What it costs to run a small amount loan
The law caps what a small amount loan can earn. What is left after the costs depends on a few numbers a lender controls.
General information, not legal or financial advice.
A small amount credit contract lends $2,000 or less, for 16 days to a year, unsecured, from a lender that is not a bank (National Consumer Credit Protection Act s 5(1)). What it may cost the borrower is set by law, not by the market.
What the law lets a lender charge
- An establishment fee of up to 20% of the amount lent, and none if the loan refinances another small amount loan (National Credit Code s 31A(1A) and (2)).
- A monthly fee of up to 4% of the amount lent, payable monthly from the day the contract is made (s 31A(1)(b) and (3)), and none for a month that starts after the loan is paid out (s 31C).
- No interest at all (s 23A).
- After a default, no more than twice the amount lent recovered in all, enforcement expenses aside (s 39B).
“The amount lent” is the adjusted credit amount: the first amount of credit, not counting any fee added to it (s 204). And a borrower’s repayments on all their small amount loans must fit within 10% of their income after tax in each repayment period (Regulations reg 28LCA).
What the average contract can earn
ASIC’s review of five lenders’ loans made from December 2022 to August 2024 put the average small amount contract at $767.52 over 20.94 weeks (REP 805, March 2025). At the caps, that contract can earn:
| Establishment fee, 20% | $153.50 |
|---|---|
| 5 monthly fees of $30.70 | $153.50 |
| If repaid on time | $307.00 |
That is a ceiling. A loan repaid early pays fewer monthly fees (s 31C), and a loan that defaults may pay none.
Where it goes
Finding the borrower. No regulator publishes what it costs to acquire a small amount borrower. ASIC did record the trade in applications: three of the five lenders it reviewed referred declined applications to an outside platform that matches them with other licensees (REP 805, p 13).
Checks on every application. Identity, bank data and usually a credit enquiry are paid for on every application, funded or not. The government’s Document Verification Service charges $0.40 a check, paid by the gateways businesses must connect through (identity verification services fees); a commercial identity check with a photo match costs more, as does a credit report. The law makes bank data a cost of every application too: where the borrower’s income is paid into a bank account, the lender must obtain and consider at least the last 90 days of its transactions (Act s 130(1A)). If one application in three is funded, each check costs three times its price per loan.
Servicing and collections. Every repayment collected, every dishonour, reminder and call costs something. What a lender may recover after a default, fees and all, is capped at twice the amount lent: $1,535.04 on the average contract (s 39B).
Disputes. AFCA, the external dispute scheme, charges a licensee $415.57 a year. The first five complaints closed in a financial year carry no fee; after that, each costs from $109.52 if it is settled at referral to $10,942.68 if it goes to a decision, including GST (AFCA fees for 2026–27).
The regulator. ASIC’s industry funding levy on small and medium amount lenders was $28.47 per $10,000 of credit provided in 2024–25, about $2.19 on the average loan (ASIC actual levies, November 2025). Applying for a licence as a credit provider costs a company $4,624 (ASIC licence fees).
Losses. No regulator publishes a loss rate for small amount loans. The arithmetic is plain all the same: a loan that pays nothing back loses $767.52, the most that 2.5 average loans repaid on time can earn (the average contract).
What decides the margin
- The share of applications funded. Checks are paid per application. Every application declined late has cost a full set of checks and earns nothing.
- Losses. Each loan lost takes the fees of two and a half good ones. Reading income from the statement the law already requires, and declining early, are the two levers.
- Loan size. Fees scale with the amount lent; most costs do not. Halve the loan and the most it can earn halves, while its checks cost the same.
- Complaints. One complaint that reaches an AFCA decision costs the fee income of about 35 average loans (AFCA fees).
Creditcrest publishes its own prices, per application and as a share of each advance, on its pricing page.
Sources
- ASIC, REP 805 Falling short: Compliance with the small amount credit contract obligations (13 March 2025): the average contract, and referrals of declined applications (p 13).
- National Consumer Credit Protection Act 2009 and National Credit Code, compilation No. 52 (1 July 2026): Act ss 5 and 130(1A); Code ss 23A, 31A, 31C, 39B and 204.
- National Consumer Credit Protection Regulations 2010, compilation No. 57 (5 September 2026): reg 28LCA.
- AFCA, fee structure, 2026–27 and funding model (five complaints a year without fee). Read 4 October 2026.
- ASIC, 2024–25 actual levies (5 November 2025), and fees for Australian credit licences.
- Australian Government, identity verification services fees.