Free tool
Business loan comparison calculator
Enter two or more loans to see monthly repayments and total cost side by side.
Why it matters
A low rate with high fees can cost more than a higher rate with no fees. The total repaid is the number to compare.
Loan terms also change your cash flow. A longer term lowers repayments but costs more in interest.
The steps
- Decide what you need. Work out the amount, the term and what the money is for. Match the loan type to the use.
- Collect offers. Ask for the rate, upfront fees, ongoing fees, term and repayment amount in writing.
- Ask for the comparison rate. Some lenders give a comparison rate. It folds the interest rate and most fees into one percentage. Business lenders are not required to give one, so the total cost in dollars is the number to compare.
- Work out the total repaid. Monthly repayment times months, plus any upfront fee.
- Work out the total cost. Total repaid minus the amount borrowed.
- Check the conditions. Look for security, personal guarantees, early repayment fees and default interest.
- Check the lender. Read the full contract and check who the lender is. Ask what a broker is paid.
- Check your cash flow. Check the repayment fits in your 13-week forecast.
Worked example
Example Distribution Pty Ltd compares two A$100,000 loans over 36 months.
| Item | Loan A | Loan B |
|---|---|---|
| Rate | 9.00% | 9.50% |
| Upfront fee | A$1,500 | A$0 |
| Monthly repayment | A$3,179.97 | A$3,203.29 |
| Total repayments | A$114,479.04 | A$115,318.62 |
| Total cost (repayments + fee - amount borrowed) | A$15,979.04 | A$15,318.62 |
Loan A has the lower rate but costs A$660.42 more over the term once the fee is counted. Loan B is cheaper, and Loan A's effective rate with the fee is about 10.0%.
Common mistakes
- Choosing on the headline rate.
- Ignoring early repayment fees.
- Not asking for fees in writing.
- Borrowing for longer than the asset lasts.
Next step
Use the Business loan comparison calculator first. Then see Pulsify for finance leaders.
Sources
Common questions
What is a comparison rate?
A single percentage that includes the interest rate and most fees, so that loans can be compared. Lenders must show one when they advertise some consumer loans. Business loans are not covered by that rule, so compare the total cost in dollars.
Should I use a broker?
A broker can find more options. Ask how they are paid.
Does the loan need security?
Many business loans need security or a director guarantee. Read the terms.
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