How to compare business loans in Australia

A business loan comparison is the process of lining up two or more offers on identical terms so you can see which one costs least and fits best. Comparing business loans in Australia is harder than comparing home loans, because business credit isn’t covered by the consumer comparison rate rules and lenders present their pricing in very different ways. The fix is simple: translate every offer into dollars and conditions you can lay side by side.

business.gov.au’s guide to applying for a loan tells borrowers to shop around. This page shows you how to do that properly, so you’re comparing the true cost and the true risk, not just the most prominent number on a quote.

What should you compare on a business loan?

There are eight things worth putting in a table for every offer.

What to compare	Why it matters	Question to ask the lender
Cash received	Fees are sometimes deducted from the advance	“How much will land in my account?”
Total of repayments	The full amount you’ll hand back	“What is the total of all scheduled repayments?”
Fees outside repayments	Establishment, line, valuation, legal, monthly	“List every fee, when it’s charged and how much.”
Term and frequency	Shapes cash-flow pressure	“How many repayments, how often?”
Security	Determines what’s at risk	“What will you register or take a mortgage over?”
Guarantees	Personal exposure of directors	“Who must guarantee, and is it limited?”
Early exit cost	Matters if you might refinance or sell	“What would it cost to repay after six or twelve months?”
Conditions	Ongoing obligations and default triggers	“What must I keep doing, and what counts as default?”

Our compare business lenders page covers the differences between lender categories; this page is about comparing the offers themselves.

How do you compare the true cost of business loans?

Use one formula for every offer: total of all repayments + fees paid outside repayments − cash actually received = cost of finance.

1. Ask each lender for the total of scheduled repayments.
2. Add any fees not already built into those repayments.
3. Work out the cash you actually receive after deducted fees.
4. Subtract cash received from total paid.
5. Divide by the number of months if you want a monthly cost for comparison across different terms.

Doing step five matters when terms differ. A shorter loan usually costs fewer total dollars but demands bigger repayments; a longer one costs more in total but leaves more breathing room. Neither is automatically better. For a full breakdown of fee types, see business loan fees, and for why there’s no standard rate to lean on, read business loan comparison rates.

An illustrative business loan comparison

Purely illustrative; the lenders are generic and no real business is involved. A printing business needs $120,000 for new equipment and fit-out works.

	Offer A: bank term loan	Offer B: non-bank secured loan	Offer C: online unsecured loan
Cash received	$118,800	$117,000	$115,200
Term	60 months	36 months	18 months
Repayment	$2,480 monthly	$4,100 monthly	$1,840 weekly
Total of repayments	$148,800	$147,600	$143,520
Ongoing fees	$1,200	Nil	Nil
Total paid	$150,000	$147,600	$143,520
Cost of finance	$31,200	$30,600	$28,320
Cost per month of term	$520	$850	$1,573
Security	Home mortgage + GSA	Commercial property	Director’s guarantee
Early exit	Break costs possible	Small fixed fee	Full cost may still apply

Offer C costs the fewest total dollars, but its weekly repayments of $1,840 come to roughly $7,970 a month, and paying it off early may save nothing. Offer A is the gentlest on cash flow but ties up the family home. Offer B sits between them. The right answer depends on the business’s monthly surplus and appetite for risk, which is exactly why a dollar table beats any single price.

Want help building this table for real offers? Start a short enquiry and a specialist will set out your realistic options in dollars.

What do people get wrong when comparing business loans?

• Comparing repayments, not totals. A low repayment over a long term can cost far more overall.
• Ignoring deducted fees. If $3,000 comes off the advance, you’re paying for money you never receive.
• Missing the security difference. An unsecured loan and one secured over your home aren’t the same product even at similar cost.
• Assuming early payout saves money. Some products charge the full finance cost regardless of when you repay; see paying off a business loan early.
• Comparing different amounts. Ask every lender to quote the same figure and a similar term.
• Overlooking ongoing obligations. Annual review fees, covenants or financial reporting requirements add cost and effort.

What questions should you ask every lender?

Keep this list beside you on every call:

• What is the total I will repay, including every fee?
• How much will I actually receive at settlement?
• Is the price fixed for the whole term, or can it change?
• What security and guarantees do you need, and can a guarantee be limited?
• Can I make extra repayments, and what does early payout cost?
• What happens if a repayment is late or missed?
• When could funds be available once I provide everything?

How do contract terms affect a comparison?

ASIC administers unfair contract term protections that cover standard-form contracts with small businesses, including business loans, where the business has fewer than 100 employees or turnover under $10 million. That’s a safety net, not a substitute for reading the contract. Two loans with similar costs can differ sharply on what triggers a default, whether fees can be changed, and whether a guarantee covers only this loan or all future debts. Weigh those differences alongside the dollars.

Which loan wins after comparing?

Usually the one with a reasonable dollar cost, repayments your cash flow carries comfortably in a quiet month, security you’re comfortable putting up, and enough flexibility for the next few years. Our business loan calculator helps you test each offer’s repayments against your own figures.

How do you compare a term loan with a line of credit?

A term loan and a line of credit can’t be compared on a single number, because one charges on the full amount from day one and the other charges mostly on what you draw. Estimate how much of the limit you’ll really use and for how long. If a business needs $100,000 but only for four months of each year, a line of credit with a modest line fee may cost far less in dollars than a term loan that charges on $100,000 for the whole term. If the money will be fully used straight away and paid down steadily, the term loan is often simpler and cheaper. Build both into your dollar table using your realistic usage, not the maximum limit.

When does it make sense to pay a little more?

Sometimes the dearer offer is the better decision:

• It avoids putting the family home up as security.
• It allows extra repayments or early payout without penalty when a big contract or sale is coming.
• Its repayment rhythm matches how customers pay you, reducing the risk of dishonours.
• It comes from a lender likely to grow the facility with you.

Put a dollar value on those benefits where you can, then decide whether they’re worth the difference.

Ready to compare offers that actually fit?

Comparisons only help if every option on the table is one you could genuinely get. To start with lenders suited to your profile, see what you qualify for. There’s no credit check to make an enquiry, we won’t hand your details to a queue of lenders, and you’ll deal with a person who knows the market. Give us accurate figures for turnover, security and the amount you need, and the offers you compare will be realistic ones.