small business, but does come with fees attached and monthly interest charges on the overdrawn amount.
  • Term loan. A term loan allows you to borrow a single lump sum which you must then repay over an agreed period of time. Available with fixed or variable rates, these types of loans are suitable when you have a fixed purchase price or expense when you know the price in advance.
  • Invoice financing. Instead of waiting weeks or months for your invoices to be paid, invoice financing allows you to use outstanding invoices to provide cash flow for your business. When you generate an invoice, you can sell it to an invoice financing company, which pays a large percentage of the invoice amount straight away and keeps a small percentage as payment for itself.
  • Business credit card.Business credit cards work in much the same way as personal credit cards, with the key differences that you can add multiple cardholders and your plastic is used for business purchases. They’re very handy for meeting your immediate cash flow needs and can also offer benefits through rewards programs, but they can also be expensive if you don’t pay off your purchases during the interest-free period.
  • Business vehicle finance. This is a secured loan that provides the funds you need to buy a vehicle for your small business. Vehicle leasing is also available, and you may also be able to take advantage of tax benefits depending on how the financing arrangement is structured.
  • Equipment lease/finance. There are multiple equipment finance options available to help you purchase or lease business equipment. Commercial loans, equipment hire purchases, finance leases and novated leases are all available, so you’ll need to compare their pros and cons to determine which option is right for you.
  • Peer-to-peer business loan.Peer-to-peer lending allows you to access business financing from a single investor or a pool of investors. These loans are easy to apply for and offer an alternative source of funding to traditional banks, but you’ll still need to satisfy a range of eligibility criteria and pay fees to the peer-to-peer “lender” that sets up the loan.

How much does a small business loan cost?

There are three factors you need to consider when calculating the total cost of a small business loan:

  • The amount you borrow. The more you borrow, the more you’ll need to repay.
  • Any fees that apply. You’ll need to read the fine print to find out what upfront and ongoing fees apply. These include application and establishment fees, as well as ongoing monthly or annual charges.
  • The interest rate. The higher the interest rate that applies to the funds you borrow, the more the loan will cost you to repay.

You should also be aware that there are multiple types of interest rates available:

  • Fixed rates stay the same and are locked in for a fixed term.
  • Variable rates fluctuate in line with changes to the cash rate and other adjustments your lender makes.
  • Factor rates apply to unsecured, fixed-term loans and is a multiplier, expressed as a decimal figure, applied to your business loan to determine the total repayment cost. For example, if you borrow $20,000 at a factor rate of 1.25, the total cost to repay the loan would be $25,000 ($20,000 x 1.25).

How does the application work?

You can typically apply for a small business loan online. You’ll need to provide your name and contact details, plus your ABN and some other basic business information.

You’ll also have to supply detailed financial information about your business, such as turnover, profit/loss statements and future cash flow projections. This can be done the old-fashioned way by providing statements, or your lender may offer the option to link up to its accounting software to allow for faster verification of your financial details.

Processing times vary between lenders, but it’s often possible to access the funds you need on the next business day.

If you need financing to help your small business expand or consolidate, start comparing your small business loan options today.

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