Business Loan Calculator — Australia 2026-27
Borrowing for your business? See what it will cost.
Estimate Australian business loan repayments with AUD principal, interest rate, term, establishment fees, monthly fees, and total cost.
Australia Business Loan Notes
Australian business loans can include a headline interest rate, establishment fee, monthly account fee, security requirement, and early-repayment conditions.
Use the AUD version to compare cash-flow pressure, total interest, fee impact, repayment term, and whether the loan supports working capital or expansion.
This page keeps Australian establishment-fee and AUD repayment language separate from UK arrangement-fee and US origination-fee wording.
Australian version note: this business loan keeps the calculation anchored to AUD amounts, local product names, Australian tax language, and the way banks, employers, agencies, or advisers usually describe the inputs.
Local cues stay visible where they matter: ATO, PAYG, superannuation, Medicare levy, stamp duty, kilometres, comparison rate, APRA, Centrelink, GST, and Australian-dollar results are not rewritten into overseas vocabulary.
Use the output as an Australian estimate first, then sanity-check it against local quotes, lender criteria, government thresholds, state rules, or professional advice before relying on the number.
Uses standard P+I amortisation formula. Interest is 100% tax-deductible for business use. Not financial or tax advice.
Select the question that matches where you are right now.
Your result shows the true cost of the loan — monthly repayment, total interest over the full term, and the comparison rate including fees. The amortisation chart in Standard mode shows how the interest/principal split changes each year.
In the early years, most of each repayment is interest — very little principal is repaid. This is why the tax deduction is largest in Year 1 and shrinks each year. The amortisation chart shows this visually: the interest bar (red) is tall in Year 1 and small by the final year.
A long loan term at a low rate can cost more total interest than a short term at a higher rate. A $100,000 loan at 7% over 10 years costs $38,000 in interest. The same loan at 9% over 5 years costs $23,000 less. Always compare total interest, not just monthly payment or rate.
The comparison rate includes the effect of fees in the effective annual rate. A loan with a 7% headline rate and $3,000 in fees can have a higher comparison rate than an 8% loan with no fees. Always use comparison rates to compare loans side by side.
Business loan interest is 100% tax-deductible — this significantly reduces your true borrowing cost. Use Detailed mode to enter your tax rate and see the net interest cost after deductions.
The interest portion of each repayment reduces your taxable income. For a company on 25% tax, every $1 of interest costs only $0.75 after the deduction. For a sole trader on the 47% marginal rate, $1 of interest costs only $0.53 net. The deduction is claimed in the financial year the interest is paid.
Only the interest component is deductible — not the principal repayment. In the early months of the loan, the interest component is large. By the final months, it is very small. This is why early repayment can reduce your total tax deductions slightly — though the interest saved almost always outweighs this.
If the loan funds an asset purchase (equipment, vehicle), you may also be able to claim the instant asset write-off — immediately deducting the full asset cost in Year 1. This is a separate and additional deduction to the interest deduction. Check the current threshold at ato.gov.au, as it changes frequently. The combined benefit of IAWO plus interest deduction in Year 1 can be very significant for equipment finance.
The three most effective ways to reduce the total cost of a business loan.
Even small additional repayments dramatically reduce total interest. An extra $500/month on a $100,000 loan at 8.5% can pay it off 12–14 months early and save $4,000–$6,000 in interest. Use Detailed mode to calculate your exact savings. Check your loan allows extra repayments without penalty.
The rate you are offered is not always the best available. Use a broker to access 20–40 lenders. Offer more security if possible — property security typically reduces rates by 1–4% compared to unsecured loans. If you have been with your bank for years and have a good track record, ask directly for a better rate — they often oblige rather than lose the relationship.
Shorter term = lower total interest but higher monthly repayments. Longer term = lower monthly repayments but much more total interest. Optimise for the shortest term you can comfortably service — add buffer for business slowdowns. For most SMEs, 3–5 years is the sweet spot for business loans under $500,000.
Before applying, these steps will maximise your chances of approval at the best rate.
Lenders assess Debt Service Coverage Ratio (DSCR = annual net profit ÷ annual loan repayments). Most require 1.25–1.5× minimum. Calculate your DSCR before applying — if it is below 1.25×, either reduce the loan amount, extend the term, or increase profitability before applying.
Commercial finance brokers access 20–40 lenders simultaneously and negotiate on your behalf. For loans above $100,000, brokers are almost always worth using. Their fee is typically paid by the lender (commission), not you. Ask for a finance broker who specialises in SME lending, not just mortgage broking.
Any outstanding ATO debt is a major red flag for lenders. Clear or arrange a payment plan for any tax debts before applying. Lenders check ATO portals directly. Also ensure your BAS lodgements are up to date — a backlog of unlodged BAS can be as problematic as an actual debt.
