Small Business Loan

Compare the best small business loans

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The Top 10 Most Popular Small Business Loans

Small business loans come in many forms today. From a “merchant cash advance” to an “unsecured small business loan”, there are more small business finance options to consider than the traditional business loans the banks offer. Over 50% of Australian small businesses have a loan facility of some description. And in some cases you do not have to offer any collateral as security.


Unsecured Business Loans

A short term business loan usually up to a maximum of 12 months. You’ll repay the loan and interest daily or weekly. No security is required.

$5k – $250k

3 – 12 Months


As fast as same-day

What can you use an Unsecured Business Loan for?

The great thing about unsecured business loans is that you can use them for any business purpose – such as covering cash flow fluctuations, or financing expansion or new business opportunities.


  • Application processes are usually fast, simple and online
  • Finance available without the security of property or other fixed assets
  • Finance available to smaller businesses that do not meet the banks’ rigorous lending criteria


  • Unsecured finance is a higher risk for the lender, so interest rates are likely to be higher
  • Terms, rates and conditions may be obscure and result in high costs
  • Depending on the amount you borrow, you may need to provide a personal guarantee, which means you will be responsible for repayment if your business is unable to meet its obligations

Pro Tip:

Make sure you fully understand the pricing of the loan, including charges and interest rates

Grow the business you want.


Line of credit

An agreed amount is made available for you to access at any time you need it. Often with a line of credit you will only pay interest on the drawn down amount, not the whole facility.

$5 - $250k
3-12 months
5.07% - 12.45%
1-2 Days

What can you use a Business Line of

Credit for?

There are no restrictions on how you can use this money.


  • Extremely flexible – draw and repay funds as you need them
  • No minimum amount – only borrow and pay interest on what you need – usually calculated daily
  • Quick and simple application process


  • No long-term certainty – can be cancelled at any time and is repayable on demand
  • Terms, rates and conditions may be obscure and result in high costs
  • Depending on the amount you borrow, you may need to provide a personal guarantee, which means you will be responsible for repayment if your business is unable to meet its obligations


Invoice Finance

Also known as “factoring” is when you sell your invoices to a lender. The lender will forward you up to 80% immediately of the invoiced amount and become responsible for collecting payment.

$5 - $100k
30-180 Days
1-3 Days

What can you use Invoice

Finance for?

Any business purpose like buying new machinery or paying tax debt.


  • Immediate injection of cash – no need to wait for payment of invoices
  • Removes the risk of late or non payment of invoices
  • Can be used to cover short term finance issues


  • You receive less than the face value of the invoice
  • Usually more expensive than loan finance
  • Many lenders have minimum turnover requirements – may not be available to new businesses without an established sales history


Merchant Cash Advance

A lender will provide you with a lump sum payment in advance and then collect repayment (and their fees) as an agreed percentage from your daily sales.

$5 - $250k
1-12 Months
Usually ~20%

What can you use a Merchant

Cash Advance for?

Anything, such as working capital or buying new inventory.


  • Quick and easy online application process
  • Immediate cash injection – funds usually available within days
  • Repayments directly linked to cash flow – no fixed interest payments or repayment schedule, with repayments made as an agreed percentage of sales


  • Only available to ‘merchant’ businesses making daily debit or credit card sales e.g. retailers, restaurants
  • History of achieving a minimum average level of sales may be required
  • Often considerably more expensive than other financing options with rates as high as 60% –200% APR
  • No government regulation on lenders, so terms and conditions can be complex and restrictive


Equipment Finance

A fixed term loan product to purchase equipment or machinery for your business. The asset will be owned by the Lender throughout the term of the contract.

$5 - $2M
1-5 Years
7-14 Days

What can you use Equipment

Finance for?

To purchase plant, equipment or machinery for your business.


  • Small or no deposit or up-front payments, minimising the initial impact on working capital
  • Flexibility to set a repayment plan to suit your cash flow, usually over a term of up to five years
  • Quicker and easier to secure than loan financing You may be able to claim GST credits for GST included in the lease charges


  • Higher interest rates and costs than loan financing
  • No equity built up in the asset – you do not own the equipment the end of the contract
  • Lease contracts usually have substantial early-termination fees so you’re locked in even if you no longer need the equipment


Hire Purchase

A medium term loan product to purchase an asset. The asset is owned by the Lender until the end of the finance term.

$5 - $2M
1-7 Years
4.6 - 15%
7-14 Days

What can you use a Hire Purchase


Typically used to purchase an asset. Buying plant, machinery and equipment for your business.


