Quick answer
Before signing a business loan, ask the lender for the total dollars you'll repay including every fee, what it costs to pay out early, exactly what counts as a default and what happens then, what security and guarantees it takes and whether they secure other debts, whether repayments or terms can change during the loan, and which external dispute scheme you can complain to if something goes wrong.
Key points
- Business-purpose loans sit outside the consumer credit rules, so your own questions do the protecting
- Ask for the total repayable in dollars, not just a repayment figure
- Get early payout costs, default triggers and guarantee scope in writing before you sign
- Unfair contract terms in standard-form small business contracts have attracted penalties since November 2023
- Check whether the lender belongs to AFCA or follows an industry code before you need either
The moment between “you’re approved” and “sign here” is the only point in a loan where you hold most of the leverage. The lender has done its work and wants the deal to settle. You haven’t committed yet. Once the documents are signed and the money lands, every change becomes a favour you have to ask for.
That leverage matters more in business lending than most owners realise. When money is borrowed wholly or mainly to run a business, the National Credit Code usually has no say over it. That means the responsible lending checks and standard disclosures you’d get on a car or home loan typically don’t come with it, and that holds even for sole traders. ASIC’s credit licensing guide makes the point plainly. The practical upshot: nobody is obliged to make sure the loan suits you. Your questions do that job.
Below are fourteen questions, grouped by what they protect. Ask them by email so the answers arrive in writing.
What will this loan actually cost me?
1. “Run to the final instalment, how many dollars leave my account in total?”
A weekly repayment figure tells you very little on its own. Ask for one number: principal, plus all interest, plus all fees, start to finish. Then subtract what you’re borrowing. That difference is the price of the money, and it’s the only figure that compares cleanly across lenders with different structures. Our guide to working out the true cost of a business loan walks through the arithmetic.
2. “Which fees come out of the advance, and how much lands in my account?”
Establishment, legal, valuation, broker and prepaid interest amounts are often deducted at settlement. On a $200k loan, $14k of deductions means you receive $186k but repay on $200k. If you need a specific amount to pay a supplier or the ATO, size the loan on the net figure.
3. “Can you give me your standard one-page cost summary?”
Some online small business lenders have signed the Australian Finance Industry Association’s Online Small Business Lenders Code, which commenced in 2018 and was last revised in September 2024. Code lenders offering term loans provide a standardised one-page disclosure, known as the SMART Box, that lays out cost and key terms in the same format across signatories. If your lender is a signatory, ask for it. If it isn’t, ask for the equivalent figures in a plain email.
4. “Are there any ongoing fees I haven’t seen yet?”
Monthly account fees, line fees on undrawn limits, annual review fees, dishonour fees and variation fees all add up. Ask for the complete fee schedule, not the summary.
What happens if I want out early?
5. “What does it cost to repay this loan in month three, month six and month twelve?”
This is the single most revealing question you can ask. Some loans let you pay out with a modest discharge fee and save the remaining interest. Others charge the full remaining interest regardless, so early repayment saves you nothing. Fixed-term bank loans can carry break costs tied to market movements. Ask for dollar examples at three points in time, because percentages hide the real effect.
6. “Can I make extra repayments without penalty?”
If your business is seasonal or you’re expecting a lump sum, the ability to pay down early without a charge can matter more than a slightly cheaper headline price.
Which events trip a default, and what follows?
7. “List every event that counts as a default.”
Missing a repayment is obvious. Less obvious are the clauses that treat other events as defaults: a drop in a property’s value, an unpaid ATO debt, a director resigning, a court judgment entered against someone who guaranteed the loan, or simply the lender forming the view that a “material adverse change” has occurred. Ask the lender to walk you through each one.
8. “If I default, what changes and how fast?”
Find out whether default interest applies, how much extra it adds in dollars per month on your balance, and whether the full balance can be called up on the spot under an acceleration clause. Ask whether there’s a grace period or a notice requirement before enforcement.
9. “What does your hardship process look like?”
A lender that has a documented hardship pathway, and can describe it, is usually easier to work with when a quiet quarter hits. Our guide on asking a lender for hardship help shows what a good process involves.
Partway through this list and wondering whether there’s a better offer out there? You can tell us what you’ve been offered and we’ll take a look; asking doesn’t touch your credit file.
What am I putting on the line?
10. “Exactly which assets does the security cover?”
A general security agreement can cover every present and future asset of the business, not just the item you’re financing. A mortgage over property might be limited to this loan or might be an “all moneys” mortgage that secures anything you owe the lender now or later. Ask which it is.
11. “Does my personal guarantee have a limit, and does it cover other debts?”
