Compare Business Loans In Australia: Reviews

  • Updated: 24/07/2021
  • Read

Our lender reviews and comparisons rely on support from our readers, we may receive a payment when you click on a link that directs you to a partner site.


Small Business Loans – Unsecured Business Loans


Unsecured loans are a good option if you are looking for a loan fast or if your business does not have suitable assets to use as collateral. As the loan has no security, your business should have a decent business credit score, an ABN, have at least 3 to 12 months trading history, and turnover of at least $5000 a month.

If you meet the lender’s eligibility criteria, then you can borrow capital from $5,000 to $1 million and repay this over 1 to 36 months.

    • maxfunding logo
    • 65
    • 90
    • 80
    • 70
    • 60
    • 50
    • 40
    • banjo logo 150 x 100
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • judobank logo
    • 62
    • 60
    • 70
    • 70
    • 50
    • 30
    • 90
    • getcapital logo
    • 80
    • 90
    • 90
    • 80
    • 80
    • 70
    • 70
    • bizcap-logo
    • 90
    • 95
    • 80
    • 85
    • 90
    • 100
    • 90
    • ondeck-logo-new
    • 83
    • 90
    • 50
    • 90
    • 90
    • 90
    • 90
    • zip-business-logo
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • moula-logo-rescaled
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • prospa-logo
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • capify logo
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • lumi logo
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90

Small Business Loans – Line of Credit


A business line of credit is a good option if you are looking for flexibility. These types of loans differ from traditional loans, as you only pay interest for what you draw from the credit facility.

    • judobank logo
    • 62
    • 60
    • 70
    • 70
    • 50
    • 30
    • 90
    • getcapital logo
    • 80
    • 90
    • 90
    • 80
    • 80
    • 70
    • 70
    • zip-business-logo
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • moula-logo-rescaled
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • prospa-logo
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • lumi logo
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90

Small Business Loans – Merchant Cash Advance


If you make all your sales through EFTPOS, debit, or credit card then a lender that offers a Merchant Cash Advance can be an option. When you get a merchant advance, the lender claims a small percentage of your daily or weekly electronic sales towards repayment of the loan.

As payments are variable, Merchant finance will suit businesses with fluctuating daily or seasonal turnover of the business.

This type of loan is best if your business is in the retail or hospitality industry, as merchant finance requires all your sales to be by electronic means.

    • beyond merchant capital logo
    • 85
    • 90
    • 80
    • 90
    • 80
    • 90
    • 80
    • capify logo
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • lumi logo
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90
    • 90


Finding the right small business loan in Australia for you


Loans are a useful means to help your businesses operate and grow. As a business owner, when applying for a loan, chances are you will want a loan that meets the following conditions:

Fast Funding – A quick turnaround from application to approval to funding, sometimes all on one business day.
Simple Loan Application Process – minimal paperwork for successful application
Easy Approval – have few conditions such as credit scores and collateral requirements
Low Business Loan Interest Rates – These are your major costs along with the establishment fee or upfront fee
Flexible loan terms – A loan amount and repayment period that meets the needs of the business

If you are looking to grow your business and lack the resources to finance it yourself, one option is to get a loan.  When choosing a business loan for your small business, it is beneficial to understand the different loan options available so that you can find the right business loan for you.

Australian businesses are fortunate to have a wide range of ways to get business finance beyond traditional bank loans from lenders such as Westpac, NAB, or ANZ. These loans can be ‘unsecured business loans’ or ‘secured business loans and can be a lump-sum or line of credit exploring your options.

This ‘compare business loans in Australia’ review guide looks at the most popular types of business loans available so you can find the best loan and lender for your needs.


Before you apply for a loan


Before you apply for a loan, it helps to determine exactly what you need finance for. This will help ensure you select the right type of loan.

