The short answer
Business loan interest rates and fees are set by risk: the security position, how much of the property's value is borrowed, the term, how certain the exit is, and how fast and complex the deal is. Fast private loans cost more than bank loans because they trade price for speed and flexibility. Compare offers on total dollars over the time you will really hold the loan, not on the headline number.
- Price follows risk: security position, equity, term and exit certainty
- Fees and minimum terms can matter more than the headline rate
- Compare total dollars over the time you will really hold the loan
- Every loan is priced on its own facts, so a published number tells you little
| Biggest price driver | Security position and how much equity is left |
|---|---|
| Common fee types | Establishment, legal, broker, discharge, extension |
| Watch for | Minimum interest periods and extension costs |
| How we price | Individually, on the property, the exit and the urgency |
Business loan interest rates and fees are the price of risk and speed. On a fast property-secured loan, the price reflects where the lender sits on the title, how much of the property’s value is borrowed, how long the money is out, how solid the exit is and how quickly the deal has to happen. Understanding those levers lets you get a sharper price and compare offers properly, instead of chasing a headline number that may not be the real cost.
We have priced short-term business loans since 2004. This is how pricing actually works from the lender’s side of the desk.
How are business loan interest rates set?
Business loan interest rates are set by the lender’s view of risk on that specific loan, built up from a handful of factors. Banks add their own funding costs and margin on top of an internal risk grade. Private lenders do the same job faster and more by hand, looking at the security and exit directly.
That’s why we don’t publish a rate card. Every loan is priced on its own facts, and the aim is the sharpest price available for that situation. Here are the factors that move it.
| Factor | Pushes the price down | Pushes the price up |
|---|---|---|
| Security position | First mortgage | Second mortgage, then caveat |
| Equity left after the loan | Plenty of buffer | Borrowing close to the limit |
| Property type and location | Standard home or commercial building in a strong area | Specialised, rural or hard-to-sell property |
| Exit | Contracted with a date | Hoped for, undated |
| Term | Short and certain | Long or open-ended |
| Loan size | Mid-range | Very small (fixed costs weigh more) |
| Urgency and complexity | Simple file with time to spare | Same-day, multi-property, trusts and guarantors |
| Credit history | Clean | Defaults, arrears, ATO debt (matters less when security is strong) |
Fast private money costs more than a bank loan. It’s for when speed or flexibility is worth that difference.
What fees can a business loan carry?
A business loan can carry several fees, and on a short-term loan they can add up to as much as the interest. The common ones are:
- Establishment or application fee: the lender’s charge for setting up the loan, often added to the loan amount.
- Legal fees: the lender’s solicitor preparing and registering the mortgage or caveat.
- Valuation fee: banks and many lenders charge for a valuer’s report. We assess the property ourselves, so you won’t pay one with us.
- Broker fee: if a broker is involved, either charged to you, paid by the lender, or both.
- Ongoing or line fees: monthly charges on some facilities.
- Discharge fee: releasing the mortgage or withdrawing the caveat at payout.
- Extension fee: if the term needs to be extended.
- Default interest: a higher rate if payments are missed or the loan isn’t repaid on time.
Business.gov.au notes that non-bank lenders may charge higher interest rates and fees than traditional banks. That’s true, and it’s the price of speed. The trick is to make sure you’re paying for speed, not for padding.
How is interest charged on short-term loans?
Interest on short-term business loans is usually charged in one of three ways, and the method changes your cash flow even when the total is similar.
- Paid monthly: you pay interest each month and the principal at the end.
- Prepaid: interest for some or all of the term is deducted from the loan up front, so you receive less in hand.
- Capitalised: interest is added to the balance and paid at the exit, which protects your cash flow but means you repay more at the end.
Prepaid and capitalised interest are common when the business needs every dollar for the job at hand. Just make sure the exit covers the larger final balance. When you compare offers, line them up on the same method, because a prepaid loan that puts less money in your hand isn’t directly comparable with one that pays out the full amount and charges monthly.
How do you compare the total cost of two business loans?
You compare the total cost by turning every element of each offer into dollars over the time you’ll really hold the loan. A loan that looks cheaper per month can cost more overall.
- List every cost. Interest plus every fee in the offer, including legal, broker and discharge, plus any valuation fee another lender adds.
- Use your realistic term. If your exit is four months away, cost both loans over four months, not the full term on the letter.
