“Small and medium businesses are driving jobs growth in Australia and must continue to do so,” said Federal Treasurer Scott Morrison earlier this month. And the combined actions of the federal government and the Reserve Bank mean that businesses have a double reason to borrow.
“Business were winners in this year’s Federal Budget and the good news is that, based on our analysis, they should also expect to benefit from the May cut in official cash rate,” said CANSTAR Research Manager Mitchell Watson.
“While lenders haven’t as yet passed through the rate cut from May this year, they can be expected to do so over the next few weeks. The vast majority of business lenders on our database passed on in full both the Feb 2015 and May 2015 rate cuts to their borrowers. The Federal Budget’s proposed tax incentives as well as a lower lending rate do put businesses in a win/win situation.”
It’s not all about the rates
While the interest rate business owners can secure on their lending will be top of mind, Mr Watson reminds borrowers to check the fees and features as well.
“The upfront fees in particular can vary significantly across loan products,” said Mr Watson.
“For example, for a term loan of $250,000 (residentially secured), our research found application fee costs ranging from $0 to $2,500. That’s a large variance for a relatively small loan. Additionally, ongoing fees on the same loan size varied from $0 to $480 per annum. On a residentially-secured overdraft, ongoing fees can be as high as $850 per annum.
“Borrowers should also consider features such as lending terms, the security that will be accepted, portability, redraw and offset as well.”
Who offers outstanding value?
After researching 90 business loan products, CANSTAR has awarded a five star rating for outstanding value to the following products:
Overdraft – secured by commercial property
- Bank Australia
- St George Bank
Overdraft – secured by residential property
- Commonwealth Bank
- St George Bank
Term Loan – secured by commercial property
- Suncorp Bank
Term Loan – secured by residential property
- Suncorp Bank
CANSTAR congratulates all winning business loan providers. Further details can be found in the 2016 Business Star Ratings Report
For further information:
Editor in Chief
Ph. (07) 3837 4151 / 0400 127 733
CANSTAR provides Australia’s interactive online research service in consumer and business finance. Founded in 1992, CANSTAR Pty Limited is Australia’s researcher of retail finance information for over 250 institutions such as Banks, Building Societies, Credit Unions, Finance Companies, Brokers, Mortgage Originators, Life Companies and finance related Internet Portals. CANSTAR customers use the extensive database for competitor analysis as well as a means of disseminating their product range. CANSTAR also distributes this information to print and electronic media for publication and to Agents, Accountants, Brokers and Internet Portals for use in advising their clients.
What are the CANSTAR star ratings?
CANSTAR researches, compares and rates the suite of banking and insurance products listed below. Results are freely available to consumers who use the star ratings as a guide to product excellence. The use of similar star ratings logos also builds consumer recognition of quality products across all categories. Please access the CANSTAR website at www.canstar.com.au if you would like to view the latest star ratings reports of interest.
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