  • Flexibility to tailor your repayment play to suit your cash flow needs and match the life cycle of the asset
  • You own the asset at the end of the contract and can continue to use or dispose of it as you wish
  • You may be able to claim GST credits for GST included in the purchase charges


  • Unlike leasing you will need to pay a deposit, which will impact your working capital
  • Higher interest rates and costs than loan financing
  • You do not own the asset until the end of the contract


Commercial Bill of Exchange

This business finance can be provided over a range of terms, usually to help with seasonal shortfalls in working capital.

$5 - $500k
1-24 Months
1.7 - 1.75%
4-7 Days

What can you use a Commercial Bill

of Exchange for?

Any business purpose, for example; working capital, staff commitments, marketing.


  • A short-term facility with the option to roll-over at each maturity date
  • Can be used as a revolving line of credit (draw down funds as you need them) or a term loan with the principle reducing at each rollover
  • Interest is payable on maturity – terms vary with maturity at agreed intervals (eg. 30, 60, 90, 120, 150 or 180 days) and the potential for periods of fixed interest


  • Interest is payable in advance and includes a margin above standard rates
  • Variable rate bills are very sensitive to fluctuations in interest rates
  • High minimum borrowing amounts (often $500,000) – only suitable for established businesses with high turnover


Traditional Business Loan

A longer fixed-term secured borrowing facility, like a mortgage. Often you will need to use personal assets to secure the loan. Most commonly available from the big banks (think: ANZ, Westpac, Commonwealth, NAB).

$50k - $10M
1-10 Years
2.97% - 12.83%

What can you use a Business Loan


Usually used to purchase buildings, retail premises, expansions, buying competitors.


  • Many lenders allow you to choose between fixed and variable interest rates or a combination
  • You may have a choice of interest-only or interest plus principle repayments
  • The loan term is usually tied to the life of the asset and you can set a repayment schedule to match the cash-flow of your business


  • Loans secured by non-residential assets attract higher interest rates
  • Most loans have minimum borrowing amounts
  • Lengthy and rigorous application and approval process – only available to established businesses


Personal Loans

Your typical personal finance fixed term loan, fixed or variable interest rate loan.

$5 - $40K
1-3 Years
7.75% - 19.09%
7 Days

What can you use a Personal Loan


You can use this money to purchase anything.


  • More economical than leasing or hire purchase for buying equipment and machinery
  • Can usually be repaid early without penalty
  • Repayable in instalments, spreading the cost of equipment purchase


  • Availability and amount will depend on your personal credit rating
  • Personal (not business) responsibility for repayments
  • Usually higher interest rates than other business loans


Business Credit Card

As per your standard credit card, a company credit card will often been securitised against the business owners.

$2 - $100K
5.88% - 20.95%
1-7 Days

What can you use a Business

Credit Card for?

Best used to purchase consumables and to help smooth out fluctuations in cash flow. In reality, you can use it for whatever you like.


  • Convenience – very easy to make purchases
  • Flexible source of emergency cash flow
  • Interest-free periods on some cards make them an economic short-term purchasing tool


  • May be linked to your personal rather than business finances
  • Interest rates can be very high
  • Can incur considerable fees and charges even when not used

Small Business Loans Summary

ProductUnsecured / SecuredRateFees
Bank OverdraftSecured5.07% - 12.45%$0 - $1280
Secured Bank LoanSecured2.97% - 9.83%$0 - $3250
Unsecured Bank LoanUnsecured2.97% - 12.83%$0 - $2625
Business Credit Card5.88% - 20.95%$0 - $450
Personal LoanSecured7.75% - 19.09%Included in Rate

Small Business Loans Summary

Purchase real estate


Buy inventory and stock

New employees

Buy equipment or machinery

Increase working capital

An opportunity that is too good to pass up

Advertising and Marketing

Buy a competitor out


Pay staff

Pay BAS or Tax Payments

The three basic principles to consider when evaluating finance.

These fundamentals will have a big impact on:

1 Your ability to be able to secure a loan

2 Speed to access funds

3 The fees and interest you will pay

Match the type and term of finance to your business needs

You can cover fluctuations in working capital with flexible short term business loans or an overdraft – but if you’re making a big purchase you’ll need a long term loan with a repayment schedule that matches your cash flow.

Safeguard your cash flow

Maintaining cash flow is one of the biggest challenges faced by any small business, so it’s vital that you have funds available when you need them – but be aware that you’ll pay more for at-call financing like an overdraft, which gives you access to funds whenever you need them.

