Business loan interest rates in Australia currently sit well above where they did two years ago, and the direction of travel is still upward. For a business owner weighing up whether to borrow now or wait, the rate you are quoted matters, but understanding why you are being quoted that rate matters more. It is the part you can actually influence.
This guide covers what current business loan rates look like, what drives the number a lender puts in front of you, and the practical levers that move it down.
The most reliable non commercial benchmark available is the Reserve Bank of Australia’s Lenders’ Interest Rates data, which is compiled from APRA returns covering over 95% of total business credit. It is worth more than any advertised headline rate because it reflects what businesses are actually paying rather than what lenders are advertising.
On the RBA’s most recently published figures, average business lending rates broke down roughly as follows:
Business size | New loans | Outstanding loans |
Small business | 6.70% p.a. | 6.86% p.a. |
Medium business | 5.58% p.a. | 5.51% p.a. |
Large business | 4.82% p.a. | 5.07% p.a. |
Two things stand out. First, small businesses pay noticeably more than larger ones, consistently around 1.8 to 2 percentage points above large business rates. That gap is a risk premium, and it is the single biggest reason presenting your business well to a lender is worth the effort.
Second, these are averages across all loan types including secured lending. An unsecured business loan interest rate will sit considerably above these figures, in many cases in the double digits, because the lender has no asset to recover against.
Everything starts here. The cash rate is the benchmark that influences what banks themselves pay for funding, and it flows through to what they charge business borrowers. The RBA held the cash rate at 4.35% at its August 2026 meeting, following three increases earlier in the year, with the next decision due on 29 September 2026.
The RBA’s own commentary has been clear that inflation remains above the 2 to 3% target band, with annual CPI at 3.5% in the twelve months to July 2026 according to the Australian Bureau of Statistics. The practical implication for business borrowers is that this is not a market where waiting is likely to deliver a cheaper rate in the near term.
This is the largest single variable within your control. A secured business loan backed by residential or commercial property attracts a materially lower rate than an unsecured facility, because the lender’s downside is covered. If you have property equity available and are comfortable using it, this is usually the difference between a mid single digit rate and a double digit one.
Some lenders also offer a business equity access loan, which draws on equity in property you already own to fund business purposes, typically priced closer to mortgage rates than to commercial lending rates.
Within any given product, lenders adjust the rate based on how risky they judge your business to be. The inputs are the ones covered in our guide to business loan requirements and eligibility: trading history, turnover, credit file, existing debt, and industry. A business with three years of clean trading and consistent revenue will be quoted differently from one at eight months with lumpy cash flow, even for the identical product.
Shorter terms and larger amounts generally attract better pricing. Very short term facilities, particularly merchant cash advance style products, can carry effective rates far higher than a conventional term loan once fees are factored in.
A fixed rate locks your repayment for the fixed period, which protects you if rates rise further. A variable rate moves with the market, which helps when rates fall but exposes you when they rise. In the current environment, with all four major banks forecasting at least one further increase before the end of 2026, the value of rate certainty is higher than it was a year ago. That said, fixed rate business loans commonly carry break costs if you repay early, so the certainty is not free.
Secured business loan | Unsecured business loan | |
Typical rate positioning | Lower, closer to RBA benchmark averages | Materially higher, often double digit |
Security required | Property, equipment or other assets | None, though a personal guarantee is usual |
Typical loan size | Larger | Smaller |
Typical term | Longer, up to 15 years or more | Shorter, commonly 1 to 5 years |
Approval speed | Slower, involves valuation | Faster, often within days |
Neither is better in the abstract. A business that needs $30,000 for three months to bridge a seasonal gap may be entirely rational choosing a higher rate unsecured facility, because the total interest cost over that period is small and the speed is worth something. The same rate over a seven year term would be an expensive mistake.
This is exactly the calculation our business loan calculator guide walks through, and it shows why comparing total repaid matters more than comparing headline percentages.
Advertised business loan rates rarely reflect what you will actually pay. The costs that sit outside the interest rate include establishment fees, ongoing account keeping fees, drawdown fees, early repayment or break costs, valuation fees on secured lending, and security registration costs.
ASIC’s Moneysmart provides free independent guidance on comparing credit products and reading fee disclosures, and it is a useful neutral reference before signing anything.
When you compare business loan interest rates properly, work out the total cost over the full term including every fee, rather than ranking offers by the advertised percentage. Two loans an entire percentage point apart on the headline rate can flip position once fees are included.
That last point is where most of the money is left on the table. Comparing properly means comparing across banks and non bank lenders at once rather than sequentially, which is difficult to do yourself without accumulating credit enquiries along the way. Lodestar Finance’s Business Loans service compares rates and structures across a panel of lenders, so the comparison happens before applications are submitted rather than after.
If you are earlier in the process, our guide on how to get a small business loan in Australia covers the steps from preparation through to settlement.
FAQs
On RBA figures, small businesses currently pay around 6.7% on average for new lending across all loan types. Anything meaningfully below that for a secured facility is competitive. Unsecured business loans sit well above this benchmark and should be compared against other unsecured offers rather than the average.
The lender has no asset to recover against if the loan is not repaid, so the higher rate compensates for that risk. It is the price of not tying up your property.
Interest on a business loan is generally deductible where the funds are used for business purposes. The rules depend on your structure and how the funds are applied, so confirm with your accountant.
Unlikely in the near term. The RBA has raised the cash rate three times in 2026 and inflation remains above target. As at September 2026, all four major banks are forecasting a further increase before year end rather than a cut.
It depends on whether repayment certainty or flexibility matters more to your cash flow, and on whether you might repay early. Fixed rates protect against further increases but usually carry break costs.
A fast business loan can genuinely settle within 24 to 48 hours in the right circumstances, but “instant approval” in the literal sense doesn’t exist
Getting a start up business loan is harder than financing an established business, because the thing most lenders rely on most, trading history, doesn’t exist
Having bad credit makes getting a business loan harder, not impossible. Mainstream lenders rely heavily on your credit file, but it isn’t the only thing
