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What are Business Loan Terms?

by OnDeck Australia,   Mar 20, 2023

Business loan terms are the conditions and requirements of a business loan agreement that lenders use to determine what kind of financing they will offer. These terms can vary widely depending on the lender, type of loan, and other factors. It is important for small business owners seeking a business loan to understand what these terms mean in order to make an informed decision about their financing options. In this article, we’ll discuss what types of terms you may encounter when shopping around for a business loan and how they might affect your ability to secure funding.

Types of small business loans

Secured loans

Secured business loans are a type of financing where the borrower pledges an asset as collateral, such as their property, equipment, or inventory. This often allows lenders to offer more competitive rates and longer repayment periods than what they might otherwise offer to an unsecured loan. However, in the event of non-payment, the lender can seize and sell the pledged assets to recover their funds. 

Secured loans can be beneficial for businesses that need a large amount of capital but may not have the best credit score or income history to get an unsecured loan. The downside is that if you default on these loans, you could risk losing your collateral. Therefore, it is important to consider all options before making this kind of commitment.

Unsecured loans

Unsecured business loans require no collateral to secure the loan. This type of loan is beneficial for businesses that may not have enough equity in their assets to qualify for a secured loan, or don’t want to risk losing their collateral in the event of a default. They can be a viable option for small businesses seeking financing who might not otherwise qualify for traditional bank loans.

One of the advantages of unsecured business loans is that they provide quick access to capital and often require less paperwork than secured loans. This means that people who need a cash flow boost quickly or don’t have time to go through stacks of paperwork can get what they need without too much hassle. Unsecured loans also tend to have a shorter loan term than secured ones and allow borrowers more flexibility when it comes to making payments. 

Loan repayment term

The repayment term is the set period during which all payments are due. This is usually in weekly or monthly installments until the full loan plus any fees are received. During this time, interest may accrue depending on the terms of the loan agreement, and late payments can incur additional fees or cause an increase in interest rates. Typical loan terms can range from 6 months to 5+ years, this differs for every loan provider and individual business financing agreement so check the conditions of your deal.


Some lenders may also require specific conditions for early repayment of business loans. For example, some lenders may require that all accrued interest be paid when repaying short-term business loans before their loan maturity date while others may offer incentives such as reduced interest rates if payments are made early.


Understanding business loan repayment terms can help businesses make informed decisions about their financing options and ensure they have sufficient funds available when their repayments are due. It’s important for any business owner seeking financing to be aware of these details before committing to an agreement with a lender so that they can choose one that works best for them and avoid potential penalties or consequences down the line.

Interest rates

Interest rates are how lenders make a profit when you borrow money for a business loan. They are a monthly or annual percentage rate based on the initial loan amount that is added to the initial loan amount over the course of repayments. The loan isn’t considered paid off until both the principal and interest payments have been fully repaid.

There are two main types of interest rates you’ll encounter when taking out a small business loan, fixed and variable.

Fixed interest rate 

Fixed interest rates stay the same over the life of your loan – meaning the rate you agree to at closing is what you can expect for the entire duration of your repayment period. This makes it easier to budget for and plan ahead as you always know what your payments will be, and can be advantageous if interest rates for loans go up afterwards, but also runs the risk of getting stuck with a poor deal if they improve.

Variable interest rate

With a variable interest rate, the rate can fluctuate over time depending on economic factors such as inflation or market conditions. This means that what you pay each repayment date could change from one to the next, making budgeting and planning more difficult but is beneficial if interest rates go down as you’ll be able to take advantage of the lower rate.

When considering what type of loan to take out, it’s important for a small business owner to weigh up both types of interest rates and decide what works best for your business’s financial situation.



Each lender has a set of eligibility criteria a business has to meet before it can be approved for a loan. This usually involves a minimum monthly or annual turnover, having been operating for a minimum period of time, and a minimum business credit score. 

For a business loan with OnDeck, we require:


Minimum $100,000 gross annual turnover

Minimum 1 year in business  

No bankruptcy

(Prior or recent) 

Minimum 400 business credit score required


Business credit score

A Business credit score is a numeric representation of the creditworthiness of a business. It is used by lenders to determine whether to approve your loan application and what interest rate and terms you should receive. The score is based on information from your business’s credit report, such as payment history, total debt, available credit, and other factors. If you have a poor credit history or score, you may be ineligible for some loans, or have a credit limit that restricts how much you can borrow. 


Learn more about credit scores, or check your business credit score for free using OnDeck’s Know Your Score tool.


Getting an OnDeck business loan

OnDeck loans can be used to maintain business cash flow while waiting on unpaid invoices, purchase new business assets, or fund expansions and new projects. 

Our business loans are approved and funded quickly (as soon as 2 hours), have weekly repayments rather than monthly repayments, and have minimum loan amounts of $10,000, with a maximum of $250,000.


Prepared by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215 (“OnDeck”) for general information purposes only. Content may belong to or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. Information current as at March 2023. You should not rely upon the material or information as a basis for making any business, financial or any other decisions. Loans issued in Australia are subject to the terms of a loan agreement issued by OnDeck. Loans are subject to lender approval. OnDeck® is a Registered Trademark. All rights reserved.


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