A personal guarantee can be capped at a dollar figure or unlimited. It can cover this facility only, or every facility the business has with that lender. Ask, and if it’s unlimited and all-moneys, ask whether a cap is possible. For a property-secured loan or any guarantee, independent legal advice is money well spent, and many lenders insist on a certificate of it before settlement.
12. “Will you register anything on the PPSR or on my property title?”
Knowing what’s registered, and how it will be removed at the end, saves an unpleasant surprise when you next refinance or sell.
Can the deal change after I sign?
13. “Can you vary the terms, fees or repayments during the loan?”
Some contracts let the lender change fees or certain terms unilaterally. From 9 November 2023 the rules on unfair terms in standard-form small business contracts gained teeth: a lender that includes or enforces such a term now risks heavy civil penalties, where previously the term was simply unenforceable. Your business qualifies as small here if headcount sits below 100, or if last income year’s turnover came in below $10 million, and ASIC notes a $5 million upfront price cap applies to contracts under the ASIC Act. That gives you solid ground to question a one-sided variation clause, but it’s still far easier to get it removed before signing than to argue about it later.
Who do I go to if something goes wrong?
14. “Are you a member of AFCA, and do you follow an industry code?”
The Australian Financial Complaints Authority can hear many small business credit disputes, but only against members, and not every lender that serves only businesses has to join. Banks signed up to the Banking Code of Practice owe extra commitments to small business customers. Since 28 February 2025 the code treats you as small if turnover is below $10 million, headcount is below 100 and your combined borrowings stay under $5 million (the debt ceiling used to be $3 million). Knowing which framework applies, before you need it, is worth one line in an email. Our guides to complaining about a lender and AFCA for small business disputes go further.
How should you use the answers?
Put the replies side by side with any competing offer. A simple table helps:
| Question | Lender A | Lender B |
|---|---|---|
| Total repayable to term | $248,600 | $236,900 |
| Net amount received | $186,000 | $192,500 |
| Payout cost at month 6 | Full remaining interest | $950 discharge fee |
| Guarantee | Unlimited, all moneys | Capped at $200k, this loan only |
| AFCA member | Yes | Yes |
These figures are illustrative, but the pattern is typical. Lender A looks fine on a weekly repayment and expensive on almost every other line. Run your own numbers through our loan cost comparison calculator, and see how to read a letter of offer for the clauses worth flagging. If an answer worries you, our list of business loan red flags helps you decide whether it’s a negotiating point or a reason to walk.
A worked example
A Geelong joinery business was offered $120k unsecured over 18 months to fund a CNC router deposit and a large commercial order. The owner asked question five. The answer: paying out at month six would still cost every dollar of interest for the full 18 months. Because the order’s final payment was due in month seven, that clause would have cost roughly $16k for nothing.
The owner took the answer to a second lender, which offered a slightly higher total cost to term but allowed early payout for a small fee. Paid off in month seven as planned, it came in roughly $11k cheaper. Two minutes of asking saved that.
Want a second opinion on the offer in front of you?
Most borrowers never ask half of these, so you’re already ahead. If the answers have left you uneasy, or you’d simply like to know whether something cleaner is available, we’re glad to look at it with you, whether you’re borrowing $30k or $3m.
Filling in our form is roughly sixty seconds of work, and your credit report stays exactly as it was. Your enquiry isn’t broadcast across a lender network, so your mobile stays quiet. A member of our team studies the offer you describe and rings you personally. Give us the real figures, fees included, and we’ll be able to say straight away whether something better is on the table.
Frequently asked questions
Do business loans have the same protections as personal loans?
No. Credit used wholly or mainly for business purposes generally falls outside the National Credit Code and the responsible lending obligations that cover consumer loans, even when the borrower is a sole trader. Some protections still apply, including the unfair contract terms laws for standard-form small business contracts, and bank codes for eligible small businesses.
Can I negotiate a business loan offer before I sign?
Often, yes. Establishment fees, early repayment terms, the scope of a guarantee and the security taken are all commonly negotiable, especially for secured loans and borrowers with options. You're far more likely to win a change before signing than after settlement.
Should a lawyer read my business loan contract?
For any loan secured over property, or where you're giving a personal guarantee, independent legal advice is worth the cost, and many lenders require a certificate of it before settlement. For a small unsecured facility, reading the full contract yourself with the questions on this page is a reasonable minimum.
What is a SMART Box?
A one-page standardised summary of a term loan's cost and key details, introduced under the industry code that some online small business lenders have signed. If your lender is a code signatory, you can ask for it before signing and use it to line the offer up against others.
What if the lender won't answer my questions in writing?
Treat that as information. A lender confident in its product will confirm fees, payout terms and default triggers by email or in the offer documents. If answers only ever come verbally, slow down and compare at least one other option.