Lender comparison
How to compare a business loan offer in Australia.
Key takeaways
- The headline rate isn't the offer. True APR (annual cost including origination and facility fees) is the only fair comparison.
- Six factors separate a good offer from an expensive one: fees, security (assets the lender can claim if repayments stop), term flexibility, early-payout terms, guarantee scope and how long funding takes.
- One comparison across our panel of 70+ lenders, with no credit check until you choose to proceed. Only a formal application triggers a hard enquiry.
- Security, term, amount and rate: four questions for judging any offer, on any product.
What a "Good" Offer Actually Looks Like
Most business owners compare loan offers the way they'd compare two prices on a shelf - whichever number is lower wins. Commercial lending doesn't work that way. Two offers with the same headline rate can differ by tens of thousands of dollars once fees, security requirements, and repayment structure are factored in, and the offer that looks cheapest on the page is very often not the offer that costs the least.
A good offer is one where every term is legible before you sign: the true annualised cost, exactly what's secured against the facility, how much flexibility you have if your circumstances change, and what it costs to get out early. An expensive offer usually isn't expensive because the headline rate was hidden - it's expensive because everything around the rate was left unexamined.
Cross-Product Comparison: Which Facility Actually Fits
Before comparing lenders within a product, it's worth confirming you're comparing the right product for the need. These five facilities solve different cash flow problems, and rate alone won't tell you which one is correct.
| Term Loan | Line of Credit | Overdraft | Invoice Finance | Equipment Finance | |
|---|---|---|---|---|---|
| How It Works | Lump sum, fixed repayment schedule | Revolving limit, draw as needed | Buffer attached to your bank account | Advance against unpaid invoices | Funds tied to a specific asset purchase |
| Best For | One-off funding need | Ongoing working capital | Short-term cash flow gaps | Bridging receivables timing | Vehicles, machinery, equipment |
| Typical Rate Range | 9.9% to 48% p.a. | 14% to 25% p.a. | 14% to 20% p.a. | 1% to 3% per invoice | 7% to 15% p.a. |
| Repayment Structure | Fixed instalments over term | Interest on drawn balance only | Repaid as funds are deposited | Repaid when invoice is collected | Fixed instalments matched to asset life |
Indicative market ranges, not quotes. Your Compare Report shows the options you qualify for across our panel.
The True Cost of a Loan: APR vs. Headline Rate
This isn't a term-loan-specific problem - it applies to every product in the table above. Any facility with an origination fee, facility fee, or line fee will have a real cost higher than its advertised rate, and the gap widens the shorter the term. Worked example below uses a $150,000 facility over a 12-month term, interest only, but the same maths applies whether you're comparing term loans, lines of credit, or equipment finance.
OFFER A
10.4% p.a.
Origination fee: 4% ($6,000)
Facility fee: $50/month ($600/yr)
Total cost: $22,200
Effective rate: ≈14.8%
OFFER B
11.7% p.a.
Origination fee: 1% ($1,500)
Facility fee: None
Total cost: $19,050
Effective rate: ≈12.7%
Offer B carries the higher headline rate but costs $3,150 less over the year - the lesson holds regardless of which product you're comparing.
Compare your options before you sign anything.
See My Options6 Red Flags to Check Before You Sign
Every one of these sits outside the headline rate, which is exactly why they're easy to miss when comparing offers side by side on price alone.
- Origination Fees
- A one-off fee deducted from the funded amount or added to the balance - ranges from 0% to 5% and moves the effective rate more on short terms.
- Exit & Break Fees
- Fixed-rate facilities often carry a break cost calculated against remaining interest; some non-bank lenders charge a flat early-exit fee instead.
- PPSR Registration
- A registered security interest on the Personal Property Securities Register can sit against specific assets or the whole business - check the scope of it, not simply whether one exists.
- Personal Guarantee Scope
- Most facilities require a director's guarantee, but the scope varies - some are capped to the facility limit, others extend further. Read the clause itself, not simply that it's required.
- Rate-Lock vs. Floating
- A variable rate can move with the lender's base rate over the term. Confirm whether your quoted rate is fixed for the full term or subject to review.
