If you’re looking for finance to grow or build your business, it’s essential to make sure the cost of the loan doesn’t impact your business operations. A low interest rate business loan can help keep your repayments down, especially if you need access to a large amount of finance.
Find out what to look for and compare low-rate business loans below.
Harmoney Business Loan
Harmoney Business Loan
No early repayment fee
100% confidential application
Harmoney Business Loan
Unsecured business loans up to $50,000 with tailored interest rates from 6.99% - 29.99% p.a.
Loans from $2,000 to $50,000.
3 or 5 year loan terms.
Establishment fees: $200 for loans under $5,000, and $450 for loans over $5,000.
Most people get their money within 24 hours of accepting terms.
A low-rate business loan is any loan option available to businesses that offers a low-interest rate. Typically speaking, a business loan offers a lower interest rate than a personal loan, with fixed rates available from around 6%.
You can also borrow more on a business loan, although this can vary on an individual basis. Many lenders require you to repay the loan within five years, although some may offer longer loan terms.
Types of low-rate business loans
Secured business loan. A secured business loan requires you to use an asset, typically a commercial or residential property, as security against the loan. In the event you fail to make your repayments, the lender can take ownership of the asset to cover the cost of the loan. As this reduces the risk for the lender, you generally receive a lower interest rate.
Unsecured business loan. Unlike a secured loan, you do not need to use an asset as security with an unsecured business loan. However, this means you will likely receive a higher interest rate than if you were to offer security.
What to keep in mind when comparing low-rate business loans
When you’re thinking about getting a business loan, it’s important to compare more than just the rate. While the interest rate helps determine the size of your loan repayments, it’s actually the comparison rate that gives you the true cost of the loan.
The comparison rate factors in any additional fees or charges attached to the loan, and is therefore a more accurate indicator of the size of your repayments. While a particular business loan may have a lower base rate, it may also come with higher fees or restrictive loan terms, meaning it costs you more over the life of the loan.
When comparing business loans, you should also consider the loan term and any additional features as these impact how you repay the loan. It’s essential to ensure that a specific loan will not have an adverse effect on your business operations or cash flow and that you are in a realistic position to repay the loan on time.
What are my other options?
Business line of credit. A business line of credit gives you access to an agreed credit limit that your business can draw on as and when it needs to. Unlike a regular business loan, you only repay the amount you use, but it is likely to have a higher interest rate than a regular business loan.
Invoice finance. If your business is waiting on outstanding invoices to be paid, you can get them financed upfront in return for a small fee. The fee can range from 0.1% to 20% of the value of the invoice, which means invoice financing may cost less than even a low-rate business loan. You generally receive up to 80 to 90% of the value of the invoice upfront, with the remaining amount paid out once the invoice itself has been paid.
Tom Stelzer is a writer for Finder specialising in personal finance, including loans and credit, as well as small business and business loans. He has previously worked as a freelance writer covering entertainment, culture and football for publications like FourFourTwo and Man of Many. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney.
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