A business loan broker compares finance options across multiple banks and non bank lenders on your behalf, rather than you approaching each one individually. The value isn’t just convenience, it’s that a broker can often identify a better fit for your situation than walking into one bank and accepting whatever that single lender offers.
This guide covers what a business loan broker actually does, how they’re paid, and what to look for if you’re deciding whether to use one.
A business loan broker doesn’t lend money themselves. Instead, they work across a panel of lenders, banks, and non bank finance companies, to find and structure a loan that suits your business. In practice, that means:
A broker licensed under the National Consumer Credit Protection framework is also bound by a Best Interests Duty for certain credit products, requiring them to act in your interest rather than simply recommending whichever lender pays the highest commission.
This is one of the most common questions people have before using a broker, and it’s worth being direct about. Brokers are typically paid by the lender, usually as an upfront commission when the loan settles, and sometimes a smaller trailing commission for as long as the loan remains active. This means using a broker generally costs you nothing directly, the commission comes out of the lender’s margin, not an additional fee charged to you on top of your loan.
Our existing guide, How Do Mortgage Brokers Get Paid? A Transparent Breakdown, explains this commission model in full detail. The same structure broadly applies to business lending brokers, though commission rates and structures can vary by lender and loan type.
It’s reasonable to ask any broker directly which lenders they have access to and how they’re paid for a specific loan, a transparent broker will answer this without hesitation.
Going direct to one bank means you only see that bank’s own products and appetite for risk. If your application doesn’t fit their criteria, you’re declined and start again elsewhere, generating a fresh credit enquiry each time.
Using a broker means your situation is assessed against a panel of lenders before you formally apply, so applications tend to go to lenders where approval is realistic. A broker can also identify options you might not have known existed, a particular non bank lender that specialises in your industry, for instance, or a structure that better suits your cash flow than the generic product a bank branch would default to.
The trade off isn’t really a trade off at all in most cases, since broker commission is paid by the lender rather than you, and the comparison itself is likely to turn up options at least as competitive as going direct, often better. Our Business Loan Rate Comparison guide covers why comparing across lenders tends to produce better outcomes than accepting the first offer in front of you.
A broker isn’t the only sensible path in every situation. If you already have a long standing relationship with a particular bank, strong existing terms, and a straightforward borrowing need that clearly fits their lending criteria, going direct can be just as efficient. A broker adds the most value when your situation is more complex, when you’re unsure which lender is likely to approve you, when you want genuine comparison across multiple options, or when your application has something non standard about it that a generic bank process might not accommodate well.
“Using a broker costs more.” In most cases it doesn’t, since the broker is paid by the lender, not by you, out of commission built into how the lender already prices the loan.
“Brokers only deal with home loans.” Many brokers, including Lodestar Finance, work across business lending as well, with access to lenders and products that don’t always overlap with the home loan panel.
“I should apply to a few banks myself first to see what I can get, then use a broker if that doesn’t work.” This is generally the wrong order. Each direct application can leave a credit enquiry on file, which can actually work against you by the time you bring in a broker. Starting with a broker avoids this.
“A broker will push me toward whichever lender pays them the most.” A properly licensed broker operating under the Best Interests Duty is required to consider your circumstances, not just their own commission. Checking their credit licence and asking direct questions about their process is the way to confirm this in practice.
If you want to compare genuine options rather than accepting a single lender’s offer, if you’re unsure which lender is likely to approve your application, or if your situation is more complex than a straightforward, clearly qualifying request, a broker is generally worth engaging. Our Business Loan guide covers the full picture of loan types and how to choose between them, which a broker can help you apply to your specific situation.
Lodestar Finance’s Business Loans service compares options across a panel of lenders Australia wide, structuring your application around what you actually need rather than what one bank happens to offer.
FAQs
Generally no. Brokers are typically paid by the lender through commission built into how the loan is already priced, not through an additional fee charged to you.
Yes, business loan brokers operating under Australian credit licensing requirements are regulated, and many are required to act under a Best Interests Duty for certain credit products. You can check a broker's credit licence status through ASIC's register search.
This varies by broker. Ask directly how many lenders are on their panel, a wider panel generally means a more genuine comparison.
Sometimes, yes. A decline from one bank doesn't necessarily mean every lender would reach the same conclusion, different lenders assess risk differently, which is exactly the kind of situation where a broker's panel access is most useful.
Generally no. Each direct application can leave a credit enquiry on your file, which may work against you later. Speaking to a broker first allows your situation to be assessed before any formal applications are lodged.
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