Calculate your business loan payment, total interest, and amortisation schedule, including an optional balloon payment.
Rates as of Q2 2025 (example)
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This calculator estimates your monthly repayment, total interest, and full amortisation schedule for a business loan — including the option to model a balloon payment (a large lump sum due at the end of the term). Balloon payment structures are common in commercial lending in Australia: they reduce regular repayments but require the borrower to repay a significant lump sum at maturity, either from savings, asset sale, or refinancing.
Without a balloon payment, a business loan uses the standard amortisation formula — fixed monthly repayments covering principal and interest, reducing the balance to zero at the end of the term. With a balloon, the formula is adjusted: the present value of the balloon is subtracted from the loan amount before calculating the periodic payment, so regular repayments are lower and the remaining balance (the balloon) is due in full at maturity.
Formula (no balloon): Monthly Repayment = [Loan Amount × Monthly Rate] ÷ [1 − (1 + Monthly Rate)−N], where Monthly Rate = Annual Rate ÷ 12, N = Term × 12. Total Interest = (Monthly Repayment × N) − Loan Amount.
Example (no balloon): A A$100,000 business loan at 9% over 7 years: monthly repayment ≈ A$1,608.91, total interest ≈ A$35,148.26. With a 20% balloon (A$20,000 due at end of term): monthly repayment drops to about A$1,437.13 — saving A$171.78/month — but total interest rises to about A$40,718.61 because less principal is repaid each month. (Note: this example is for illustration purposes only — enter your actual rate and terms.)
Business loans in Australia are regulated differently from consumer loans — they are not covered by the National Consumer Credit Protection Act (NCCP Act), which applies only to loans for personal, domestic, or household purposes. This means business borrowers have fewer statutory protections than consumer borrowers, and loan terms can be more varied. Common business loan structures in Australia include: fully-amortising term loans (as modelled without a balloon), interest-only loans for a fixed period followed by principal repayment, balloon-payment loans (common in commercial property and equipment finance), and revolving credit facilities. Business loan rates are influenced by the Reserve Bank of Australia's cash rate, the lender's assessment of the borrower's creditworthiness and the loan's security, and broader credit market conditions. A key tax advantage of business borrowing: interest on loans used for business income-producing purposes is generally deductible to the business, reducing the effective after-tax cost of borrowing. For example, a 9% interest rate for a business paying 25% company tax has an effective after-tax cost of approximately 6.75%. The ATO's Instant Asset Write-Off and other small business tax concessions may also affect decisions about financing versus expensing business assets — consult a registered tax agent for advice on your specific situation.
A balloon payment is a large lump sum due at the end of a loan term, after a series of smaller regular repayments. It reduces the regular repayment amount, improving short-term cash flow — but it requires the borrower to pay a significant amount at maturity, either from accumulated savings, the sale of an asset, or by refinancing. Balloon payments are common in commercial property loans, equipment finance, and chattel mortgages in Australia. They are useful when the borrower expects to have funds available at maturity (e.g., from asset sale proceeds or business growth) but needs lower payments in the interim.
The interest on a business loan is generally deductible to the business as a business expense under section 8-1 of the Income Tax Assessment Act 1997, provided the loan is used to produce assessable income. This significantly reduces the after-tax cost of business borrowing — for a company paying 25% tax, a 9% loan rate has an effective after-tax cost of 6.75%. Loan principal repayments are not deductible. For specific tax advice on your business loan, consult a registered tax agent or accountant.
Business loans can be secured against a range of assets: commercial or residential property (as a mortgage), business equipment or vehicles (chattel mortgage or PPSR registration), accounts receivable (invoice financing or debtor finance), or general business assets. Unsecured business loans are also available (particularly from online or fintech lenders) but typically at higher interest rates due to the lender's greater risk. Some lenders may also require a personal guarantee from business directors.
Business loans are used for business purposes (investment, equipment, working capital, property) rather than personal use. Under Australian law, the National Consumer Credit Protection Act (NCCP Act) — which governs responsible lending obligations, comparison rates, and consumer protections — applies only to consumer loans, not business loans. Business loan terms and protections are governed by the loan contract and commercial law, and vary more widely between lenders. This means borrowers should review business loan contracts carefully and seek independent legal or financial advice.
A chattel mortgage is an asset finance product where the lender takes a mortgage over a specific asset (often a vehicle or equipment) as security for the loan. Ownership of the asset transfers to the borrower immediately (unlike a lease), but the lender holds a registered security interest until the loan is repaid. The calculation and repayment structure is similar to a standard business loan, and may include a balloon (residual) payment at the end. Chattel mortgages are popular with Australian businesses for vehicle and equipment finance due to their GST and tax treatment.
The Australian Banking Association's Small Business Lending Code is a voluntary code of practice that participating banks have agreed to follow when lending to small businesses (generally those with a total exposure below A\$3 million for most matters, or A\$5 million for some provisions). It provides protections for small business borrowers including clear disclosure of loan terms, access to an internal complaints process, and reasonable notice periods before calling in loans or taking enforcement action. Not all lenders are signatories, so check whether your lender has adopted the code.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only and do not constitute financial or tax advice. The interest rate used is an example only and does not represent a rate currently offered by any specific lender — actual business loan rates, fees, security requirements, and terms vary by lender, loan type, and the borrower's financial position and creditworthiness. Business loans are not covered by the National Consumer Credit Protection Act. Consult a qualified financial adviser, accountant, or legal professional for advice specific to your business circumstances.