Business Loan Interest Rate Guide

Calculate how much you will repay on top of the amount you borrow with a business loan interest rate. Find out if credit is accessible for your business today. To give you the rundown on everything you might need to know, Monzi’s here. Read on for our comprehensive guide.

Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

Business loan interest rate

Your business loan interest rate is the a major factor in determining the total cost of your loan. In short, it will influence the amount you are required to repay on top of the principal amount that you borrow.

As a result, it’s incredibly important. Finding the most competitive rate can potentially save you and your business a stack of money.

But what goes into an interest rate? How can I get the best deal? And what is the average business loan rate?

These are all questions that you might have. Luckily, Monzi’s here to answer them. We’ve assembled this business loan interest rate guide to cover all the important questions. Let’s go.

Business loan interest rates and the five C’s

When it comes to business loans, a common assessment process for lenders is what’s known as the five C’s. The C’s stand for: character, collateral, capacity, capital and conditions.

Lenders assess each of the five elements and use this information to determine if they should extend credit to your business.

Given their importance, if you’re a business owner, it’s crucial to understand what each C means. That way, you can tailor your applications to give yourself the best chance of being approved.

To help you out, we’ve provided a quick rundown of each factor. Check it out:


Character focusses on your credit history and reliability as an organisation. In short, it’s a measure of your integrity as a business. Lenders will assess your credit history to determine if you are a trustworthy borrower with a track record of making your debt repayments on-time and in full. From this, they can get an idea of your character.


What assets could you use to secure your loan? For lenders, this is important information as if you default on your loan, they may be able to repossess the asset to cover their losses. Examples of collateral include property (business or personal), vehicles, equipment, vehicles or inventory. Without sufficient collateral, lenders may be hesitant to extend credit.


This is an easy one. It’s simply your business’ capacity to repay the loan. In assessing your capacity, lenders will focus on profits, income, account receivables as well as any cash outflows (e.g. other debts, current expenses). From there, they can get an idea of what repayments may be affordable for your business.


Lenders prefer to deal with businesses who have extensive capital portfolios. This may include inventory, property or equipment. In short, if you are unable to make your repayments, lenders like to see that you have a range of assets that could be sold to cover your repayments.


The terms of your loan. Are they favourable for both your business and the lender? Lenders who offer more favourable terms may be more willing to extend credit. Common considerations here include the repayment schedule and term, loan amount and interest rate.

Online business loan interest rate calculator

If you’re interested in getting an idea of what your loan may cost then using a loan calculator is a great first step. They’re not only free but easy to use as well.

Simply enter your loan amount, repayment term and interest rate and you will receive an estimate of your total loan cost and repayments.

While you’re there, play around with each of the loan features to see how that would affect your repayments. For instance, assess how a change in your term would influence your regular repayments. If you’re lucky, you may be able to determine that works best for your business.

However, remember that these figures are non-binding and an estimate only.

A free calculator is available from MoneySmart.

Is my business eligible?

In order to be eligible to access finance, you will need to check a few boxes. Requirements may vary between lenders, however, more than often than not, lenders will require the following:

  • Business age: some lenders may require your business to have been operating for six to twelve months before financing is offered.
  • Profitability, revenue and turnover: you must show that your business is earning sufficient income such that you have capacity to repay the loan.
  • Credit history: you must have a history of making your repayments in a reliable manner.
  • Your company must possess an Australian Business Number (ABN) or Australian Company Number (ACN).

What can I use a business loan for?

Business loans Australia can cover a range of business-related expenses. While by no means an extensive list, common examples include:

  • Product development and research
  • Operating costs and expenses (e.g. payroll)
  • Marketing and advertising costs
  • Purchasing new inventory or equipment
  • Cover rent or property costs

What is the average business loan interest rate?

There is no average interest rate as they vary significantly based on the terms of your loan as well as your business profile.

As a guide, lenders will typically calculate your interest rate based on the following:

  • Secured or unsecured?
  • Your organisation’s credit history
  • The loan amount and terms

However, as discussed, rates vary. If you’re a large business with a good credit history seeking a sizable loan then your interest rate will typically be much different to a small business applying for a loan.

As a result, it’s difficult to provide specific answers.

Business loan interest rate man in suit pointing

Unsecured business loan interest rates

With an unsecured business loan, there’s no need for your business to attach an asset as security. Just make your scheduled repayments until the balance of the loan has been repaid. Simple.

Keep in mind that unsecured loans are small cash loans. As a result, they may be an option if you find yourself needing to cover a minor expense.

