Low Interest Business Loans

Find the business loan with the lowest rate available by comparing offers with Savvy and making a more informed decision.

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, updated on July 3rd, 2024       

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Whether you are an aspiring entrepreneur looking to get your business off the ground or the owner of an existing business who is planning to expand, ensuring that you have access to sufficient capital is fundamental to executing your plans. Taking out a low-interest business loan in Australia can be a great way to access the funds you need and, in this guide, you can find answers to the most important questions about accessing such loans. Discover how to compare your loan options to make sure you make the best decision for your business here.

What are the best ways to get a low interest business loan?

When looking to take out a business loan, it is obvious that you should want to find a loan that can offer you the lowest rates possible, which will reduce the overall cost of your loan. To find the best interest rates for your business loan, you should look to meet as many of the following points as possible:

Method Explained
Show a strong financial record
By ensuring you have a clean credit history and a strong financial position, you will immediately put yourself in a good position to get a lower rate. You can do this by paying your bills and rent on time and working to ensure that your bank statement shows a record of meaningful savings and efficient allocation of funds.
Show positive cashflow and business activity
If you can show prospective lenders that your business has been engaged in trade for a certain amount of time and has generated strong cashflow throughout this period, you might find that you are able to get a better deal on your loan. Each lender will have different preferences in this regard, but 12 months of business activity with monthly revenues of around $6,000 per month are common thresholds for online lenders to look for.
Offer security for your loan
Offering an asset as security against your loan can be a good way to increase your borrowing range and land lower interest rates. Be aware that, by offering up equity in your property as security, you will be limited as to how to utilise this asset throughout the life of your loan, such as not being able to sell your property. Not all businesses have assets that they are able to offer for security, but for those that do, this can be a great option.
Use a guarantor
If you have an associate such as a friend or family member who is willing to act as your guarantor, they can provide an asset as security for your loan in order to lower your interest rate. This can also increase your borrowing range. Using a guarantor can also be a good alternative to providing your own asset as security if you would like to maintain your flexibility of use of that asset during the life of your loan. In this case, your guarantor assumes responsibility for your debts if you are unable to make your repayments.
Choosing a variable or fixed rate
You can benefit by opting for either a fixed or variable rate, depending on the circumstances at the time of your loan agreement. If current interest rates are low and unlikely to fall further, you can ensure that you will enjoy these low interest costs for the duration of your fixed rate period. On the other hand, if you feel as though interest rates can drop further, you may enjoy even lower interest costs in the near future as rates fall by opting for a variable rate loan.

What are my low interest business loan options?

There is a wide variety of options available to you in your search for a low interest business loan. Some of the most popular options include:

Unsecured business loans

Unsecured business loans offer a good opportunity to access credit for those who wish to maintain flexibility in the use of their assets, or those who do not own current assets. While the interest payable on unsecured loans may not be as low as that of a secured loan, you can still get a good loan deal. Additionally, you will not face the same barriers to entry as you would applying for a secured loan.

Secured business loans

Secured business loans from larger lenders such as major banks are often amongst the loan options with the lowest interest rates on the market, as the scale of these lenders’ operations allows them to charge less interest. By including security in your loan agreement, you can keep your interest rates to a minimum.

Vehicle or equipment loans

Large banks and certain specialist lenders can offer low interest loans for the purchase of vehicles and equipment for your business which use the purchased asset as security in order to keep rates low. These loans generally allow access to up to $1,000,000 in funds for purchases and can be repaid over a loan term that suits your business, from three months to five years.

Established business loans

The majority of online lenders offer less rigid lending criteria, which means these lenders are often easier to be approved for a loan from compared to others and can therefore be an appealing option. These lenders will generally offer more favourable interest rates to applicants who can provide evidence that their business has considerable, established revenue streams and has been in business for longer than 6 or 12 months.

Types of business loan

Why compare business loans through Savvy?

Frequently asked questions about low interest business loans

Will I be able to get a better interest rate for my loan if my business has a proven track record?

Yes, you will be able to considerably better interest rates on your loan if your business has a proven track record over a long period of time. Your lender will require proof of this in the form of cashflow statements, bank statements or statements of income.

Is it possible to refinance my current debt with a low interest business loan?

Yes – refinancing a business loan to a new one with a lower interest rate is a common choice made by business owners. By refinancing your variable rate loan to a new, low, fixed rate loan, for example, you might find that not only are you able to make marginal savings in your interest costs, but that your business can budget more effectively moving forwards. You can use Savvy's loan repayment calculator to help you work out how much you could save by refinancing by comparing your current and potential new loan. 

Is a low interest business credit card a viable option for accessing credit?

While different business credit cards will carry varying interest rates, and some may be lower than others, generally, relying on business credit cards as your primary source of credit will lead to you incurring greater interest costs as opposed to other types of business finance.

If I am locked into paying a certain interest rate, how else can I reduce my interest expenses?

If you are ‘stuck’ paying an interest rate which you are unhappy with and refinancing is not an option, you could consider making extra repayments towards your loan to reduce the outstanding principal and, therefore, your monthly interest costs. Bear in mind, though, that often servicing debt can be cheaper than boosting your cashflow through other means, such as increasing marketing or selling equity in your business.

Can I redraw any of my low interest business loan that I have already paid off?

Yes – if your loan has a redraw feature and you have an interest rate on your loan that you are particularly happy with, redrawing some of your principal paid as additional repayments could be an option for you. By utilising your cheap finance further, you can make savvy business decisions, such as taking advantage of investment opportunities which could offer lucrative returns.

Which lenders will give me the lowest interest rate for my business loan?

While the interest rates you will be offered by lenders will vary depending on their policies and your financial situation, a major bank will most likely be able to offer you the most competitive rate. This does not necessarily mean that these lenders will be your best option, though, as sometimes financiers who charge higher rates, such as online lenders, can actually offer you a deal that is better suited to you, or are more accepting of factors such as a less established business or bad credit.

Can I receive my business loan funds on the same day I apply?

Yes – unsecured business loans are quick to process, so lenders can formally approve your application and transfer your funds in as little as two hours from the point of submitting your form and documents. However, this will depend on various factors, such as the time of day you apply (the earlier, the better), whether your lender needs any further documentation to confirm the details on your application (which would delay the process) and the lender you choose, as not all will be able to process that quickly. Other lenders may require up to 24 hours to approve and fund your application, so if you need funds for your small business today, it’s worth comparing your options.

Still looking for the right finance for your business?

Explore a range of business loan options suitable to your financing needs and apply online through Savvy today.