Quick answer
Before signing a business loan, ask about total cost in dollars, every fee and when it's paid, repayment amount and frequency, early repayment and discharge costs, exactly what security and guarantees are required, what happens if a repayment is missed, and how the loan ends. Clear, written, specific answers are a good sign; vague or pressured answers are a reason to slow down.
Key points
- Ask for total cost in dollars over the time you expect to hold the loan.
- Get every fee, the repayment schedule and the early repayment terms in writing.
- Understand exactly what security and guarantees you're giving.
- Know what happens if a repayment is late, and how the loan ends.
- Vague answers or pressure to sign quickly are signals to slow down.
A business loan offer can look simple on the first page and complicated by the tenth. The easiest way to understand it is to ask direct questions and listen carefully to the answers. This list is grouped by topic so you can use it in a phone call, a meeting or while reading an offer. Each group ends with what a good answer sounds like.
What questions should I ask about cost?
- What is the total cost of this loan in dollars if I hold it for the period I expect — including interest and every fee?
- What fees apply, and when is each paid? Establishment, valuation, legal, ongoing, discharge.
- Are any fees deducted from the loan amount, so less reaches my account than I’m borrowing?
- Is interest charged on the full amount from day one, or only on what I draw?
- Is the pricing fixed or can it change during the term? If it can change, what drives it?
A good answer is specific and written: a list of fees with amounts, a total cost figure you can check, and a clear explanation of how interest is charged. Our explainer on what a business loan really costs shows how to compare two offers in dollars.
What should I ask about repayments?
- How much is each repayment, and how often? Daily, weekly, fortnightly, monthly?
- Is it principal and interest, interest-only or capitalised? What does the balance look like at the end?
- Can the repayment date line up with when my customers pay me?
- What happens if I’m going to miss a repayment? Who do I call, and what are my options?
- Are there default fees or default interest if a payment is late?
A good answer maps the repayments against your real income pattern and explains the process if things get tight — before anything goes wrong. If the structure isn’t clear, read how business loan repayments work.
What should I ask about early repayment and the end of the loan?
- Can I repay early, in full or in part? What does it cost at month three, six and twelve?
- Is there a minimum interest period?
- What will it cost to discharge the security when the loan is repaid?
- How does this loan end? What’s the expected exit — trading income, a sale, a refinance?
- If the exit is late, what happens? Is an extension possible, and at what cost?
A good answer treats the exit as seriously as the approval. Short-term loans in particular should come with a clear, agreed plan for how they finish. More detail: can I repay a business loan early.
Mid-way through a list like this, it’s common to realise you’d like someone on your side of the table. If that’s you, send a quick enquiry — there’s no credit check when you first enquire, and a real person can walk through an offer with you.
What should I ask about security and guarantees?
- What security is required? A mortgage, a caveat, a general security agreement, a specific asset?
- Which properties or assets does it cover, and does it extend to future debts?
- Who needs to give a personal guarantee? Is it limited to an amount, or unlimited?
- Do guarantors or co-owners need independent legal advice?
- Will a security interest be registered on the PPSR? Over what?
A good answer is precise about what’s being pledged and by whom. “All present and after-acquired property” and “all monies” clauses are common, but you should understand them. See what you can use as security for the options.
What should I ask about the process?
- What documents do you need, and what’s the timeline from here to funds?
- What conditions must be met before settlement or funding?
A good answer gives you a complete document list upfront and flags anything that commonly causes delays. Our page on what slows a business loan down is a useful cross-check.
What answers should make me pause?
Not every hesitation is a red flag, but these are worth slowing down for:
| Answer | Why it matters |
|---|---|
| “Don’t worry about the fees, they’re standard.” | Every fee should be named and explained |
| “You need to sign today or the offer goes.” | Genuine offers allow reasonable time to review |
| “Just pay this fee first and we’ll get you approved.” | Be cautious about upfront payments before a formal offer |
| “You’re guaranteed approval.” | No responsible lender guarantees approval before assessing you |
| “We’ll sort the exit out later.” | Short-term loans need an exit agreed now |
| “The guarantee is just a formality.” | Guarantees create real personal liability |
How do I compare two offers side by side?