In this ‘compare business loans in Australia’ review, we recommend asking yourself the following question before taking on any loan:

  1. How do you intend to use the funding?
    • What is the purpose of the loan, some loans may serve your needs better
  2. How much capital do you need?
    • Knowing how much funding you need and how you will use it, will help you find the right lender and loan type
  3. What is the funding timeline?
    • Is the loan for short-term or long-term purposes.
  4. Can you afford the loan?
    • Draw a business plan and determine if you can afford the risk of taking on the loan.
  5. Does your business have a strong credit history?
    • It is easier to get funding if your business is creditworthy. Some lenders will consider lending if you have poor credit but you may pay higher fees.
  6. How much will the loan cost?
    • It is worth shopping around and comparing different lenders. The best lender will hold an Australian credit licence with AFSL and be a member of AFIA. Lenders with AFIA should include SMART Box™ which is a pricing disclosure quote you can use to compare quotes with different lenders.
  7. Do you need the loan?
    • When you have asked yourself the above questions, you will be in a better position to ask yourself if you really need the loan and if it will give you a return on investment
factors affect loan application

All loans will be unsecured or secured. We look at what this means and then deep dive into the main types of loans available.

types of business loans


Unsecured Business Loans


An unsecured business loan is simply a funding solution for your business that does not require collateral to secure the loan. This type of loan can be a term loan, line of credit, or cash advance.

Unsecured loans a good option in the following circumstance:

  1. Your business has few (if any) assets: In place of security, the business owner or director needs to provide a personal guarantee.
  2. Your business needs funding fast: Quick application and approvals are common, sometimes on the same business day.
  3. You don’t want to deal with paperwork: SME lenders offer low or no doc loans and require little (if any) paperwork
  4. You want flexibility: SME lenders can be more flexible than bank lenders with lending amounts, loan terms, and interest rates.
  5. You want choices: There are a greater number of SME lenders than bank lenders
  6. You want to build your credit score: Paying off unsecured loans builds trust with lenders and builds your credit score


Unsecured business loans are not the best option in the following circumstances:

  1. You want to avoid high interest rates: With no collateral, SME lenders are taking on greater risk so charge more interest
  2. Your business has poor credit AND poor cash flow: SME lenders will lend if you have poor creditworthiness but only if you have good cash flow
  3. Your business does not meet eligibility criteria: Lenders have eligibility requirements to ensure they do not receive applications from businesses with high risk.

Since lender require a minimum monthly cash flow and period in operation, Start-up businesses are no candidates for unsecured loans..


Unsecured business loans are good options for any business-related activity such as:

  • Purchasing Inventory
  • Business expansion
  • Purchase or upgrade of Equipment/machinery
  • Employing new staff
  • Cash flow
  • Invoice financing
  • Invoice factoring
What is a unsecured Business Loans


Are unsecured loans expensive?


Unsecured loans have higher interest rates than secured loans as the lender is taking on greater risk. As your business does not back the loan with security, the lender has reduced means to recoup the debt in event of default.

While unsecured loans have a higher cost, Business owners often consider this extra cost a reasonable trade-off to get fast funding. Immediate cash flow ensures businesses do not miss out on opportunities or slow operations while due to lack of capital.

To get an unsecured business loan, your business should have a solid credit history. Some SME lenders however may still consider your application if your business can show the business is profitable and/or has good cash flow.

Advantages

  • Fast Approval
  • Business does not need assets for collateral
  • Flexible repayment periods
  • Quick Application and processing
  • Fewer administration costs
  • More lenders to choose from

Disadvantages

  • A personal guarantee from owner/director
  • Banks usually won’t lend without collateral
  • High-interest rates
  • Not for businesses with no trading history (start-ups, new businesses)
  • Limitation on the amount you can borrow
  • A decent business credit score may be necessary
  • Strict lending criteria



Secured Loans (Equity Loans)


A secured business loan is simply a loan that requires the loan to be secured with an asset.

As secured loans have the backing of an asset, loan repayments should be timely or the lender may claim the asset to recoup costs. You will find traditional lenders like banks require security while many online lenders do not.

Assets that lenders will accept usually include vehicles, franchise licenses, machinery, equipment, and property.

What is a secured business loan


Are secured loans expensive?


Secured business loans will usually have a lower interest rate than an unsecured business loan. Using collateral means the lender can use the asset to recover the loan in event of default. This means most of the risk rests with the borrower.

Using collateral is common for long-term loans and where the business has poor credit.


