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Compare the Best Unsecured Business Loans

William Baker

CEO

“Deciding on the best funding option for your business can be challenging. We make it easy for you.”

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Karen

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Unsecured Business Loans

Unless you’ve been in business a while or have assets such as property, chances are your bank won’t lend you money. This is where unsecured business loans come into play. They’re a great option for new businesses, startups and businesses that don’t own assets or prefer to use the business health to repay a loan.
Loan Amount
Amount
$5k - $250k
Business Loan - Terms & Conditions
Terms
3 - 12 months
Business Loan Rates
Interest Rates
High
Loan Speed
Speed
As fast as same-day

Let's take a look at the Pro's and Con's.

Pro's:
  • Fast and simple online application approval processes
  • No collateral or security required
  • Funding offered to small businesses that would not normally meet traditional lending guidelines
Con's:
  • You’re likely to pay a higher interest rate, due to the greater risk for the lender.
  • Additional fees can increase the cost of the finance

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Here's How We Find You the Best Unsecured Business Loan

We use our Best Match Lender™ logic to compare and find which Unsecured Business Lenders are a great match for your business. We also match you to the financier who will offer your business cash-flow friendly repayments.

Lend works with Australian non-bank lenders who can provide your business with a free, no obligation unsecured business loan offer in just a few hours.

Compare the Top 5 Lenders by starting our quick and easy application process

You can get started with our quick and easy application process. It’s 100% online and free – no paperwork!

Alternatively read this guide on how to get a business loan or see how your industry stacks up here.

 

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What is an unsecured business loan?

Generally speaking, there are two types of loans, secured and unsecured. An unsecured loan means the loan is not secured against an asset such as property, cash or equipment.

Since the lender doesn’t have security over your assets (cannot force you to sell your assets in the event of non payment), unsecured business loans usually come with a higher interest rate but this can be outweighed by the fact they’re often a hassle-free (less paper work and requirements) and fast (can be approved the same day) solution to the shortfall in capital you have.

As a small business owner you need to decide whether the higher interest rate is worth the immediate access to cash via an unsecured business loan is worth it. Most business owners looking for capital agree it is.

Comparison between secured and unsecured loans

Secured Loan Unsecured Loan
Length of Loan (term) Longer (up to 5 years) Shorter (Up to 12 months)
Interest Rate Lower (example: 5%) Higher (example: 12%)
Requirement Credit and ID check.

12+ months in business.

Business financials.

Collateral in case you
default, such as your home,
car or other assets.

More paperwork. 		Credit and ID check.

3+ months in business.

Less paperwork. 100% online.
Speed of Decision Can be approved in weeks. Can be approved in days.
Loan Amount Unlimited $5,000 to $300,000

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How do I get an unsecured business loan?

Step 2 - Financials
Step 1
Enter general information about your business into our online application form (how much you need, the purpose of the loan, the business industry, etc.). This helps us determine what further information we need to collect for the best lenders that will be able to help you.
Financial Security
Step 2
Complete the rest of your application (tailored to you), this includes things such as your personal details, business details and business finances. Make sure you have your ABN and financials handy.
Step 3 - Online Application
Step 3
Provide read-only access to your bank statements. This is a secure and fast way to provide bank statements to a lender. The read-only service is provided by a third party which has been integrated into our application process for simplicity. See our FAQ’s at the bottom of the page to learn why bank statements are required for unsecured business loans.
Step 4 - Documents
Step 4
Your information is analysed and matched with the best lender for your business. Wait for the lender to call you. They will let you know if you have been conditionally approved, usually subject to a credit check.
Step 5 - Receive Money
Step 5
Once the loan has been approved and documents signed, you can expect to receive the funds into your business account within one business day. You will make regular payments until the loan is paid off.

Unsecured Business Loan Requirements

  • 6+ months in business (sometimes as little as 3 months)
  • Australian registered business
  • Online bank account
  • Minimum turnover of $60k per annum

As mentioned in the loan comparison table, unsecured business finance has less requirements. Above is a list of what the requirements usually entail.

How much can I borrow?

