Interest rates on business finance in Australia are among the least transparent figures in the lending market.
Lenders advertise headline rates that do not include fees. Comparison rates that include some fees but not others. Factor rates on revenue-based products that require conversion to understand the effective annual cost. Rate ranges that span from reasonable to extreme depending on borrower profile.
A business owner who signs a loan agreement without understanding the total cost of what they are accepting has made the most important financial commitment in the process without the information needed to evaluate it.
The Current Rate Environment for Australian Business Finance
Business finance rates in Australia in 2026 reflect an interest rate environment that remains elevated relative to the 2012 to 2022 period.
The RBA cash rate trajectory has kept the cost of capital meaningfully higher. For a plain-language explanation of how these rates are applied to different loan structures, see our guide to how a business loan works. than the period of record low rates that preceded 2022. Major bank business lending rates currently sit in the range of 7% to 10% per annum for secured commercial facilities. Non-bank unsecured lending typically runs 15% to 35% per annum. Revenue-based and short-term fintech products carry effective rates that often exceed 40% per annum when calculated correctly.
These are market ranges, not guarantees. A specific business's rate depends on trading history, credit profile, security available, facility type, lender selection, and deal size. A business with strong financials and property security accessing bank lending at 7.5% is in a different position from a startup accessing a fintech facility at 28%.
How to Read a Business Finance Rate Correctly
Three numbers appear in most Australian business loan pricing. Each tells a different part of the story.
The headline interest rate is the annual rate applied to the outstanding loan balance to calculate interest. For a $200,000 loan at 12% per annum, the annual interest on the full balance is $24,000, reducing as the principal is repaid. This is the most commonly quoted number in business lending advertising.
The comparison rate is calculated by combining the headline interest rate with the loan's standard fees and charges, expressed as a single annual percentage. An establishment fee of $2,500 on a $200,000 loan adds approximately 0.3% to 0.5% to the effective rate depending on the term. A monthly administration fee of $30 adds approximately 0.2% per annum. The comparison rate captures these components on a standardised basis.
Limitations of the comparison rate: it is calculated on a standardised loan size and term for comparison purposes. It does not capture early repayment fees, missed payment fees, or variable charges that depend on how you use the facility. It is a better comparison tool than the headline rate alone, but still an approximation.
The factor rate appears on merchant cash advances and some revenue-based products. A factor rate of 1.20 on a $100,000 advance means total repayment of $120,000. The fee is $20,000 regardless of how long repayment takes.
A factor rate does not translate directly into an annual percentage rate without knowing the repayment timeline. A $20,000 fee on $100,000 repaid over 12 months is approximately 20% per annum. The same fee repaid over six months is approximately 40% effective annual rate. The faster the business repays, the higher the effective annual cost. This is the counterintuitive feature of factor-rate products that most business owners do not appreciate when they accept an offer.
Business Finance Rate Ranges by Product Type
Bank secured term loans for established businesses with property security: 7% to 10% per annum, comparison rate 7.5% to 11%.
Bank business overdrafts and lines of credit: variable rates tracking the RBA cash rate plus a margin, currently approximately 9% to 12% per annum for most commercial facilities.
Non-bank unsecured business loans (6 to 24 months): 15% to 35% per annum for established businesses. Higher rates apply for shorter trading history or adverse credit. Comparison rates are often meaningfully higher due to establishment fees.
Asset finance (chattel mortgage, finance lease): 7% to 18% per annum depending on asset type, age, and borrower profile. New equipment from recognised manufacturers sits at the lower end. Used or specialised equipment at the higher end.
Invoice finance: typically expressed as a percentage of invoice face value per month, ranging from 1.5% to 4% per month. On an annualised basis, this translates to approximately 18% to 48% per annum. Faster-paying debtors reduce the effective cost because the advance is held for a shorter period.
Revenue-based finance and merchant cash advances: effective annual rates of 30% to 80% when factor rates are converted to annualised figures. These products compensate lenders for fast access, minimal documentation, and the absence of credit assessment.
What Drives the Rate a Specific Business Receives
Business finance rates are priced on risk. Every variable that reduces the lender's risk reduces the rate.
