Calculate Australian business loan repayments, compare loan types, and estimate the true cost of business borrowing. Includes SME loan types and ATO small business instant write-off.
| Item | Value |
|---|
Small business loans in Australia are available from major banks (ANZ, CBA, NAB, Westpac), non-bank lenders (Prospa, Moula, OnDeck), and the government-backed SME Guarantee Scheme. Interest on business loans is generally tax-deductible.
| Loan type | Rate range |
|---|---|
| Secured term loan (bank) | 7–12% p.a. |
| Unsecured term loan | 12–25% p.a. |
| Chattel mortgage (equipment) | 8–14% p.a. |
| Line of credit | 9–18% p.a. |
| Invoice finance | 1.5–3.5% per invoice per month |
| Loan Type | Best For | Typical Rate | Term |
|---|---|---|---|
| Unsecured business loan | Working capital, short-term | 9–25% p.a. | 1-5 years |
| Secured business loan | Larger amounts, lower rate | 6–12% p.a. | 2-10 years |
| Business line of credit | Flexible ongoing cash flow | 8–18% p.a. | Revolving |
| Invoice financing | Bridging debtors | 2–5% per 30 days | Per invoice |
| Equipment finance | Machinery, vehicles | 5–12% p.a. | 2-7 years |
| Loan Amount | Rate | Term | Monthly Payment | Total Interest |
|---|---|---|---|---|
| $50,000 | 10% | 3 years | $1,613 | $8,068 |
| $100,000 | 9% | 5 years | $2,076 | $24,560 |
| $200,000 | 8% | 7 years | $3,114 | $61,576 |
| $500,000 | 7% | 10 years | $5,806 | $196,720 |
When using a business loan to purchase eligible assets, the ATO's instant asset write-off may allow you to deduct the full purchase price in the year of purchase rather than depreciating it over years. This creates a significant first-year tax benefit that effectively subsidises the loan. At a 30% company tax rate, a $50,000 asset purchase delivers $15,000 in tax savings in year one — reducing the real cost of the asset and its financing.
What do Australian lenders require for a business loan?
Typically: 1-2 years of business tax returns and financial statements, 6-12 months of business bank statements, proof of ABN (usually 2+ years active), BAS lodgement history, and for secured loans, evidence of the collateral asset. Online lenders increasingly use open banking connections to verify income from bank statements directly.
Is business loan interest tax deductible in Australia?
Yes. Interest paid on a loan used for business purposes is fully deductible against business income in the year it is paid. At a 30% company tax rate, the after-tax cost of a 10% business loan is effectively 7%. This deductibility makes business borrowing more cost-effective than it might appear at headline rates.
What is a business line of credit?
A business line of credit gives you access to a pre-approved pool of funds that you draw on as needed and repay (revolving). Interest is charged only on the amount drawn, not the total limit. It suits businesses with variable cash flow — you draw during slow periods and repay when revenue improves. Lines of credit are flexible but typically at higher rates than term loans.