Businesses are paying more than they were last year to borrow funds, but margins over market benchmarks are not all that much wider than they were a year ago.Outstanding lending by banks to business through variable rate loans increased 15 per cent to $279 billion in the year to June 2008, compared with a year earlier.The weighted average interest rate on variable rate business loans was 8.68 per cent, a 107 basis point increase over twelve months earlier. The official cash rate increased one per cent.The Reserve Bank of Australia publishes quarterly data on interest rates paid, in aggregate, by businesses on their loans.At June 2007 only 14 per cent of businesses with variable rate loans paid an interest rate greater than nine per cent. A year later more than three times as many businesses, or 46 per cent, paid interest rates of nine per cent or more.Interest rates charged in the six per cent to eight per cent band accounted for 45 per cent of all loans at June 2007. Less than 10 per cent of businesses paid interest rates in this band as at June 2008.Total outstanding business loans (variable, fixed and bills) increased 23 per cent in the financial year ending 2008 to $663 billion, with the biggest increase in high value loans that are more than $2 million. These high value loans accounted for 69.9 per cent of all outstanding business loans value at June 2008, up from 65.3 per cent a year earlier.Alarm bells may be ringing at some banks, with the finance and insurance sector showing the strongest year-on-year percentage lending growth, increasing 46 per cent to $135 billion.The finance and insurance sector now accounts for 20.3 per cent of total credit outstanding, up from 17.1 per cent twelve months earlier.Wholesale trade, retail trade and transport and storage account for 13.2 per cent, agriculture 8.1 per cent, manufacturing 6.8 per cent, construction 4.6 per cent and mining 1.8 per cent. The remaining 45.2 per cent are classified as other.New credit approvals in the construction sector performed strongly, increasing 44 per cent to $4.7 billion in the June 2008 quarter compared to a year earlier, with the $522 million wholesale finance approvals falling in value to one sixth for the same period.