Security. A secured loan where the lender can recover from property or equipment if the business defaults carries a lower rate than an unsecured loan where recovery options are limited to legal action. Registered residential or commercial property produces the lowest rates.
Trading history. A business with five years of clean financials is assessed as less risky than one with 18 months of trading. Longer history provides more evidence of the business's ability to manage debt through varying market conditions.
Director credit profile. A director with a high personal credit score and no adverse credit events carries lower personal risk. For small businesses where the director's personal position is integral to the lending assessment, this factor directly affects the rate.
Revenue consistency. Consistent monthly revenue indicates a stable business model. High revenue variability increases perceived risk, which increases the rate.
Deal size. Larger deals are often priced more competitively because the lender's fixed costs of origination are spread across a larger revenue base. A $2,000,000 facility often achieves better pricing than a $200,000 facility from the same lender.
Broker relationships. A broker who places significant volume with a specific lender has relationship depth that produces better pricing. See our comparison of using a broker vs going direct for the full picture. has relationship depth that a single business owner applying directly does not. For larger deals, this produces meaningful rate differences. GPS Finance's lender relationships deliver competitive pricing across all business finance products
Comparing Rates Across Different Products
The correct comparison method for business finance rates is the total repayment amount expressed in dollars over the period being considered.
Interest-rate products: multiply the monthly repayment by the number of months. Subtract the principal. The result is total interest paid.
Factor-rate products: the total repayment is fixed at origination. The fee is total repayment minus the advance amount.
Invoice finance: estimate total fees based on the average outstanding debtor book and average days invoices are outstanding.
Once the dollar cost is established for each option, compare those figures against the benefit the facility delivers. A facility costing $18,000 in interest over 12 months to fund a growth initiative generating $60,000 in additional profit is straightforwardly positive. A facility costing $18,000 to fund an operational deficit with no defined resolution is a different calculation.
Frequently Asked Questions
What is the current business loan interest rate in Australia?
Business loan interest rates in Australia in 2026 range from approximately 7% per annum for secured bank lending to 35% or more for unsecured non-bank products. Asset finance sits between these ranges at roughly 7% to 18% depending on asset type and borrower profile. Revenue-based products carry higher effective rates when factor rates are annualised. The rate a specific business receives depends on its financial profile, security available, and lender selected.
How do I get the best business finance rate in Australia?
Four things consistently produce better rates: maintaining a clean credit file and strong ATO compliance; building a longer trading history before applying; offering adequate security where available; and applying through a broker with strong lender relationships rather than directly to a single institution at retail pricing. Businesses that refinance at the two-year mark, after building a strong track record, consistently achieve better rates than they accessed initially.
Why is the comparison rate different from the headline rate?
The comparison rate includes standard fees alongside the interest rate, expressed as a single percentage. An establishment fee or monthly account keeping fee that appears small in dollar terms can meaningfully affect the effective cost of a short-term loan when expressed as an annual rate. For long-term loans, fees have less impact on the comparison rate because they are spread across more periods.
Can I negotiate business finance rates in Australia?
Yes. Particularly for larger deals and where a broker is presenting competitive alternatives. A broker presenting a $500,000 equipment finance deal to a specialist lender with an established relationship is in a different negotiating position from a business owner presenting the same deal cold. Rates are often described as fixed but are more commonly a starting point for a structured conversation.
What rate should a startup expect on an unsecured business loan?
For a startup under 12 months old applying for an unsecured business loan from a non-bank lender, effective annual rates of 25% to 40% are the realistic range. Some fintech platforms offer lower rates for businesses with strong, consistent platform revenue. At the two-year mark, refinancing into a lower-rate facility is typically achievable for businesses that have managed their initial facility well.
Further Reading
- How a Business Loan Actually Works
- Small Business Finance: The Complete Guide
- Business Line of Credit in Australia
GPS Finance Group (CRN 000575797) is an Authorised Credit Representative of AFAS Group Pty Ltd (ACL 414426). AFCA Member ID 119860. General advice only — consider whether this information is appropriate for your circumstances.