Small Business Loans in Australia (2026): Types, Current Rates and How to Get Approved

Whether you need A$30,000 for a coffee machine, A$150,000 to fit out a second shop or a buffer for slow-paying customers, borrowing is the most common way Australian small businesses fund growth. This guide is for sole traders, partnerships and company owners comparing small business loans in Australia in 2026. It explains the main types of finance, secured versus unsecured lending, what rates small businesses are actually paying (from official RBA data and published lender rates, each dated), the status of government guarantee schemes, how credit reporting affects you, the protections in the Banking Code, and what a loan really costs, with worked A$ examples.

Quick answer

Most small business loans in Australia are either secured (usually against property or the equipment being bought) or unsecured (backed by the business's cash flow and a director's personal guarantee). In August 2026 new small business loans averaged 7.23%, or 6.98% when secured by residential property (RBA, published 8 October 2026). Unsecured loans cost more — NAB's QuickBiz unsecured loan was 12.95% fixed on 11 October 2026. There is no government guarantee scheme open to new loans.

• RBA cash rate: 4.60% from 30 September 2026, after four rises this year

• Lenders look at trading history, BAS and tax lodgments, cash flow, credit reports and security

• Sole traders and guarantors are assessed on their personal credit reports

• Banking Code protections apply to small businesses with under A$5 million of total debt

• Compare the total cost — rate, fees, term and security — not just the headline rate

Types of small business finance

"Business loan" covers several quite different products. Picking the right one matters as much as the rate, because a mismatch — funding a short-term cash gap with a seven-year loan, or buying a truck with an overdraft — costs money.

Term loans. You borrow a lump sum and repay principal and interest over a fixed term, typically one to five years unsecured or up to 15–30 years when secured by property. Rates can be fixed or variable. Use them for one-off investments: fit-outs, a business purchase, a vehicle fleet.

Overdrafts and lines of credit. A limit attached to your business account that you draw and repay as needed, paying interest only on what you use. They suit seasonal businesses and short gaps between paying suppliers and getting paid. Rates are variable and usually higher than term loans, and the bank can review the limit each year.

Equipment finance. A chattel mortgage, finance lease or hire purchase over a vehicle or piece of machinery, with the asset itself as security. Because the lender can repossess the asset, rates are usually closer to secured lending, and many businesses pair this with the instant asset write-off or depreciation.

Invoice finance. A lender advances a percentage of your unpaid invoices, and you repay when customers pay. It suits businesses selling on 30–60-day terms to larger customers. The cost is usually a discount fee plus interest.

Commercial property loans. Loans to buy the premises you trade from, secured by that property, with longer terms.

Fintech and non-bank lenders. Online lenders offer fast unsecured loans and lines of credit, often with decisions in a day. They can approve businesses the banks decline, but rates and fees are often much higher, and some quote a simple "cost of funds" rather than an annual interest rate — so compare total repayments.

Secured vs unsecured business loans

	Secured	Unsecured
Backed by	Property, term deposits or the asset being financed	Business cash flow, plus usually a director's personal guarantee
Typical amount	Larger — limited by security value and serviceability	Smaller — often up to A$250,000 at major banks
Typical rate	Lower: new residentially secured small business loans averaged 6.98% in Aug 2026	Higher: e.g. NAB QuickBiz 12.95% fixed (11 Oct 2026)
Term	Up to 15–30 years for property-secured loans	Commonly 1–5 years
Speed	Slower — valuations and security documents	Faster — sometimes same-day decisions
Risk to you	Lose the security if you default	Guarantor's personal assets exposed if you default

Backed by

Secured

Property, term deposits or the asset being financed

Unsecured

Business cash flow, plus usually a director's personal guarantee

Typical amount

Secured

Larger — limited by security value and serviceability

Unsecured

Smaller — often up to A$250,000 at major banks

Typical rate

Secured

Lower: new residentially secured small business loans averaged 6.98% in Aug 2026

Unsecured

Higher: e.g. NAB QuickBiz 12.95% fixed (11 Oct 2026)

Term

Secured

Up to 15–30 years for property-secured loans

Unsecured

Commonly 1–5 years

Speed

Secured

Slower — valuations and security documents

Unsecured

Faster — sometimes same-day decisions

Risk to you

Secured

Lose the security if you default

Unsecured

Guarantor's personal assets exposed if you default

Secured vs unsecured: what "security" really means

A secured loan gives the lender a legal right over an asset if you don't repay. For a small business that is often the owner's home (a registered mortgage), a commercial property, a term deposit, or — for equipment finance — the vehicle or machine itself, registered on the Personal Property Securities Register (PPSR). Lenders may also take a general security agreement over all the business's assets.