The risk dictates the rate

To successfully secure financing you’ll need to convince a lender that you are a good risk (as per how they determine this) to get the lowest interest rates. For some types of loan, you’ll need to offer security, such as your property. With any financing application you’ll have to provide full financial data about your business – and a realistic repayment schedule that takes into account factors such as seasonal fluctuations in turnover, and the risk of late payment by your customers.

How to choose the right lender

Online lending is becoming a crowded market and there are new providers popping up all the time, many specialising in particular forms of business lending like invoice finance. Each have different requirements (e.g. minimum borrowing amounts) and offer different terms and conditions.

1 Choose the finance product you want first

2 Research multiple Lender websites for rates and fees

3 Seek assistance from an independent third

How to apply for and get a business loan online

Before you apply you’ll need to prepare a basic business case and budget for your loan. Establish how much you need to borrow and how much you can afford to repay, over what period. Do not over commit your business. Use this business loan calculator to determine how much you can borrow.


Visit your chosen lender’s website


Complete an online application form

Your business details

  • ABN
  • Structure
  • Location
  • Sector
  • Turnover
  • Time in business

How much you want to borrow and for how long How you will use the funds Basic details about yourself (especially where you are required to provide a personal guarantee)


Upload your supporting documents

Your bank statements for the last 4 to 6 months Your credit sales / merchant statements for the last 4 to 6 months Proof that you have been operating for the lender’s minimum required period Proof that you meet the lender’s minimum turnover requirements Personal identification documents

What happens next?

1 From here, the Lender will assess your loan amount versus the creditworthiness of your business and either provide you with an instant response online or phone you, once their credit team has looked at your application.

2 Once approved, you can sign the loan agreement (electronically) and be funded on the same day.

Can afford to repay it

Understand all of the fees and charges

Are confident you are getting the best deal

The top 8 reasons your loan application will be declined

1 Your revenue is inconsistent

2 You haven’t been in business long enough

3 Existing debt or loan facilities

4 Your business is seasonal

5 Your industry is weakening

6 The majority of your revenue comes from a handful of suppliers

7 Your industry is too high risk

8 Poor credit history

Business Funding For Start Ups

If you are a start-up, you’ll find out that no one really wants to lend to you, you’re just too high risk. You could consider doing sweat equity deals (people provide services to you at reduced or no cost in exchange for equity) or sell some equity.

Alternatively you can search for a suitable business grant or beg family and friends.

Around 25% of ALL small businesses have a credit card but no other forms of debt. Business credit cards will often be securitised against you personally.

6 Examples Where Unsecured Business Funding Could Help You:

1 You’re a seasonal business and you need to build your product inventory before the holiday period even though you’re short on cash right now. History tells you you will make the sales.

2 You get a golden opportunity to buy stock at a discounted price but you need to buy it immediately

3 A retail premise you have had your eye on has finally come up for rent, you’re going to have a huge expense in relocating

4 To purchase a new piece of machinery to improve efficiency and output

5 You’ve secured a great premise but now you need to fit it out

6 You’re BAS & Tax payments have caught you off guard and you need to get them paidThe reality is, whatever it is that you need for your business, from working capital, releasing cash from unpaid invoices or to bring on new employees with an unsecured short term loan you can invest it however you like.

The future of alternative business lending in Australia:

While the banks might seem like the obvious place to turn for a loan, they aren’t always a viable option for small businesses. Bank loan application processes can be slow and burdensome – and without a solid financial history or security to offer, small business loan applications frequently get rejected by banks.

An inquiry was recently concluded into the access and funding for small business and it was acknowledged:

Financing conditions for small  and medium enterprises


Interest rates on SME loans are generally higher than those for large business loans and mortgages. This largely reflects the higher costs and risks associated with bank lending to SMEs. Smaller businesses typically have less documentation and shorter financial histories, so it is generally harder and more costly for banks to acquire the required information to make accurate credit assessments. In addition, SMEs typically have more volatile revenue streams and are more likely to default. However. lenders do differentiate on price and some business can pay below standard rates, depending on their credit history and quality of collateral. Since the GFC, interest rate spreads on small business loans have increased relative to other loan types, which reflects the generally higher price of risk (Chart 3.6). This is similar to edvelopments in some other advanced economies.

Small business lending in Australia is on the same trajectory as the US market. In the US the Small Business Lending Index indicates alternative non bank lenders approve around 64.1% of all applications whereas the big, risk averse banks would approve less than one fifth (17.8%) of the same commercial applications.

In fact, Morgan Stanley recently predicted that alternative finance lending would lend $11.4 billion annually to SME’s by 2020 in Australia when $0 was funded via marketplace lending in 2014. The convenience and speed at which small business can finally get access to money through unsecured business loans is helping drive small business Australia forward.