Comparing and reviewing the best business loans in Australia


There is no shortage of options loans you can choose from. Below we review some of the most popular types of loans for Australian businesses. All these loans are available as unsecured loans or secured loans however most non-bank lenders we review offer unsecured loans.


Business Term Loans


Business loans with a loan term are the most common type of loan. This type of loan is much the same as a personal loan however you can only use the loan for business purposes.

Term loans mean you will receive the entire loan all at once as a lump sum. With this type of loan, you will a regular repayment over an agreed period.

Business term loans come in several flavours including small business loans, short-term business loans, fast business loans, and working capital loans.

Most of these names are simply marketing however some may have a few subtle differences. This mostly comes down to the amount of funding available and the length of the loan.

What is a business term loan


Interest rates and repayments

Fixed Interest rates: When using fixed rates, the interest rate is the same through the repayment period. This type of interest is good for forecasting future payments but is likely to entail early repayment fees or penalties if you pay back the loan before the end of the loan term.

Variable Interest rate: Sometimes called floating interest rates, these rates can fluctuate over the course of the loan. This means your repayments may vary with each payment schedule.
Choosing a loan with variable interest rates means you may be able to refinance your loan such as change the repayment amount. These types of loans usually don’t contain hidden fees such as early repayment fees.



Business Line Of Credit


A line of credit means you can access a credit facility for cash when you need it. You will only pay interest fees on the portion of the money you withdraw from the facility. Examples of lines of credit include bank overdrafts, buy now, pay later, and credit cards.

Lines of credit are popular where you need short-term finance. As the facility is pre-approved, you can quickly access funds(up to your limit) without needing to go through an approval process for each drawdown.

This type of funding is popular for purchases that are too large for credit cards or buy now pay later financial services but too small for term loans.

Interest rates and repayments

Unlike term loans where you pay interest for the entire loan, a line of credit means you only pay interest on the funds your use.

When making repayments, a line of credit can be rolling or non-rolling. A rolling line of credit means you can redraw any funds that you have paid back.

What is a line of credit


Asset Finance –
Vehicle, Fit Out and Equipment Finance


Asset finance is an umbrella term and includes equipment leasing, hire purchase, finance leases, and asset refinance.

If you are looking to purchase assets for the business such as machinery, equipment, vehicles, commercial property, or even renovate or fit-out your premises, then asset finance could be the right solution for you.

The lending arrangement will vary depending on how you plan to procure the asset. there are 3 types of asset finance options:.

  • Finance to purchase asset outright
  • Finance to hire asset with a view to purchasing the asset in future
  • Finance to hire asset only (lender maintains ownership)


Asset finance loans will usually cover a fixed term as the value of the asset is available in advance.

Advantages

  • Little documentation needed
  • The asset you finance is the collateral for the loan
  • A poor credit score is ok as the asset is security

Disadvantages

  • High interest rates than other loan types
  • The lender owns asset until you pay the debt
What is asset finance


Business Overdrafts


A business overdraft provides a safety net as it allows you to continue to access capital when your business bank account has no savings remaining. Overdrafts are a good option for maintaining cash flow in an emergency or when you need short-term funding.

Business overdrafts are a type of line of credit attached to your bank account. This allows for access to capital directly through the business bank account even though the account may have no funds. It is therefore a good option for maintaining cash flow in an emergency or when you need short-term funding.

Examples of overdrafts that can be useful include:

  • Buying new stock
  • Closing outstanding invoices
  • Paying unforeseen business expenses
  • Resolving supply chain costs


Business bank overdrafts can either be secured or unsecured. If you use a non-bank lender, then you will probably need to attach your bank account details with the lender’s account so they can provide funds for the overdraft when you need it.

Advantages

  • A good option for a seasonal business to cover cash flow shortages in low times
  • Usually no early repayment fee
  • Can be quick to arrange as the lender should have visibility of your bank details
  • Pay interest only on the overdraft funds
  • Can stop the overdraft when cash flow returns and debt closed

Disadvantages

  • Interest rates are often variable, making it hard to calculate borrowing costs
  • High interest or penalty rates if you go over the overdraft limit
  • Overdraft facility may be closed with no notice if not used correctly
  • May have extra fees
What is a business overdraft


Merchant Cash Advance


With a Merchant Cash Advance (MCA), the lender loans (or advances) you money for a percentage of your daily sales by EFTPOS, debit, or credit cards.

