Quick answer
Business loan pricing reflects how much risk the lender takes and how much it costs to provide the loan. The biggest drivers are security (property usually lowers pricing), credit history and trading strength, loan size and term, how quickly the money is needed, how much paperwork is available and the lender's own funding costs. That's why two businesses, or two offers to the same business, can differ so widely.
Key points
- Pricing reflects the lender's risk and cost of lending.
- Security, credit and trading strength move pricing the most.
- Speed and lighter paperwork usually cost more.
- Compare total dollar cost, not a single headline number.
You’ll notice there are no “rates from” figures anywhere on this site. That’s deliberate. Business loan pricing depends so heavily on your circumstances that a published number would mislead far more people than it helped. What is useful is understanding what moves pricing, so you can make sense of the offers you receive and, where possible, improve them.
What does a lender’s price cover?
Every business loan price covers roughly four things:
- The lender’s cost of funds: what it costs the lender to raise the money.
- Expected losses: an allowance for loans that won’t be repaid.
- Running costs: assessment, servicing, collections.
- Profit.
The second item is where your circumstances come in. Anything that lowers the chance of loss, or the size of a loss if it happens, tends to lower pricing.
What are the biggest pricing drivers?
| Driver | Usually lowers pricing | Usually raises pricing |
|---|---|---|
| Security | Property, especially first mortgage | No security, or second-ranking |
| Credit history | Clean, long history | Recent defaults, judgements |
| Trading strength | Steady, growing turnover, clean banking | Volatile income, dishonours |
| Time in business | Several years | Months |
| Paperwork | Full financials | Low doc or no doc |
| Speed | Planned in advance | Urgent |
| Term | Matched to purpose | Very short with heavy fees, or very long |
| Loan size | Larger loans often price lower per dollar | Small loans carry fixed fees |
| Lender type | Banks for strong, conventional files | Specialist lenders for complex files |
Why does security matter so much?
With property security, a lender can recover most or all of a loan if things go wrong, so its expected loss is lower. That’s why secured business loans usually price lower than unsecured ones. The trade-off is that your property is at risk and setup costs are higher. See compare by security.
Why do speed and paperwork cost more?
Lenders that assess quickly on lighter paperwork have less information and less time to check it, so they price for the extra uncertainty. They also often lend over shorter terms with frequent repayments to manage risk. If you can plan ahead and provide fuller documents, you usually widen your options and lower your cost. See compare by speed.
How do pricing methods differ?
Lenders express pricing in different ways:
| Method | How it works | How to compare |
|---|---|---|
| Annual rate on reducing balance | Interest on what’s still owing | Total dollars over the term |
| Flat or fixed total | A set total repayable from the start | Total dollars, and early payout terms |
| Factor rate | Amount × factor = total repayable | Total dollars and term |
| Fees-based | Establishment, line or service fees dominate | Add all fees in |
Because they’re different, the only fair comparison is total dollar cost over the period you’ll actually have the loan. Our total cost guide shows how.
How do wider conditions affect pricing?
Lenders’ funding costs move with broader interest rate conditions, which affects pricing, especially on variable loans. Lender appetite also shifts: when certain industries face pressure, such as construction or hospitality, some lenders tighten. The Reserve Bank’s work on small business conditions tracks these trends. Your own file, though, usually matters more than the economy.
Illustrative example. Two Brisbane landscaping businesses each ask for $100,000. The first has traded for eight years, owns its depot and has clean books; it’s offered a property-backed term loan over five years at low cost. The second is 14 months old, rents, and has a paid default from a previous venture; it’s offered an unsecured loan over 18 months at noticeably higher cost. Both offers are fair for the risk. The second business plans to refinance once it has two years of history.
What can you do to improve pricing?
- Plan ahead so you’re not paying for urgency.
- Keep banking clean for several months before applying.
- Lodge on time so full-doc options are available.
- Consider security if you’re comfortable with the risk.
- Match the term to the purpose.
- Disclose everything so offers don’t change late.
- Compare offers in dollars, not headlines.
Why can the same lender quote two businesses so differently?
Within a single lender, pricing is often set by bands or grades. Your application is scored on the factors above, and the score places you in a band with its own pricing. Small differences in your file can move you between bands:
| Factor | Example that can move you up a band |
|---|---|
| Time trading | Passing two years of trading |
| Bank conduct | Six months without a dishonour |
| Credit file | An old default reaching a few years in age, or being paid |
| Lodgements | Getting returns current so full-doc assessment is possible |
| Security | Adding property, or reducing the amount so unsecured fits better |
That’s why it can pay to wait a month or two if you’re close to a threshold and the need isn’t urgent.
What doesn’t affect pricing as much as people think?
- Who you bank with. Loyalty can help with a bank, but it rarely outweighs security and credit.
- The headline advertising. Advertised figures describe the best-case borrower.
- How much you want the loan. Lenders price risk, not enthusiasm; a clear purpose and plan help more.
- Your industry, on its own. Industry matters, but a strong business in a tough industry can still price well.
Understanding what really moves pricing lets you spend your effort where it makes a difference: clean banking, current lodgements, a sensible amount and term, and a fair comparison of offers in dollars.
How should you read an offer that seems expensive?
An offer that looks dear isn’t necessarily unfair. Before dismissing it, ask what’s driving the price:
- Is it the security position? Would adding property, or a smaller amount, change it?
- Is it urgency? Would the price fall if you could wait a few weeks?
- Is it paperwork? Would lodging returns open a cheaper option?
- Is it the term? Would a different term reduce the total cost?
- Is it the lender type? Would a bank or a different non-bank view the file differently?
Asking the lender directly what would improve the offer is reasonable, and often produces a useful answer. Sometimes the dearer offer is still the right one, because it’s the only one that meets your deadline or keeps your home out of the deal.
Get priced on your circumstances
Because every price depends on your details, the only way to know is to ask. Enquiring doesn’t put a mark on your credit file; a check only comes up once you decide to go ahead. We don’t hawk your details to a list of lenders. A real person looks at your security, trading and timing, and shows you what each realistic option would cost in dollars.
Please be accurate on the form so the pricing you see is pricing you can actually get. Start your enquiry, or compare offers you already have in the loan offer comparer and then ask us for more.
Frequently asked questions
Why don't you publish business loan rates?
Because business loans are priced on each borrower's circumstances: security, credit, trading, term and more. A published figure would mislead most readers. The fair comparison is the total dollar cost of offers made to you.
Why did I get a different offer from a friend's business?
Your business, security, credit history, term and amount are almost certainly different. Each of these moves pricing.
Does the Reserve Bank cash rate affect business loans?
It influences lenders' funding costs, particularly for variable loans, but business loan pricing also reflects risk and lender type, so it doesn't move one for one.
How can I get better pricing?
Offer security if you're comfortable, keep banking clean, have lodgements current, choose a term that fits, avoid rushing if you don't need to, and compare offers in dollars.
Is a factor rate the same as an interest rate?
No. A factor rate sets the total repayable as a multiple of the amount borrowed. It doesn't account for the term, so compare it in total dollars.