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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, carry the lowest rates because the security reduces the lender's risk. On 10 October 2026 CommBank published its secured BetterBusiness Loan from 7.54% p.a. variable and Westpac its business loan from 8.16% p.a. variable. Those are starting rates for the strongest files; the margin added for your security and risk sets what you pay.

Unsecured business loans cost more because the lender has no specific asset to claim if you default. The same day CommBank published its unsecured business loan from 13.09% p.a. variable and NAB its QuickBiz loan at 12.95% p.a. fixed. Online lenders mostly quote a rate only after reading your bank statements, usually above the banks, and some quote a factor rate instead, so convert every quote to a total dollar cost. The business loan interest rates guide lists what each lender publishes.

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 file is assessed for most small business loans, particularly where you are providing a personal guarantee. Business lenders do not generally publish a minimum score; a clean file opens the most lenders, and defaults, judgments or a run of recent credit enquiries can raise the rate offered or narrow 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, a minimum turnover, a satisfactory credit history (both personal and business), an active ABN and often GST registration, and the ability to show the loan is affordable from current cash flow. Published floors run from four months of trading at Bizcap and six at Prospa to 12 months at Moula and OnDeck; NAB QuickBiz asks for $75,000 of annual turnover and OnDeck $100,000 of annual revenue.

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 ready before you apply avoids the most common delays.

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.