- Check minimum interest periods. A loan with a six-month minimum costs six months of interest even if you repay in three.
- Model the late case. Add what an extension or default interest would cost if the exit slips by a month.
- Compare against doing nothing. What does not borrowing cost? A lost supplier discount, a contract penalty, a missed purchase, or an ATO debt still accruing interest.
Our business loan calculator helps with the arithmetic.
Illustrative example: the cheaper loan that wasn’t
Illustrative example: a wholesaler needs $500,000 for three months until a large customer pays. Two offers arrive.
Offer A has the lower monthly price, but a six-month minimum interest period and a separate fee for each of the lender’s legal, settlement and administration steps. Offer B has a higher monthly price, no minimum period and one bundled establishment fee.
Costed over the real three-month term, Offer A charges for six months of interest plus its stack of fees. Offer B charges for three. Offer B comes out cheaper in total dollars, despite the higher monthly figure. If the customer pays early, Offer B gets cheaper still. If the customer pays late, both cost more, so the extension terms become the deciding factor.
The lesson: read the minimum term and fee list before you look at the rate.
How does the cost of borrowing compare with not borrowing?
The cost of not borrowing is real and often bigger than owners expect. The ATO’s general interest charge and shortfall interest charge are no longer tax deductible for charges incurred on or after 1 July 2025, so a tax debt left to run now costs more after tax than it used to. A supplier who stops supplying, or a contract you can’t start, can cost far more than the loan. See business loans for tax debt for that comparison in detail.
How can you get a sharper price?
You get a sharper price by lowering the lender’s risk and workload. Offer first-mortgage security where you can, keep the loan comfortably inside the property’s value, bring a contracted exit, and send a complete document pack in one go. Our documents needed for a business loan checklist covers the last part. And if you’re already in an expensive short-term loan, fast business loan refinancing may cut the cost.
For a price on your actual deal rather than a guess, tell us about it here. You can also compare loan types on our products page, weigh fast business loans vs bank loans, or browse more guides on the blog.
Get a real price today
Give us the amount, the property, what’s owing and the exit, and a real person who prices urgent loans every day will come back with a straight answer, quickly. There’s no credit check to enquire, your details aren’t sent out to a crowd of lenders, and if we can’t help we’ll tell you plainly.
Please be accurate on the form, especially the property value and loan balance, because those drive the price. Get your quote started or call 1300 852 150.
How it works, step by step
- List every costInterest plus every fee named in the offer, in dollars.
- Use your real termCost each offer over the months you will actually hold it.
- Test the late caseAdd what an extension would cost if the exit slips.
- Weigh the alternativeCompare against the cost of not borrowing at all.
Rates and fees: your questions answered
Why don't fast lenders publish their rates?
Because a published figure is either a teaser that few borrowers get or a worst case that scares off good deals. Short-term loans are priced on the property, the equity, the exit and the timing, and those vary on every file. We'd rather give you the sharpest price available for your situation than advertise a number that doesn't apply to you.
Is interest on a business loan tax deductible?
Interest on money borrowed for business purposes is generally deductible, but how it applies depends on your structure and how the funds are used. Your accountant is the right person to confirm it for your situation. Note the contrast with ATO interest charges, which are no longer deductible for amounts incurred from 1 July 2025.
Can I negotiate the fees on a business loan?
Sometimes. Fees tied to outside costs, such as legal work, are hard to move. Lender fees and minimum terms have more give, especially on clean deals with strong equity and a contracted exit. The best lever you have is a well-prepared file, because it costs the lender less to process.
What is default interest?
Default interest is a higher rate that applies if you miss a payment or don't repay by the end of the term. It's standard in short-term lending, and it's why the late-exit scenario belongs in any cost comparison. A realistic term with a buffer is the simplest way to make sure it never applies to you.
Do brokers add to the cost?
They can. Some business loan brokers charge you a fee, others are paid a commission by the lender, and some do both. Either way it should be disclosed. Ask for every party's fee in writing and include it in your total-cost comparison.
Is a cheaper loan always the better one?
No. A cheaper loan that settles a week too late can cost you the deal, a supplier discount or a penalty. The right loan is the one that does the job on time at a fair price for the risk. Price matters, but only after speed and certainty.
Sources we checked
Written by the BizLoansFast lending team · Updated 2026-10-05