Sometimes called a business cash advance or merchant finance, this option is available to businesses that make most of their sales via card terminals. Tieing repayments to sales means your repayment can be in line with seasonal cash flow. In other words, you will pay less when sales are low and more when sales are high.

Examples of businesses an MCA is good for include:

  • Retails
  • Restaurants
  • Hotels
  • Online businesses

An MCA usually requires no security so can be fast to get if your business meets the lender’s minimum qualification conditions

Advantages

  • Fast funding
  • No fixed repayment schedule
  • Repayments are a percentage of turnover
  • Good option if you have bad credit
  • No collateral
  • Convenience as repayment as automatically deducted from daily sales

Disadvantages

  • One of the most expensive types of financing
  • Reduces your daily profits
  • Lose control over sales operations (can’t accept cash sales)
  • May need to use the lender’s preferred payment system
What is a merchant cash advance



Trade Finance – Import / Export Credit, Lines of Credit


Trade finance is an umbrella term for lending that helps facilitate international trade.

If your business deals with international trade, trade finance providers reduce trade risks for global payment by balancing the needs of exporters and importers.

Trade finance works on a confirmed order basis. Taking out a loan allows you to complete orders as soon as possible. Import transactions can be tough on cash flow as you will usually need to pay for the goods long before they are received. Export transactions have the same issue but in reverse, payments from the buyer can take 30 to 120 days which can put a strain on finances.

This finance is popular with exporters, importers, wholesalers, distributors, and sometimes companies with staff or contractors overseas.

Types of trade finance include

  • A letter of credit: This arrangement sees the importer’s bank promise the exporter that they will make payment when the transaction is complete
  • Import / Export credit: This is a working capital loan for imports and export
  • Import / Export line of credit: Lending lines of credit are pre-approved funds you can access when you need them for import or export purposes


Advantages

  • More flexible than other types of loans
  • Lending against invoices is faster
  • A greater level of borrowing against assets (for secured loans)
  • Helps maintain cash flow while payments owing are in arrears
  • Finance is usually backed by an insurance policy or secured against the goods

Disadvantages

  • Can be expensive if the business lacks cash flow due because of late payments

Loans are important to help your businesses operate and grow. As a business owner, when applying for a loan, chances are you will want a loan that meets the following 3 conditions:

What is trade finance


Invoice Finance / Invoice Factoring / Invoice Discounting


Invoice finance allows you to borrow money based on the value of outstanding invoices that customers owe your business. Unpaid invoices have a payment term of 30 to 120 days (or more) and this wait for payment can affect your business cash flow.

Choosing invoice finance allows you to receive a cash advance from lenders without needing to wait days or weeks for the vendor to honour the invoice debt.


Invoice loans or invoice line of credit


Invoice finance means you are using your invoices as proof (or collateral) that your business will pay back the lender for the cash advance. These types of loans will either mimic a traditional
loan where you receive a lump sum for the loan or a line of credit where you access funding when you need capital.

A way to use invoices as collateral to borrow funds against debts owed from customers


Invoice factoring


Invoice factoring means you are selling invoices to a lender (or factoring company) at a discount in return for cash that covers most of the value of invoices.

A way to fund business cash flow by selling outstanding invoices to a lender at a discount


Invoice discounting


Invoice discounting is the same as invoice factoring but responsibility for invoice collection remains with the business.

This arrangement means you are using the invoices as security and removes the need for customers to know about 3rd party involvement..

A way to use invoices as collateral for a cash advance and for your business to maintain responsibility for the collection of invoice payments


If your business has a human resource or finance department who can reliably handle timely debt collection and you don’t wish customers to know you are using a 3rd party to handle debt collection
then business discounting may be suitable.

