Low Rate Business Loans

Find out more about how to minimise your business loan's interest rate and compare a range of offers right here with Savvy.

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, updated on September 21st, 2023       

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How do I get a low-rate business loan?

There are a number of different factors that determine whether you get offered high or low interest rate for a small business loan. Some are easier to control than others, but all of them play a part in the process. These include:

Trading history

Lenders generally regard loaning money to a large, well-established company as a safer choice than lending to a small one, and that often means they’re willing to offer better terms. However, a small business that’s been successfully trading for decades might still be offered better rates than a larger start-up company founded in the last few years. A stable and successful business is generally more able to repay a business loan and, as a result, it’ll generally be offered lower interest rates. It’s important to keep good records to show how your business is tracking.


If you’re willing to offer some collateral on the loan – that's a large asset of some kind, such as a property or vehicle – that can improve your rates significantly and can help you secure a cheaper loan. If things go bad and you can’t make your repayments, your lender can sell your asset to make some of their money back. This is called a secured loan. An unsecured loan tends to have higher interest rates and lower amounts, although it’s generally quicker and easier to get approved.

Type of lender

For a secured loan, the type of lender can also play a significant factor in the rate you get for the loan. In Australia, banks are often able to offer better rates for a secured business loan than some of the smaller operators. The catch is that it’s often a lot harder to get approval for a loan with a big bank – the process can take weeks, requires lots of information about your business and its finances and your odds of getting rejected are generally higher. In Australia, smaller lenders are more flexible when it comes to their lending criteria and can turn an application around in a few days, with their rates for unsecured loans often on par with the bigger banks.


Another factor that might affect the interest rate over the life of your loan is the type of interest you’ve gone for. Fixed rate interest is locked in at a certain rate and isn’t going to change. Variable rate interest goes up and down with the market and are more flexible when it comes to additional and early repayments, but their non-locked rate can mean you end up paying more overall if rates rise throughout the term. So, a variable rate will be far better if interest rates go down during the life of the loan, but fixed interest is better if interest rates rise. It’s worth keeping an eye on what Australian interest rates are doing as a whole before you decide what kind of interest you want to lock in and compare your options.


Some lenders might apply special conditions to a loan that might improve the rate a little. This might be something like requiring you to pay off a certain debt, provide specific documentation of some kind, or avoid certain activities as a business. If they can place restrictions on you that lessen the risk, they might offer a better rate if you accept those conditions. It’s worth remembering, though, that the lender is more interested in your business making its repayments than in growing and expanding. You’d want to think through the consequences of accepting any special terms and conditions carefully.

How does risk affect whether I get a low interest rate on a business loan?

No matter which kind of lender you’re going with, the main equation that’s going to affect both your chances of getting approved for a business loan in Australia and how good the terms of the loan are is risk. In loan terms, risk is the likelihood that the lender will lose money on the loan, generally because you can’t make your repayments. All lenders will charge interest on a business loan, but whether the rate is low or high depends on how much risk they think is involved.

Lenders use higher interest rates to offset risk. If they’re offering a loan to a customer with a one-in-twenty chance of the loan turning bad and not being repaid, you can offset that risk by charging other customers a little bit more – the nine loans that do get repaid will cover the shortfall of the one that doesn’t.

As such, most lenders will be making decisions on how much interest to charge you based not only on how much need to charge to stay in business, but also on how much of a risk it is to loan your business money. Most of the things you can do to improve the interest rate on a loan really come down to reducing the risk to the lender.

Types of business loan

Why compare business loans through Savvy?

Pros and cons of an unsecured business loan


Easy application 

Generally an unsecured loan comes with fewer rigorous checks than a secured one, meaning the application process is a lot simpler and less painful – particularly with some of the smaller lenders.

Quick turnaround

The simpler application process means unsecured loans can have a much quicker turnaround. Many smaller operators can have a loan approved within 24 hours.

No collateral required

An unsecured loan doesn’t require an asset to be put on the line – which is handy if you’re just starting out and don’t have much in the way of assets. It also removes the risk of losing your asset.

Assets are freed up

Because your assets aren’t tied up as security on a loan, you’re not restricted what you do with them – you can move to a smaller property to free up some capital, or upgrade your significant equipment without the bank being involved.


Higher rates 

Because they come with more risk for the lender, they can’t offer interest rates as low as a secured business loan.

Shorter terms

Unsecured loans are generally intended to be paid off a lot quicker at one to two years, rather than ten to 20. This means less interest over the life of the loan, but higher repayments.

Smaller amounts

An unsecured loan generally offers a lot less money (dependant on your circumstances). This can still be around $200k – $300k to the right customer, though.

Still dependant on credit history

Even though the checks are less stringent than with a secured loan, they’ll still check your credit history – meaning bad credit will probably still be a problem (unless you’re applying for a bad credit business loan).

Frequently asked questions about low-rate business loans

What fees and charges can be included with a business loan?

A business loan can have lots of different fees that might be more or less obvious. Initial set-up fees are very common, as are ongoing monthly or annual maintenance fees. Some lenders can also charge you for each transaction you make, for making late repayments, and even for making extra early repayments to get ahead. It’s worth doing the homework to find out what fees a particular lender charges so you don’t get caught out and using our repayment calculator to help you work out what you might end up paying each instalment and overall.

How do I compare low-rate business loans?

When you're considering the cheapest loans available in Australia, the interest rate itself (generally expressed as a percent figure) is a good place to start, but don’t forget that fees and charges can also affect how much the loan costs you. Ongoing fees and charges – either regular fees or penalty fees for certain actions – can bring the cost of a loan up. You should also be wary of honeymoon rates, which is a business loan with an initial low interest rate that increases after a certain time. Sometimes a slightly higher interest rate with lower fees can actually work out better in the long term.

How much money can I get with a low interest rate business loan?

This depends on many factors. In Australia, even an unsecured loan – the easiest type of business loan to get – could reach up to $200,000–$300,000. A secured loan could offer up to tens of millions of dollars, often at a better rate, but it very much depends on the circumstances of your business. A big established business with a steady income will always be able to borrow more than other, less successful ones. Some smaller lenders may be willing to offer larger amounts to a small business, however.

Can I get a low-rate business loan if I have no money?

Probably not – although if you have decent cash-flow but no savings, you can still get an unsecured loan without a deposit or any collateral, making them one of the best options for a small business that’s still getting established. You’ll need to show evidence of a steady cash flow, though, to show the lender that you’re able to pay off the loan.

In Australia, does every lender offer fixed interest rates on business loans?

No, but many do – it’s always worth checking this when comparing lenders for a business loan – opting for fixed interest in a period of low interest rates can save you a lot when the rate goes back up. Read the fine print though – it’s not unusual for a lender to offer an initial fixed rate that reverts to a variable rate after a few years.

Will my credit rating affect whether I get low rates on a business loan?

Yes – credit ratings are a central part of how lenders assess the risk involved with a loan and lenders will often check the credit score of both you and your business as they assess your loan application. Lower credit ratings will come with higher interest rates to offset the perceived extra risk they pose to your lender. Conversely, if your credit rating is particularly good, you could be offered very low interest rates. It’s always a good ideal to look after your credit rating.

What government grants are available to my business?

The federal and state governments offer a range of grants to businesses of all shapes and sizes, with just some of them including New Business Assistance with NEIS and Accelerating Commercialisation. These essentially serve as interest-free loans for businesses without any need to repay the funds. It’s always important to check the criteria of these grants to see whether your business qualifies, otherwise you may have to apply for a business loan to access the funds you need.

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