Business loans · 6 min read
How Do Business Loans Work in Australia? A Plain-English Guide
How Australian business loans work — interest, fees, terms, secured vs unsecured, repayments and what lenders check — explained simply.
Key takeaways
- You borrow a lump sum (or a limit) and repay it with interest over a set term.
- Unsecured loans are judged on cash flow; secured loans cost less because an asset backs them.
- Always compare the total cost of the loan, not just the headline rate.
The basics
A business loan is money a lender advances to your business. You agree on an amount, a term (from a few months to several years), a rate and a repayment schedule. Repayments cover the amount borrowed plus interest and any fees.
Secured vs unsecured
An unsecured business loan doesn't need property or assets — the lender relies on your cash flow, so approval is faster but the rate is higher. A secured loan is backed by property or equipment, which usually lowers the rate and lifts how much you can borrow.
What lenders check
Most Australian lenders look at the same handful of things:
- An active ABN and how long you've been trading
- Monthly revenue and consistency of deposits
- Existing debts and repayment history
- What the funds are for
Repayments and costs
Repayments can be daily, weekly or monthly. Beyond the interest rate, check establishment fees, early repayment terms and the total amount repayable — that's the real price of the loan.
General information only — not financial advice. Consider your circumstances and speak to a qualified adviser.