An unsecured loan has no specific asset behind it, but that rarely means no personal exposure. Banks and most non-bank lenders require directors of a borrowing company to sign a personal guarantee, making them personally liable if the company can't pay. Westpac, for example, says a director's guarantee is generally needed on its unsecured overdraft for corporate borrowers. Read the guarantee carefully: some are limited to a dollar amount, many are unlimited and cover all the company's debts to that lender.

Security changes the price because it changes the lender's risk. The RBA's figures show the gap: in August 2026 new small business loans secured by residential property averaged 6.98%, below the 7.23% average for all new small business loans, while advertised unsecured term loans from major banks sit several percentage points higher again.

What small businesses are paying in 2026

Rates moved up during 2026. The Reserve Bank lifted the cash rate four times — in February, March, May and September — taking it to 4.60% from 30 September 2026. Variable business loans generally follow, and fixed rates price in expectations about future moves.

The most reliable picture of what small businesses actually pay is the RBA's Table F7, built from data every bank reports to APRA. It shows averages, not advertised "from" rates.

Small business lending rates — RBA Table F7 (August 2026, published 8 Oct 2026)

7.23%

New small business loans

All types, average

6.81%

New variable-rate loans

8.09%

New fixed-rate loans

7.47%

All outstanding small business loans

Two caveats. These are averages across all small business loans, including many large, property-secured facilities, so a young business borrowing unsecured will pay more. And the August figures predate the September cash rate rise, so new variable loans written in October are likely to be priced higher.

Lenders also publish indicator rates, to which they add a customer margin based on your risk. NAB's page, effective 9 October 2026, lists its Business Options Prime at 8.10% and its Business Overdraft Prime at 10.97%, with a margin added for each customer. For unsecured term lending, NAB advertised its QuickBiz loan on 11 October 2026 at a fixed 12.95% p.a. for A$5,000 to A$250,000 over up to five years, with no upfront or ongoing fees. These are examples, not recommendations; other banks and lenders price differently, and rates change often. Always get a written quote with every fee listed.

Worked examples: what a loan really costs

These use straightforward principal-and-interest repayments and ignore fees. Rates are illustrative and based on the published figures above.

1. Unsecured equipment top-up. A Newcastle electrician borrows A$80,000 unsecured over five years at 12.95% fixed. Monthly repayments are about A$1,818, and total interest over the term is roughly A$29,092.

2. The same amount, secured. If he instead secures the A$80,000 against his home at an assumed 8.6% — NAB's 8.10% indicator plus an assumed 0.5% margin — the monthly repayment falls to about A$1,645 and total interest to about A$18,711. He saves around A$10,400 but puts his house on the line.

3. Fit-out for a second café. A Brisbane café owner borrows A$150,000 secured over seven years at an assumed 8.6%. Repayments are about A$2,383 a month, with about A$50,174 of interest over the term. Before signing, she checks that the second café's projected profit covers A$28,600 a year of repayments with room to spare.

4. A short cash gap. A Hobart wholesaler draws A$40,000 on an overdraft priced at 9.37% (NAB's QuickBiz Overdraft Prime indicator on 9 October 2026, before any margin) for one month while waiting for a large customer to pay. The interest is about A$312 — far cheaper than a term loan for a short, self-liquidating need. Left drawn all year, the same balance costs about A$3,750.

Try it — monthly repayment on an A$80,000 business loan

Loan AmountInterest Rate (p.a.)Tenure

Loan Amount₹80,000.00

Total Interest₹29,091.93

Total Payable₹1,09,091.93

Number of EMIs60

Monthly EMI₹1,818.20

Open the full EMI Calculator (PDF, save, compare)

Government-backed loans: the SME guarantee schemes are closed

Searchers still ask about the "SME Guarantee Scheme". Here's where it stands. In 2020 the Commonwealth guaranteed 50% of new loans that participating lenders made to small and medium businesses; in 2021 that became the SME Recovery Loan Scheme, with an 80% guarantee for loans written from 1 April to 31 December 2021, falling to 50% for loans from 1 January to 30 June 2022. Treasury says the scheme closed to new loans on 30 June 2022. Across all phases, Treasury's performance data shows nearly 109,000 loans worth around A$16.5 billion, with A$4.5 billion still outstanding at 30 June 2025.

As at October 2026 there is no general Commonwealth guarantee for new small business loans. If a lender or broker tells you a loan is "government guaranteed", ask for the scheme name and check it on treasury.gov.au or business.gov.au.

Targeted government finance does exist:

• Export Finance Australia's Small Business Export Loan lends A$20,000 to A$350,000 to exporters with turnover of at least A$250,000.
• State and federal grants sometimes fund the same projects without repayment — see our small business grants guide.