In addition to this, unsecured loans may come with higher interest rates than secured loans as the loan is not guaranteed. In other words, as the lender’s risk is greater, additional interest will be added to account for this.

If you find that the interest rate is too high then consider applying for a secured loan instead. You will need to sign over an asset as security (e.g. machinery or a vehicle), however, you may be offered a more competitive interest rate.

Business loans Australia comparison

Don’t accept the first loan you find. Instead, shop around, try to find the best deal for your business. Moreover, with favourable terms, you can minimise your repayments and make your debts easy to manage.

Not sure what to compare? Consider the following:

  • The interest rate: lower is usually better.
  • Fees and charges: additional fees can add up. Avoid them where possible.
  • How much can you borrow from this lender?
  • Are there a range of repayment terms on offer?
  • Fixed or flexible repayments?
  • Do you need to guarantee the loan?
  • Does the lender have a history of treating borrowers well?

How much can you borrow for a business loan?

Business loans come in a range of sizes. However, the maximum amount you are able to borrow will depend on your business profile.

For some small businesses, this may be just a few thousand dollars. On the other hand, a large organisation with a strong credit history and a range of assets may be able to access cash loans that reach into the hundreds of thousands (or more!).

How long can you get a business loan for?

This will depend on your loan. While a short term loan may be repaid within one to two years, a long-term commitment could stretch over a period ranging from 10 to 20 years.

Most lenders will offer a range of repayment terms. Moreover, do the calculations to determine the period that is right for you. Try to, in short, balance paying off your debts ASAP with affordable regular repayments.

In short, the length of your business loan should be a function of what’s comfortable for your business.

Do business loans affect personal credit?

Potentially, however, it will depend on the type of credit you have applied.

In short, if you personally guarantee the loan for your business using one of your assets then it can potentially affect your personal credit score. This is, in particular, true if you fail to make your repayments on time. Moreover, this usually relates to small business owners.

On the other hand, if you apply for a business loan that is not personally guaranteed and relates simply to the business, there should be no impact on your personal credit score.

How much do business loans cost?

The total cost of your business loan will vary based on the details of the loan. As a result, in order to calculate the total cost of your loan you will need to sum the following:

  • Your loan amount
  • The interest applied
  • Any fees and charges

The combination of these three elements will determine your total loan cost. So, before applying, an online loan calculator may be able to provide you with an estimate of the total cost.

Can you pay off a business loan early?

Yes, potentially. However, consult your loan contract as it will be able to give you a definitive answer.

Typically, lenders will apply an early-exit fee if you opt to pay your debt off early. This is an additional charge added onto your total debt and should be listed in your contract.

While paying off your debt early is great in theory, make sure it is right for your business before following through. Maintaining some level of debt is a staple of most businesses and can free up resources that can be allocated elsewhere.

However, the decision is yours. Aim to make the best decision for your business.

Why was my business loan application denied?

Monzi cannot say why your business loan application was rejected. Moreover, there are a number of potential reason this could have occurred.

As a rule, your best bet is to contact your lender directly. They may be able to provide you with the exact reason.

This is an important step. Receiving feedback on your failed application can better prepare you for the future.

Business loan interest rates and Monzi

While at Monzi we may not be able to offer business loans, we can potentially make it easy to access personal loans online.

Through our lender-finder service, you can apply for cash loans from $300 to $10,000. Therefore, apply and we may be able to pair you with a lender in just 60 minutes. Moreover, scroll up and use Monzi’s loan slider to begin your application now.

Small personal loan$300 to $2,000
Medium personal loan$2,001 to $4,600
Large personal loan$5,000 to $10,000

Finally, head to the MoneySmart website for more information on personal loans.

Alternatively, follow us on Facebook, Instagram, Twitter and Pinterest.

Finally, if you’re a budding entrepreneur, make sure you read Monzi’s guide to starting a business in Australia.

Factor In


Two credit cards
Two credit cards

You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000


12 months (minimum)

12 months (maximum)


20% upfront establishment fee

+ 4% monthly fee


Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. The minimum and maximum loan term is 12 months. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Loan amount

$2,001 - $4,600


13 months (minimum)

24 months (maximum)


48% Annual Percentage Rate (APR)

67.41% Comparison Rate p.a.


Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principal Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Annual Percentage Rate (APR) for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. The minimum loan term is 13 months and the maximum loan term is 24 months. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.

Loan amount

$5,000 - $10,000


13 months (minimum)

24 months (maximum)


21.24% Annual Percentage Rate (APR)

48% Comparison Rate p.a.


Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principal Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Annual Percentage Rate (APR) for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. The minimum loan term is 13 months and the maximum loan term is 24 months. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.