The repayment formula, comparison rate, and how to use the results
The repayment formula
Monthly repayment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ−1]
Where P = loan amount, r = monthly interest rate (annual rate ÷ 12), n = total number of months.
Example
$100,000 at 8.5% over 60 months: r = 8.5%/12 = 0.708%/month. Monthly repayment = $100,000 × [0.00708 × (1.00708)⁶⁰] ÷ [(1.00708)⁶⁰−1] = $2,057/month. Total repaid: $123,411. Total interest: $23,411.
Comparison rate
The comparison rate includes the effect of fees in the effective annual rate. Always use the comparison rate to compare loans — a 7% loan with $3,000 in fees may be more expensive than an 8% loan with no fees. This calculator approximates the comparison rate from the actual costs.
| Loan amount | Rate | Term | Monthly | Total interest |
|---|---|---|---|---|
| $50,000 | 8.5% | 3 yr | $1,578 | $6,800 |
| $100,000 | 8.5% | 5 yr | $2,057 | $23,411 |
| $250,000 | 9% | 7 yr | $4,009 | $86,760 |
| $500,000 | 8% | 10 yr | $6,066 | $227,920 |
Term loans, equipment finance, lines of credit, and unsecured loans
| Loan type | Typical rate 2026-27 | Best for |
|---|---|---|
| Secured term loan (bank) | 7%–11% p.a. | Expansion, property, large capex |
| Unsecured business loan | 12%–25%+ p.a. | Fast cash, no security available |
| Equipment finance | 5%–9% p.a. | Vehicles, machinery, technology |
| Line of credit/overdraft | 8%–15% p.a. | Working capital, seasonal needs |
| Invoice finance | 1%–3%/month | Unlocking debtor cash |
| Government SME loan | Varies | SBFE-backed, lower rate for eligible |
Major bank vs fintech lenders
Major banks (CBA, NAB, ANZ, Westpac) offer the lowest rates but require more documentation, longer approval times (2–6 weeks), and often require property security. Fintech lenders (Prospa, Capify, Moula, Lumi) approve faster (24–72 hours) and require less security, but charge significantly higher rates. For large amounts or long terms, the interest cost difference is substantial — a $200,000 loan at 9% vs 18% over 5 years costs an extra $58,000 in interest.
DSCR requirements
Most lenders require a Debt Service Coverage Ratio of at least 1.25–1.5× for business loans. DSCR = annual net profit ÷ annual loan repayments. For a $100,000 loan at $2,057/month ($24,684/year), you need net profit of at least $30,855–$37,026/year (1.25–1.5× cover).
Claiming interest, instant asset write-off, and maximising your tax benefit
What is deductible
Interest payments on business loans are 100% tax-deductible for ABN holders and companies, provided the loan is used for income-producing business purposes. The principal repayment is NOT deductible — only the interest component of each payment reduces your taxable income.
How the deduction decreases over time
For a $100,000 loan at 8.5%, Year 1 interest is approximately $8,247 — a deduction worth $2,062 at 25% company tax. By Year 5, interest is only ~$815 for that year. The tax benefit is front-loaded in a P+I loan.
| Year | Interest paid | Tax deduction (25%) | Net interest cost |
|---|---|---|---|
| Year 1 | ~$8,247 | ~$2,062 | ~$6,185 |
| Year 2 | ~$6,810 | ~$1,703 | ~$5,108 |
| Year 3 | ~$5,242 | ~$1,311 | ~$3,932 |
| Year 5 | ~$815 | ~$204 | ~$611 |
Instant asset write-off (separate benefit)
If the loan funds the purchase of a depreciating asset (equipment, vehicle, technology), eligible small businesses can claim the full purchase cost as an immediate deduction under the instant asset write-off — separate from the interest deduction. Check the current ATO threshold at ato.gov.au, as this changes frequently.
What lenders assess, documentation needed, and tips for approval
What lenders assess
- DSCR: Net profit ÷ annual loan repayments — need 1.25–1.5× minimum
- Trading history: Most banks require 2+ years; fintechs 6–12 months
- Revenue: Minimum $100k–$250k annual turnover for most secured loans
- Credit history: Business and personal credit checked
- Security: Property significantly improves approval and reduces rate
- ATO compliance: No outstanding tax debts — lenders check via ATO portal
Documents typically required
- 2 years of business financial statements (P&L, balance sheet)
- 2 years of business tax returns
- 6–12 months of business bank statements
- Recent BAS statements
- Personal ID and personal financial statements
- Purpose of loan documentation
Using a broker
A commercial finance broker can access 20–40 lenders simultaneously and often negotiates better rates and terms than going direct. Broker fees are typically paid by the lender (commission). For loans above $100,000, using a broker is almost always worthwhile.
