Typical Business Loan Interest Rate – For many Australians, January is the perfect time to take control of their finances and set goals for the coming year. And if 2019 is a year of economic flux, many Australian businesses and households are likely to be in the doldrums these days.
Interest rates on many consumer financial products, including home loans, personal loans, savings accounts and term deposits, fell sharply in the second half of 2019, following three rate cuts by the Reserve Bank in June, July and October.
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Typical Business Loan Interest Rate
But does 2019 bring good news for Australian businesses looking to secure additional funding in 2020 through business loans?
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Australian businesses are relying on additional funding to meet a range of needs, with the latest figures from the Australian Bureau of Statistics revealing businesses took out $872 million in new loans in October 2019 alone and more than $9 billion for the year to October 2019.
Well, the combination of low interest rates and increased competition in the business loan sector could make 2020 the best year to get a business loan. Here’s a quick breakdown.
With the official cash rate falling from 1.50% to a historic low of 0.75% in 2019, it may not come as a surprise to learn that business loan interest rates have also fallen over the past year.
In fact, the average interest rate for 11 business loans offered from major and challenged banks tracked in the database decreased by 0.45% – from 5.52% on January 1, 2019 to 5.04% on January 1, 2020.
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2019 only reflects a longer trend associated with Reserve Bank interest rate cuts in recent years.
As the chart below shows, the average rate in our database has maintained a relatively constant downward trajectory since we started tracking business lending rates in 2011. The exception is the period between 2017 and 2019 which coincides with a lack of movement in the official cash rate from the RBA .
As a result, with interest rates at relatively low levels, 2020 could be the best time to borrow money in Australia in recent years. And the scenario for businesses looking to borrow money could improve further in the coming months if the Reserve Bank decides to pull back the rate trigger.
According to banking expert, Peter Marshall, there is a realistic chance the RBA could act at the first meeting of 2020 on February 4.
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“A 0.25% interest rate cut from the Reserve Bank in February is definitely not out of the question. I don’t think most banks will do any cut at all, a 0.10% or 0.12% cut is an easier option in my view,” he said.
Apart from falling interest rates, one of the biggest changes to the business lending landscape in Australia in the last decade has been the rise of new challenges with online lenders.
Online lenders such as Capify, Prospa and Moula have emerged in recent years and have been successful by offering faster funding processes and less stringent application requirements, among other factors.
Challenger Bank Judo Bank, which was only established in 2016, has also achieved success in the field of business loans targeting small and medium enterprises.
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Although these new players still represent a relatively small market share, especially compared to the big four banks, the growing awareness of these lenders as a viable option among Australian businesses is borne out in recent reports.
According to the Australian Banking Association’s 2019 SME Lending Economy Report, Australian businesses turn to ‘finance companies’ 37.4% of the time when looking for finance compared to banks 64% of the time.
Small businesses are even more likely to approach finance companies, with businesses with 0-4 employees approaching finance companies 42.4% of the time compared to 56.6% of the time for banks.
The same report also shows encouraging signs for businesses seeking finance, with 94% of small business loan applications approved by banks in the study.
Compute Loan Interest With Calculators Or Templates
Ready to start 2020 by finding a business loan that fits your business needs? Check out some hot deals in the table below, or browse some offers from both banks and online lenders using a dedicated business loan comparison table.
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Tom Watson is a financial journalist and co-host of the Finance Burrito podcast, specializing in fintech, property and business banking. Whether it’s reporting on banking trends or discovering the latest product innovations, Tom’s mission is to keep our readers up to date with Australian financial news. His work is often sourced in media and social media channels. Tom holds a degree in Journalism from the University of Technology, Sydney. He is also ASIC RG146 (Tier 2) Certified for general counsel.
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Performing Credit Quarterly 4q2022: Bad News Bulls
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To find the best auto financing companies, we sorted through thousands of refinancing applications that were successfully made on the platform in the second half of 2022. Based on our selection based on loan closing volume and average APR, we left the top five providers for 2023.
ILending is the most popular auto refinance lender on the platform in 2022. iLending charges no application fees, allows joint applicants and can provide cars with up to 200,000 miles to refinance.
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When you apply, a personal advisor will guide you through the automatic refinancing process, go through all your options and help you with the paperwork.
Auto Approval offers the second lowest average APR on the platform in the second half of 2022. Auto Approval charges no application fees and only pulls soft credit when you apply.
After you submit your application, Auto-Approval will show you potential refinancing offers from lenders. Once you choose an offer, the lender will do a hard credit pull to provide you with an official offer for approval.
RefiJet is the most popular subprime auto finance lender on the platform. Like others on this list, RefiJet manages loans with lenders in its network. After you fill out the online form, a loan counselor will guide you through your options and the automatic financing process. RefiJet also offers prequalification and no payment options for the first two months of your refinance loan.
Hdfc Business Loan Interest Rate Discount Supplier, Save 58%
RefiJet charges a $495 origination fee, though this can be rolled into your new car loan. However, here are more lenders that specialize in bad credit car loans, if you’re curious.
Gravity Lending offers its customers the lowest average APR in the second half of 2022. The company does not charge a fee for its automatic refinancing service, and the process from application to funding can take a little time.
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