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Understanding Business Loan Rates and Costs in 2026

Business loan rates in Australia vary widely depending on the type of loan, the security offered, your business's financial strength, and the lender. Understanding what drives these rates helps you negotiate better terms and choose the most cost-effective finance for your needs.

Secured business loans — those backed by property or other assets — typically offer the lowest rates, starting from around 5% to 7% per annum. The security reduces the lender's risk, and that saving is passed on to you through a lower rate. Commercial property loans, for example, often have rates comparable to residential mortgages because the property itself provides strong security.

Unsecured business loans carry higher rates because the lender has no specific asset to claim if you default. Rates for unsecured loans typically range from 8% to 15% per annum, with the exact rate depending on your business's revenue, profitability, credit history, and time in operation. Fintech lenders and online platforms often offer faster approval for unsecured loans but may charge higher rates than traditional banks.

Factors That Affect Your Business Loan Rate

Several factors influence the rate a lender will offer your business. Security is the most significant: a loan secured by residential or commercial property will almost always attract a lower rate than an unsecured loan. The loan-to-value ratio matters too — borrowing 60% of a property's value will get you a better rate than borrowing 80%.

Your business's financial health plays a major role. Lenders assess your revenue, profit margins, cash flow stability, and balance sheet strength. A business with consistent revenue growth and healthy margins will qualify for lower rates than one with volatile or declining income. Time in business also matters — most mainstream lenders require at least two years of trading history for the best rates.

Your personal credit score is assessed for most small business loans, particularly those under $500,000 or where you are providing a personal guarantee. A strong personal credit history (score above 700) opens access to better rates and more lender options. Any defaults, judgments, or credit enquiries can increase the rate offered or limit your options to specialist lenders.

The loan term also affects the rate. Shorter-term loans (one to three years) may have slightly different rate structures compared to longer terms. Some lenders offer fixed rates for the full term, while others offer variable rates that fluctuate with the market. Fixed rates provide certainty for budgeting but may be slightly higher than the initial variable rate.

Business Loan Eligibility Requirements

Eligibility criteria vary by lender and loan type, but common requirements include a minimum time in business (usually 6 months to 2 years), minimum annual revenue (often $75,000 to $200,000 depending on the lender), a satisfactory credit history (both personal and business), an active ABN and GST registration, and the ability to demonstrate that the loan is affordable based on your current cash flow.

For larger loans or those requiring property security, lenders will typically require full financial statements including tax returns, profit and loss statements, and a balance sheet. They may also request a business plan or cash flow forecast, particularly for expansion funding or new ventures. Having these documents prepared before you apply significantly speeds up the approval process.

Self-employed applicants should note that lenders may calculate income differently from the figures shown on your tax return. Tax-effective structures that minimise taxable income can also reduce the borrowing capacity a lender is willing to offer. An experienced business finance broker can help identify lenders whose assessment methodology works best for your financial structure.

Choosing the Right Business Loan Structure

The best loan structure depends on what you are financing and your business's cash flow pattern. A term loan with fixed repayments suits one-off purchases or projects with a defined budget. A line of credit is better for businesses with seasonal revenue that need flexibility to draw and repay as cash flow allows. Equipment finance makes sense when the asset being purchased can serve as security, keeping rates low without needing to offer property.

Consider the total cost of the loan, not just the monthly repayment. A longer loan term reduces monthly payments but increases the total interest paid. Using this calculator, you can see how adjusting the term from three years to five years lowers your monthly commitment but adds significantly to the interest bill. The right balance depends on your cash flow capacity and whether the investment will generate returns that exceed the interest cost.