Understanding business overdraft interest rates in Australia is essential before you commit to any facility. Rates vary significantly between lenders, and the headline rate is only part of the story. Here is a complete, honest breakdown of what you will actually pay for a business overdraft in Australia in 2026.
Business overdraft interest rates in Australia in 2026 fall into two distinct categories based on lender type:
| Lender type | Interest rate range | Line fee | Who can access |
|---|---|---|---|
| Major banks (CBA, NAB, ANZ, Westpac) | 8–15% p.a. | 1.0–2.0% p.a. | Established businesses with property and full financials |
| Non-bank lenders (Shift, Prospa, Moula etc) | 14–30% p.a. | 0.5–2.0% p.a. | 6+ months trading, $6K+ monthly revenue, no property needed |
| Specialist/high risk lenders | 25–40%+ p.a. | Varies | Poor credit, short history, distressed situations |
Important: These are annual rates on drawn funds only. If you draw $30,000 for 30 days at 24% p.a., the interest cost is $591. The facility costs nothing in interest when the drawn balance is zero.
Your business overdraft interest rate in Australia is not fixed - it is calculated based on your specific business profile. The key factors that determine your rate are:
Longer trading history signals lower risk and attracts lower rates. A 5-year-old business with consistent revenue will receive a better rate than a 12-month-old business with the same revenue. Most non-bank lenders offer their best rates to businesses trading 2+ years.
Higher and more consistent revenue means lower perceived risk. A business with $150,000 per month in consistent deposits will receive a better rate than a business with the same average but volatile monthly deposits.
Your Equifax credit score directly impacts your interest rate across all lenders. Businesses with scores above 700 typically access the lowest available rates. Those between 550–650 will receive higher rates reflecting the additional risk.
Some industries are considered higher risk by lenders - construction, hospitality and retail can attract slightly higher rates due to their historically higher default rates. Professional services, healthcare and technology typically attract lower rates.
Offering property security - residential or commercial - reduces the lender's risk and results in a materially lower interest rate. An unsecured overdraft at 22% p.a. might be offered at 15% p.a. secured against property.
High existing loan repayments relative to revenue signal reduced cash flow and may result in a higher rate or lower approved limit.
Larger facilities can sometimes attract better rates as the lender earns more absolute revenue. Very small facilities (under $20,000) may attract higher rates.
The interest rate is only one component of the total cost of a business overdraft. Before committing to any facility, understand all applicable fees:
| Fee | Typical range | Example on $100K facility |
|---|---|---|
| Establishment fee | 0.75%–3% | $750–$3,000 (one-off) |
| Line fee (annual) | 0.5%–2% of limit | $500–$2,000 per year |
| Interest on drawn funds | 14%–30% p.a. | Depends on use |
| Monthly service fee | $0–$75 | $0–$900 per year |
| Early repayment | Usually $0 for overdrafts | $0 |
A business draws $40,000 from a $100,000 overdraft facility for an average of 15 days per month over 12 months. At 22% p.a.:
For the working capital support provided, this is extremely cost-effective for most businesses.
The rate difference between banks and non-bank lenders looks significant on paper. But the comparison is only meaningful if you can access both options.
The majority of Australian SMEs cannot access a bank business overdraft. They don't meet the trading history, financial statement, credit score or property requirements. For these businesses, the choice is not "bank at 12% vs non-bank at 22%" - it's "non-bank at 22% vs no funding at all."
Related: See the full 2026 Business Overdraft Factsheet for eligibility, worked examples and what documents you need.
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Get a free rate comparison →Business overdraft interest rates in Australia in 2026 range from approximately 8-15% p.a. for bank facilities to 14-30% p.a. for non-bank lenders. Your actual rate depends on your business profile, trading history and credit score.
Non-bank lenders take on more risk by lending to a wider range of businesses - those with shorter trading history, imperfect credit or without property security. Higher rates reflect this additional risk and faster, more flexible approval processes.
Yes - in most cases. Interest on a business overdraft used for business purposes is generally tax deductible. Speak with your accountant to confirm your specific situation.
A line fee (also called a facility fee) is an ongoing annual charge on your approved overdraft limit, regardless of whether you use the facility. It is typically 0.5-2% p.a. of your approved limit.
Everything you need to know - eligibility, rates, lenders and Payday Super 2026.
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