Australian business loan worked examples 2026-27
| Loan amount | Rate | Term | Monthly | Total interest | Total cost |
|---|---|---|---|---|---|
| $50,000 | 8.5% | 5 yrs | $1,026 | $11,558 | $61,558 |
| $100,000 | 7.5% | 5 yrs | $2,003 | $20,200 | $120,200 |
| $100,000 | 11.5% | 5 yrs | $2,201 | $32,070 | $132,070 |
| $250,000 | 7.0% | 7 yrs | $3,775 | $67,083 | $317,083 |
| $500,000 | 6.5% | 10 yrs | $5,679 | $181,477 | $681,477 |
| $1,000,000 | 6.0% | 15 yrs | $8,439 | $518,975 | $1,518,975 |
Rate sensitivity
A 2% rate increase on a $250,000, 7-year loan adds roughly $244/month and $20,500 in total interest. With current RBA cash rate at 4.10% (2026-27) and potential cuts ahead, locking in a fixed rate may be unwise if you expect rates to fall.
Australian business loan eligibility — what lenders look for
Trading history
Most banks require minimum 12-24 months of trading. Fintech lenders (Prospa, Moula, Lumi, OnDeck, Banjo Loans) will lend to 6-month-old businesses but at higher rates (15-25%). Brand-new businesses can access StartUp Loans of up to $50,000 via specialist providers.
Revenue thresholds
Major banks (CBA, NAB, ANZ, Westpac) typically require minimum $250,000 annual turnover for unsecured products. Below this, fintech lenders fill the gap with revenue-based lending starting at $50,000-$100,000 annual revenue.
Personal guarantee
Almost all SME business loans require a personal guarantee from the director(s). This means if the business defaults, the lender can pursue your personal assets. Limited-recourse loans exist but at significantly higher rates.
Security options
| Security type | Typical rate range | Loan-to-value |
|---|---|---|
| Residential property | 6.5%-8.5% | Up to 80% |
| Commercial property | 7.5%-9.5% | Up to 65-70% |
| Equipment | 5.5%-9.5% | Up to 100% of asset |
| Invoice (debtor finance) | 1.5%-3% per month | 70-85% of invoices |
| Unsecured (fintech) | 11%-25% | N/A |
Credit checks
Both business credit reports (Equifax Business, illion) and personal director credit history are checked. Defaults under 5 years old significantly reduce approval odds. Some lenders specialise in defaulted-credit borrowers but rates are 18-30%.
Government-backed Australian business loan programs 2026-27
SME Recovery Loan Scheme
The federal government guarantees 50% of eligible business loans up to $5 million, accessible through participating banks (most majors and many regionals). Rates are typically 1-2% below market because of the guarantee. The scheme has been extended multiple times since 2020.
Export Finance Australia
EFA provides loans to exporters that wouldn't otherwise be commercially viable — used widely by growing exporters in advanced manufacturing, mining services, and agribusiness. Loans from $250,000 to $50 million with terms up to 10 years.
Regional Investment Corporation (RIC)
Loans for farmers and rural water-infrastructure investments at concessional rates. Variable rate currently around 4.5% (well below market). Eligibility is tightly restricted to primary producers and rural businesses.
State-based grants and loans
Each state has small-business grant and concessional loan schemes — e.g. NSW Boosting Business Innovation, Victorian SBM Fund, QLD Made in Queensland program. Worth checking before commercial lending; some grants don't need repayment.
Common Australian business loan mistakes to avoid
Comparing headline rates only
Comparison rates (mandatory for consumer credit but not business) include establishment fees and ongoing charges. A 7.5% loan with $4,000 establishment may be more expensive than a 8.0% loan with $500 establishment. Always calculate total cost of credit over the loan term.
Mixing personal and business finance
Using personal credit cards or a personal loan to fund business is expensive (typically 18-25%) and complicates tax deductions. Set up a separate business loan or business credit card immediately.
Borrowing for the wrong term
Long-term loans for short-term working capital create unnecessary interest. Short-term loans for long-term equipment create cash-flow pressure. Match the loan term to the asset life or income horizon.
Not checking the early-repayment terms
Many business loans include break costs for early repayment, particularly fixed-rate facilities. If you might pay early (business sale, refinance), use a variable-rate or product without break fees.
Ignoring covenants
Business loan agreements often include covenants — e.g. maintaining a minimum debt-service ratio, providing quarterly management accounts, restrictions on additional borrowing. Breach can trigger default even if you're paying on time. Read the loan documentation carefully.
How Australian business loans are treated for tax
Interest is fully deductible
Interest on business loans is 100% tax-deductible against business income, provided the funds are used for an income-producing business purpose. This includes asset purchase, working capital, refinancing prior business debt, or buying out a partner.
Principal is NOT deductible
Only the interest portion of repayments reduces taxable income. The principal portion is a balance sheet item — it reduces the loan liability but doesn't affect profit and loss. Use the loan repayment calculator to see the split.