Credit reporting: how your history affects approval

Australia's credit reporting rules in Part IIIA of the Privacy Act apply to consumer credit — home loans, personal loans, credit cards and the like. Under comprehensive credit reporting, a consumer credit report shows not just defaults and enquiries but also repayment history — a monthly 0–7 code showing whether you paid on time — and financial hardship arrangements. The OAIC says repayment history stays on your report for 2 years, a payment counts as missed if it's made more than 14 days after the due date, and a default (at least 60 days overdue, at least A$150, after two notices) stays for 5 years. Hardship information stays for one year.

Business loans themselves are commercial credit, which sits outside most of Part IIIA. Commercial credit information is handled under the Australian Privacy Principles, and business credit bureaus hold records about companies — court actions, payment defaults to suppliers, ASIC data and enquiries. But for a small business, your personal report usually matters most:

• Sole traders and partners are the borrower, so the lender assesses their personal credit history.
• Company directors who give a personal guarantee are checked as individuals; a missed credit card payment can affect a company loan.
• Each new application usually creates an enquiry. Several enquiries in a short period can count against you, so shortlist lenders before applying.

You can get a free copy of your consumer credit report from each credit reporting body — the OAIC currently lists Equifax and Experian — once every 3 months, and again if you've been refused credit in the past 90 days. Check it before you apply and correct errors first.

Getting loan-ready

1. 1

   Bring tax and BAS up to date

   Lenders check for overdue lodgments and ATO debts. A payment plan in good standing is better than an unexplained debt.

   BAS guide
2. 2

   Prepare the numbers

   Two years' financial statements and tax returns (or one year plus management accounts), recent BAS, six to twelve months of bank statements, an aged debtors list and a cash flow forecast showing how repayments will be met.

3. 3

   Check credit reports

   Get your personal reports free and fix errors. Check the company's file with a business credit bureau if you've had supplier disputes.

4. 4

   Decide on security

   Know what you're prepared to offer — property, equipment, a guarantee — and the limit of any guarantee.

5. 5

   Compare at least three quotes

   Ask for the rate, every fee, total repayments, the term, the security and any early repayment cost in writing.

What lenders assess

Approval comes down to whether the lender believes you can repay and what it can recover if you can't. Expect questions on:

• Trading history. Many unsecured products need 12 months or more under the same ABN; NAB's QuickBiz, for example, requires an ABN registered for at least 12 months and turnover of at least A$75,000.
• Turnover and profit. Lenders read your BAS, profit and loss statements and bank feeds. Serviceability — whether cash flow covers all repayments with a buffer — matters more than turnover alone.
• Existing debt. Other loans, leases, credit cards, buy-now-pay-later facilities and ATO debts all count.
• Purpose. Lenders prefer loans that create income (equipment, stock, fit-outs) to loans that plug losses.
• The people. Owners' credit reports, experience in the industry, and personal assets and liabilities if a guarantee is involved.
• Security. Valuation and type of any property or equipment offered.

Use the loan eligibility calculator to estimate how much your cash flow can support before you approach a lender.

Your protections as a small business borrower

Business loans aren't covered by the National Credit Code's consumer protections, but small businesses still have significant safeguards.

Are you a "small business" under the Banking Code? (all three must apply)

0/3

• Turnover under A$10 million in the previous financial year (with your business group)
• Fewer than 100 full-time equivalent employees
• Less than A$5 million total debt to all credit providers, including undrawn limits and the new loan

Share Print

Banking Code of Practice. Banks that subscribe to the ABA's Banking Code — which includes the major banks — owe extra obligations to small business customers. From 28 February 2025 the Code defines a small business as one that, with its business group, had turnover under A$10 million in the previous financial year, has fewer than 100 full-time equivalent employees, and has less than A$5 million total debt to all credit providers (up from A$3 million, counting undrawn limits and the loan being applied for). For these customers, the bank must give at least 30 days notice before enforcing a payment default or a remediable non-monetary default, can act on non-monetary defaults only if they're material, and can't include vague "material adverse change" default triggers in standard-form loans.

Unfair contract terms. Since 2016 the unfair contract terms rules in the ASIC Act have covered standard-form small business contracts for financial products and services, including business loans. Since November 2023, unfair terms are prohibited outright and civil penalties apply — ASIC has taken court action over such terms — for example against PayPal Australia over a term in its standard small business contract.

Disputes. If you can't resolve a complaint with your bank, small businesses can go to the Australian Financial Complaints Authority (AFCA), which is free.

