Types of business loans in Australia
Australian businesses can access a range of loan products depending on their needs. Term loans provide a lump sum repaid over a set period (1–7 years typically) — suited for equipment purchases, fit-outs, or expansion. Lines of credit allow you to draw down and repay flexibly up to an approved limit, ideal for managing cash flow gaps. Equipment finance (chattel mortgage or finance lease) is secured against the asset itself, often with lower rates than unsecured loans. Invoice financing unlocks cash from outstanding invoices without waiting for customer payment.
Secured loans (backed by property or other assets) carry meaningfully lower interest rates than unsecured loans. If you have business or personal property to offer as security, this is typically the most cost-effective borrowing option.
What interest rate should I expect?
In 2026, unsecured business loan rates from bank and non-bank lenders typically range from 7% to 15% p.a., with the spread driven by business age, turnover, profitability, credit history, and the presence or absence of security. Well-established businesses with strong financials and property security can access rates closer to the bank's business base lending rate (around 6–8%). Fintech and alternative lenders offer faster approval but typically at higher rates (12–20%+). Always calculate the comparison rate — which includes fees — rather than just the headline rate.
Understanding comparison rates and establishment fees
Lenders are required to disclose a comparison rate for most business loan products. The comparison rate incorporates the interest rate plus most fees (establishment, monthly account fees) to give a single annual percentage that represents the true cost of the loan. An establishment fee of $2,000 on a $100,000 loan adds approximately 0.5–1% to the effective annual cost depending on the loan term. Always request the full fee schedule — including early repayment fees — before signing any loan agreement.