- Prepayment Penalties
- Paying a facility off early should usually save you interest - confirm the lender doesn't charge a penalty that offsets or exceeds that saving.
Security, Term, Amount and Rate: A Mental Model for Any Offer
Rather than comparing offers line by line, security, term, amount and rate give you four questions to ask of any facility, on any product, from any lender.
- Security
- What's actually secured - the asset, the business via a general security agreement, or nothing at all - and does that match what you're comfortable putting at risk?
- Term
- Does the repayment term match the life of what you're funding, and can you exit or refinance before it ends without a costly penalty?
- Amount
- Is the amount sized to your actual need and your ability to repay from cash flow - rather than simply the maximum a lender is willing to lend?
- Rate
- What's the true APR once every fee is included - not the number printed largest on the offer document?
Comparing via a Broker vs. Going Direct to One Bank
COMPARING VIA A BROKER
- One comparison across our panel of 70+ lenders, with no credit check until you proceed
- Access to non-bank and specialist panels a single bank won't offer
- Someone reviewing fee structure and guarantee scope on your behalf
- An extra step before you're talking to the lender directly
GOING DIRECT TO ONE BANK
- Familiar relationship if you already bank with them
- Only one offer to evaluate - nothing to benchmark it against
- A formal application there is a hard enquiry on your file
- No visibility into whether a better rate exists elsewhere
Frequently Asked Questions
What's the difference between comparing and applying?
Comparing means reviewing indicative options based on the information you provide. Through Trade Funding there’s no credit check until you choose to proceed, so your credit file isn’t affected. Applying means submitting a formal application to one specific lender, which triggers a hard credit inquiry. Comparing lets you see the field before committing to any one application.
Does getting quotes hurt my credit score?
No. Comparing through Trade Funding involves no credit check until you choose to proceed, so it doesn’t affect your credit score. Only a formal loan application, which involves a hard enquiry, has the potential to affect your file - and even then, typically only if you make several in a short period.
How many lenders should I compare?
There's no fixed number, but comparing across at least a handful of lender tiers - bank, second-tier, fintech, and specialist non-bank where relevant - gives you a realistic view of where your business actually sits. A single quote tells you what one lender will offer; it doesn't tell you what's available.
What if my bank already made me an offer?
Treat it as a starting point, not a ceiling. Banks price to their own risk appetite and existing relationship, which doesn't always produce the sharpest rate or the most flexible terms. Comparing it against other lenders costs nothing and either confirms you already have a good deal or surfaces a better one.
Can I compare secured and unsecured offers side by side?
Yes, but compare them on true APR and total cost, not rate alone. A secured offer will almost always show a lower headline rate; whether that's actually the better deal depends on what you're putting up as security and how that trades off against the rate saving.
How long does a comparison take?
A Compare Report, matched against 100+ products across our panel of 70+ lenders, is typically ready within 24 hours of receiving your documents. There's no waiting on individual lender responses one at a time.
Does comparing cost anything?
No. It costs you nothing to compare your options, and there is no obligation to proceed. Costs only arise if you proceed: the lender’s fees and, in the rare case we’d charge a fee for our service, you’ll see it on your Compare Report before you decide.
Will comparing options delay my funding if I need cash soon?
Not materially. The comparison step involves no credit check and runs across the panel at once, so it doesn’t add a separate credit step - and it's common for applicants to move from comparison straight into a formal application with the lender they choose.
How we’re paid
You don’t pay to compare. Lenders pay us.
How do we get paid?
Comparing costs you nothing. Not comparing can cost you plenty.
The headline rate rarely tells the whole story. Fees, charges and loan terms can add far more to what you repay. That’s why your Compare Report shows every cost we can identify side by side.
In most cases, the lender pays us, and only if you decide to proceed with their product offer. For more complex deals, or where the lender pays us little or nothing, we may charge a fee for our service. It doesn’t happen often, but when it does, it’s shown on your Compare Report and we’ll walk you through it before you decide.
No obligation to proceed, ever.
See the options that fit your business.
No credit file impact · No cost to compare · No obligation
Or talk to us: 1300 161 641 · support@tradefunding.com.au