Establishment fees
Loan establishment fees, brokerage fees, and legal costs to set up a loan are deductible over the lesser of 5 years or the term of the loan. A $4,000 establishment fee on a 5-year loan deducts $800/year.
GST on loan fees
Most loan fees are input-taxed (no GST charged). However, business broker fees may include GST, and you can claim back the GST as input tax credit if you're registered.
Refinancing
Refinancing an existing business loan keeps the interest deductible, as long as the refinanced loan is used to pay out the original business loan. Cash-out refinances (where you take additional money for personal use) require careful apportionment.
❓ Frequently asked Frequently asked questions about Australian business loans
What is the typical business loan interest rate in Australia 2026?
In 2026-27, secured business loan rates from major banks range from approximately 7%–11% p.a. Unsecured loans from fintech lenders typically charge 12%–25%+ p.a. Equipment finance rates are often 5%–9% p.a. because the asset provides security. The rate you receive depends on your credit history, business revenue, trading history, and the security you can offer.
Is business loan interest tax-deductible in Australia?
Yes — interest on business loans is 100% tax-deductible for ABN holders and companies, provided the funds are used for income-producing business purposes. The principal repayment is not deductible. Keep loan agreements and documentation showing the business purpose. The interest deduction is largest in the early years of the loan when the interest component is highest.
How do I calculate business loan repayments?
Monthly repayment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ−1], where P = principal, r = monthly rate (annual rate ÷ 12), n = total months. For $100,000 at 8.5% over 60 months: $2,057/month. Total interest over the life of the loan: $23,411. This calculator does this automatically — enter your figures above.
Can a sole trader get a business loan in Australia?
Yes — sole traders with an ABN can apply for business loans. Most lenders require 12–24 months of trading history, business bank statements, tax returns, and BAS statements. Amounts up to $150,000 are often available unsecured for established sole traders. For larger amounts or lower rates, property security is usually required.
What is a personal guarantee on a business loan?
A personal guarantee means the director (or directors) personally promise to repay the loan if the business cannot. The lender can then pursue your personal assets — including your home — in the event of default. Most Australian SME business loans include personal guarantees. Limited-recourse loans exist but are more expensive.
How much can I borrow for a business loan?
Depends on revenue, security, and credit profile. Unsecured fintech loans: typically $5,000 to $500,000. Secured bank loans (residential property): up to 80% of property value, with no cap. Equipment finance: up to 100% of equipment cost. Most banks size unsecured loans at 5-10% of annual revenue without other security.
Is it better to get a business loan or use a credit card?
Business loan almost always wins on cost. Business credit cards charge 18-25% p.a.; business loans charge 7-15%. The exception: very short-term needs (under 30 days) where the card interest-free period makes credit cards effectively free. For anything longer, use a loan.
Do I need a business plan to get a loan?
For unsecured fintech loans: no — they assess based on bank statements and BAS. For traditional bank loans above $250,000: yes — a written business plan, three years of financials, and forecast cashflow statements are standard. Larger loans (above $1 million) often require external accountant-prepared management accounts.
What's the difference between secured and unsecured business loans?
Secured loans have collateral (property, equipment, invoices) the lender can claim if you default. Rates are lower (6.5%-9.5%) and amounts are larger (up to several million). Unsecured loans rely only on credit assessment — rates are higher (12-25%) and amounts smaller (typically capped at $150-300k).
Can I get a business loan with bad credit?
Yes, but at significantly higher rates (18-30%) and smaller amounts. Specialist lenders cater to defaulted-credit borrowers. You may also access secured loans with residential property as collateral even with poor personal credit. Many fintech lenders are more flexible than banks on personal credit history.
How long does it take to get approved for a business loan?
Fintech lenders: same-day to 48 hours. Major bank unsecured: 5-10 business days. Major bank secured: 3-6 weeks for property valuation, legal review, and approval. Government-backed schemes (SME Recovery Loan, EFA) typically add 1-2 weeks to standard bank timelines.
Should I use a finance broker for a business loan?
For loans above $100,000, almost always yes — brokers access 20-40+ lenders and typically negotiate 0.5-1.5% off the headline rate. Brokers are paid by the lender so their service is free to you. For very small loans (under $50,000), direct fintech application is often faster and equally competitive.
Where these figures come from
Business figures on this page are drawn from the Australian Taxation Office (business tax, GST, PAYG), Business.gov.au (the federal business registration hub), Fair Work (employer obligations), and ASIC (company and director rules).
- Company tax rate (25% / 30%) — ATO — Company tax rates.
- GST rules (10%) — ATO — GST.
- PAYG withholding & employer obligations — ATO — PAYG withholding.
- Business registration (ABN/ACN) — Business.gov.au.
- Employer pay & award obligations — Fair Work Ombudsman.
- Company & director rules — ASIC — Companies.
Last checked: July 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.