Put the answers into a simple table:
| Question | Offer A | Offer B |
|---|---|---|
| Total cost (expected holding period) | ||
| Upfront fees (deducted?) | ||
| Repayment amount and frequency | ||
| Early repayment cost | ||
| Security required | ||
| Guarantees required | ||
| Exit plan and extension terms | ||
| Time to funds |
The cheapest-looking offer isn’t always the best. One that arrives in time, fits your cash flow and lets you repay early without penalty can be worth more than a lower headline cost.
Should I bring anyone else into the conversation?
Consider involving:
- Your accountant, for the tax and cash flow implications.
- A lawyer, for property-secured loans, guarantees and complex structures. Guarantors and co-owners who aren’t borrowers are commonly required to get independent legal advice anyway.
- Your business partner or co-owner, before any property is pledged.
business.gov.au suggests bringing an adviser or accountant to a lending interview if you’re not confident answering financial questions yourself.
What should I have ready so the lender can answer properly?
A lender can only give precise answers if it has precise information. Before you start asking, have these ready:
- The amount and exact purpose, with evidence.
- Twelve months of business bank statements.
- A list of existing debts and their repayments.
- Your tax position and lodgement status.
- Property details if relevant.
The companion guide questions to answer before you apply turns this into a self-check.
What should I ask myself after the conversation?
Once you have the answers, take ten minutes on your own before deciding. Four questions keep the decision grounded:
- Do I understand every page I’m about to sign? If not, which part — and who can explain it?
- Does the repayment work in my slowest month, with room left for wages, rent, super and tax?
- Is the exit real? If this is short term, do I know exactly how it ends, and what happens if that’s late?
- Would I be comfortable if the security were called on? If the answer is no, the amount, term or security may need to change.
If all four answers are comfortable, you’re likely looking at a loan that fits. If one isn’t, that’s the question to take back to the lender before you sign — not after. A good lender will welcome it.
What does a good lender conversation sound like? (Illustrative example)
Illustrative only — invented exchange.
An Adelaide manufacturer asks a lender: “What’s the total cost if I repay this in eight months rather than twelve?” The lender replies with a written breakdown: the establishment fee, interest for eight months, no early repayment cost after month six, and the discharge fee for the general security agreement. The owner can now compare it directly with a second offer that looked cheaper per month but had a minimum interest period.
That’s the standard to hold every lender to: a specific question, a specific answer, in writing.
Ask your questions to a real person first
The right questions protect you; the right answers give you confidence. Enquiring with us doesn’t involve a credit check, your details aren’t sent out to a pile of lenders, and a real person answers these questions plainly for your situation. Please fill in the form accurately — amount, purpose, security and any existing debts — so the answers you get are specific to you.
Frequently asked questions
What's the most important question to ask a business lender?
What will this loan cost me in total, in dollars, over the period I expect to hold it — including every fee and any early repayment cost? That single answer makes offers comparable.
Should I get a lender's answers in writing?
Yes. The loan offer and contract are what count, so make sure the important points — fees, repayments, early repayment terms, security — appear in writing before you sign.
What's a red flag when talking to a lender?
Pressure to sign immediately, reluctance to explain fees, requests for upfront payment before a formal offer, and promises of guaranteed approval before assessing you.
Should my accountant or lawyer review the offer?
For larger loans, property-secured loans and anything involving personal guarantees, it's sensible. Guarantors and co-owners who aren't borrowers are often required to get independent legal advice anyway.
Is it rude to ask lots of questions?
Not at all. Good lenders expect questions and answer them plainly. A business loan is a significant commitment, and understanding it fully protects both sides.