Common mistakes

• Comparing headline rates only. A lower rate with an establishment fee, monthly fee and early repayment charge can cost more than a higher no-fee rate. Compare total repayments.
• Short-term loans for long-term assets. Funding a fit-out with a 12-month fintech loan creates repayment pressure. Match the term to the asset's life.
• Applying everywhere at once. Multiple enquiries can look like credit stress. Shortlist first.
• Letting BAS slip. Late lodgments and unpaid ATO debts are among the most common reasons for decline.
• Mixing personal and business money. Clean records in a separate business bank account make approval faster.
• Believing "government guaranteed" claims. The SME guarantee schemes are closed; check any scheme name with Treasury.

Official links

• RBA — Business lending rates (Table F7)Monthly average small business rates
• RBA — Cash rate targetCurrent cash rate and history
• Treasury — SME Recovery Loan SchemeClosed to new loans 30 June 2022
• OAIC — Credit reportingFree credit reports and your rights
• ABA — Banking Code of PracticeSmall business and guarantor protections
• AFCAFree external dispute resolution

Next steps

Work out how much you need, for how long and what you can offer as security. Run the numbers in the EMI calculator at a secured and an unsecured rate, check your cash flow with the working capital calculator, pull your free credit reports, and bring your BAS up to date. Then get written quotes from at least three lenders. If the money is for an asset, read our instant asset write-off guide, and check the small business grants guide in case part of the project can be funded without borrowing.

This is general information, not financial or legal advice — confirm on the official source or with a professional.

Frequently asked questions

What interest rate will I pay on a small business loan in Australia?

It depends on security, term and your risk profile. RBA data published on 8 October 2026 shows new small business loans averaged 7.23% in August 2026, and 6.98% where secured by residential property. Unsecured loans cost more: NAB's QuickBiz unsecured loan was advertised at a fixed 12.95% p.a. on 11 October 2026. The cash rate is 4.60%.

Is there a government-guaranteed small business loan in Australia?

Not at the moment. The Commonwealth's COVID-era SME Guarantee Scheme and its successor, the SME Recovery Loan Scheme, closed to new loans on 30 June 2022, and no replacement guarantee scheme was open in October 2026. Targeted government finance still exists — for example, Export Finance Australia's Small Business Export Loan of A$20,000 to A$350,000 for exporters.

Can I get an unsecured business loan?

Yes, usually up to a few hundred thousand dollars, if the business has trading history and steady turnover. Unsecured loans don't need property, but banks and fintech lenders almost always ask directors for a personal guarantee, charge higher rates and offer shorter terms — commonly up to five years. Larger amounts or lower rates usually need property or other security.

What do lenders look at when I apply?

Typically: how long you've traded (often 12 months or more for unsecured loans), turnover and profit from BAS, financial statements and bank statements, existing debts, ATO debts and lodgment history, the owners' personal credit reports, the purpose of the loan, and any security offered. Clean, up-to-date tax lodgments and a clear repayment plan make a material difference.

Does applying for a business loan affect my credit score?

If you're a sole trader or you give a personal guarantee, the lender will usually check your personal credit report, and the enquiry is recorded for 5 years. Comprehensive credit reporting also shows 2 years of repayment history on consumer credit, including payments more than 14 days late. You can get a free credit report from each credit reporting body every 3 months.

What protections do small businesses have when borrowing from a bank?

Banks that subscribe to the Banking Code of Practice give extra protections to small businesses with turnover under A$10 million, fewer than 100 full-time equivalent staff and less than A$5 million of total debt — including at least 30 days notice before enforcing most defaults. Unfair contract terms laws also apply to standard-form small business loans.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 11 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Statistical Table F7 — Business Lending Rates — Reserve Bank of Australia · accessed 11 October 2026
2. 2.Cash rate target — Reserve Bank of Australia · accessed 11 October 2026
3. 3.SME Recovery Loan Scheme — The Treasury · accessed 11 October 2026
4. 4.SME Loan Guarantee Schemes — performance data — The Treasury · accessed 11 October 2026
5. 5.Credit reporting — access, repayment history and defaults, what stays on a report, commercial credit — Office of the Australian Information Commissioner · accessed 11 October 2026
6. 6.Banking Code of Practice (2025) — Australian Banking Association · accessed 11 October 2026
7. 7.ASIC sues PayPal Australia for alleged unfair contract term with small businesses (23-246MR) — ASIC · accessed 11 October 2026
8. 8.Business loan interest rates, account fees and charges — NAB · accessed 11 October 2026
9. 9.NAB QuickBiz Loan — NAB · accessed 11 October 2026
10. 10.Difference between secured and unsecured overdrafts — Westpac · accessed 11 October 2026