Business term loans explained

What is a business term loan?

A loan for a set amount, repaid over a set period with scheduled repayments, usually monthly or weekly. Once the loan is drawn the balance only falls, and once it is repaid the facility ends.

That makes it the right shape for a purchase with a known price, a fit-out, an acquisition, or refinancing other debt, and the wrong shape for a business that needs to draw and repay repeatedly, which is what a line of credit or overdraft is for.

What terms, rates and security do lenders publish?

Checked against each lender's published page on 20 September 2026, with the CommBank, Westpac and NAB rows re-checked on 30 September 2026. Terms change without notice; confirm the current position with the lender or your broker before relying on it. Where a lender does not publish a figure the cell says so.

How is the term decided?

By the security first and the purpose second. A loan secured by property can run to 30 years at ANZ and CommBank because the lender is lending against the asset; an unsecured bank loan is capped at 5 to 7 years and $250,000; an unsecured online loan runs to 5 years at most, and at Prospa only past 3 years for amounts over $150,000.

Within those limits the sensible term is the working life of what you are buying: five years for a vehicle or fit-out, longer for premises, shorter for stock or a project with a defined end.

Fixed or variable?

Online lenders and NAB QuickBiz quote a fixed rate for the whole term, so the question mostly arises at the banks. ANZ publishes fixed terms up to 10 years when interest is paid in arrears and up to 5 years when it is paid in advance, the latter being a tax-timing option.

A fixed rate gives repayment certainty and usually carries break costs if you repay early; a variable rate moves with the market and can generally be paid down without penalty. For a loan you may refinance or clear early, variable is the safer default.

What does a term loan cost beyond the rate?

Establishment fees, which range from a fixed figure (Unity Bank publishes $250) to a percentage of the loan at some online lenders; monthly service fees (CommBank publishes $35, Westpac from $14); redraw fees on large redraw balances (CommBank 0.49% p.a. over $100,000); and early termination fees on fixed loans (Unity Bank publishes at least 1.00%).

Online lenders often quote a total payback figure rather than a rate. Compare the total amount repaid over the term, which the business loan calculator shows for any rate and term.

Is a term loan the right product?

Yes if the amount and the purpose are fixed and the asset outlives the term. No if you will need to draw again in six months, in which case a line of credit avoids reapplying, or if the purchase is a vehicle or piece of equipment, where asset finance secured on the item is usually cheaper than an unsecured term loan. The borrowing capacity guide covers how the amount is set, and small business loans compares the other structures.