Advantages

  • Release up to the entire value of outstanding invoices immediately
  • Secure funding using invoices rather than other assets
  • Pay supplier invoices in a timely fashion
  • The level of funding can increase in line with the increase in invoice value
  • Do not require a high business credit score

Disadvantages

  • Higher costs (similar to short term loans)
  • Can become too reliant on invoice financing
  • May not be able to access if using other loan products
  • High charges if payments fall behind
  • High reliance on customers to pay invoices on time
What is invoice finance


Caveat Loans


Caveat loans are one of the fastest types of loans to arrange. If your business has suitable assets (usually property) then the lender can put a caveat on the asset when providing you with funding.

Placing a caveat on an asset means you cannot sell the asset until you pay the loan.

Advantages

  • An easy way to obtain finance quickly
  • Credit history unlikely to affect the ability to get a loan
  • The loan is secured with property
  • Caveat loans are very versatile
  • Low Document requirements
  • When funds are repaid, you are released from the loan

Disadvantages

  • Must clarify with lender exactly how you use the funds
  • Best for short-term loans due to higher interest rates
  • Loan terms are shorter (1-12 months)
  • May have additional fees (application, valuation, legal fees)
  • The amount available to borrowers limited by equity value


Second Mortgage Loans / Home equity loans


Second mortgage financing means you are using the equity in property assets that already have a mortgage, as collateral. As this is a second mortgage, the new lender will be the second in line with the first mortgage holder should there be a default on the loan.

Advantages

  • Taps into the equity of your home without costs of the first mortgage
  • Avoid private mortgage insurance
  • The loan is secured with property
  • Lower interest rate than other types of loans
  • Flexible with how you use the funds
  • Tax-deductible

Disadvantages

  • Higher interest rate than the first mortgage
  • Built-up equity reduces the net worth of business
  • Risk of foreclosure
What is a Second Mortgage loan

Business Credit Cards and Buy Now Pay Later Finance



Business credit cards are the same as personal credit cards, however, they are designed to meet the needs of small businesses.

Using a business credit card allows for the separation of personal and business spending and provides the ability to track purchases using accounting software such as MYOB and Xero.

Features that make business credit cards different from personal credit cards include:

  • You will likely need to provide a personal guarantee for credit card debts
  • Business lending limits are higher than a personal credit card
  • Protections found on credit cards for personal loans may not be available with business credit card
  • Reward programs are tailored to business needs
  • You can give a business card to staff and control their spending limits


With the increasing popularity of buy now pay later (BNPL) services, some business lending providers are offering BNPL specifically for business-to-business lending (B2B).

BNPL means you can buy your product and pay off your purchase over time. The main difference between credit cards and BPNL is that credit cards charge interest rates until the credit is paid while BPNL has fixed payments over time with fees for late payments.

Advantages (Business credit cards)

  • Convenient option to pay business expenses
  • Separates business from personal expenses
  • Transactions can be tracked with accounting products
  • May have no interest costs if the debt is paid within the month
  • Receive reward points and discounts
  • Flexible with how you use the funds
  • Employees can have their own card to pay for business expenses
  • Can set spending limits for each cardholder
  • Higher credit limit than a personal card
  • Potential tax deduction on card fees


Disadvantages

  • Minimum balance to be paid each month
  • Interest charges for late payment
  • High-interest rates
  • Usually a joining or renewal fee
What is a Business Credit Card

Fast Business Loans provides factual information about lending products for businesses. Information provided is taken from the lender's website or by contacting the lender's support for information. While we make efforts to ensure the information is accurate and up-to-date, the information provided published on this website should be treated as of general nature so
1. Fast Business Loans cannot guarantee information provided on our website matches details on the lender's website
2. While we attempt to cover all the lender's main loan products, users of this website should not expect all products are covered.
3. This website does not consider your business needs, objectives or financial circumstances so it not recommending any particular products.
4. Fast Business Loans recommend reading the lenders product disclosure statements before taking up any financial product offer.
Our website is completely free for all viewers of this website. Though FastBusinessLoans may receive a payment from some lenders, we maintain independence and objectivity when it comes to reviews and rankings. If you do apply for a product through this website, you will be dealing directly with the provider of that product and not with us.