Unsecured finance lenders prefer regular cash flow over anything else. The amount you can borrow will be determined by:

  • Your credit history
  • How long you have been in business
  • Your average monthly revenue
  • How you collect payment from your customers (whether you process credit card payments, cash or send invoices)

 

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What is the average interest rate
on an unsecured business loan?

Unsecured business loan interest rates are calculated on risk. It’s risk based lending. The higher the risk your business is, in the case where your cash flow could be inconsistent and you’ve just started out, you’re extremely high risk and you will pay a higher interest rate than a business seeking funding for an expansion who has strong cashflow and has been trading for many years. See examples below.

Example 1Time in business: 7 months Payment types: 80% invoice, 10% EFTPOS payments, 10% cash Rate: 28% APR

Example 2Time in business: 2 years Payment types: 70% EFTPOS payments, 30% invoice Rate: 14% APR

To work out the cost or to see how much you can borrow use our business loan calculator.

As you can see, this type of business financing does cost more than a traditional bank loan. You’re paying an increased amount for speed and a hassle-free process. It’s always best to do a business loan comparison to make sure you are paying the lowest possible business finance rates and fees. Start ups and new businesses will find it more challenging to get funding as the risk when you are starting out is high. It’s not until you have at least 3 months (ideally 6) trading history and some cash flow will your business be considered for a business loan.

4 Scenarios Where Unsecured Business Loans Can Help

  1. Alexander is a mechanic that recently started his own business. He’s been trading for four months and rents an industrial unit. The business needs a car hoist that is going to cost $14,000. The average monthly revenue is $7,000.

    He approached his bank for a loan and they couldn't help due to only being in business for four months. Alexandra looked for business loans online, completed an online loan application and was offered an unsecured loan on a 9 month term.

  2. Jason started his printing business two years ago and needs to rent a larger space with additional equipment to allow him to increase output that will secure more customers. He doesn’t own property or assets due to investing most of his money into growing his business.

    He needs $75,000 to help cover the cost of relocating, renting larger premises and hiring more printers. His average monthly turnover is $19,000 and 75% of his customers pay by POS credit card, the remaining 25% are invoiced on 30-day-terms and pay by bank deposit.

    An unsecured loan is a good option for Jason because he doesn’t have any assets or collateral to secure a loan with.

  3. Emma has a retail business in a high street selling homeware items. An opportunity has arisen to purchase stock at a discounted price but she needs to buy it immediately.

    An unsecured loan is ideal for Emma as she needs access to funds fast to avoid missing out on the stock. 85% of Emma’s revenue comes from card payments so she is offered a unsecured loan via merchant cash advance.

  4. Rebecca and Susan own a cafe in a popular seaside tourist destination. They are very busy during the spring and summer months, but business slows down during autumn and winter. They want to renovate the cafe during winter in preparation for spring.

    The renovation includes expanding the seating area which will help serve more customers. They need $65,000 for the renovation. Although their monthly revenue drops during autumn and winter, and they will need to close for 3 weeks, the annual revenue shows that they can afford the loan.

    They take out an unsecured business loan on a 6 month term to pay for the renovation.

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Unsecured Business Loans Compared

Loan Description
Unsecured Term Loan A term loan is a loan that is repaid in regular payments over an agreed period of time. They’re usually for a specific purpose. For unsecured term loans, the term is normally between 6 to 12 months.
Unsecured Line of Credit A line of credit, also known as a cash advance, or revolving line of credit, provides you with access to a specific amount of funds. You can use part or all of the funds and pay it back and use it again and again. You only pay interest on the amount drawn.
Unsecured Merchant Cash Advance For businesses that have regular merchant payments (credit card and EFTPOS). The lender will loan you a percentage of your merchant sales in advance. You repay the loan daily, through an agreed-upon percentage of future sales from your merchant sales.
Unsecured Bank Loan Some banks offer unsecured loans. It’s the same as the term loan above, but from a bank instead of a finance company. The loan requirements vary from bank to bank and are based on the risk of you and your business. Often these requirements will be quite strenuous.
Unsecured Bank Line of Credit It’s possible to get an unsecured line of credit from a bank. It’s the same as the line of credit above, but from a bank. You will need to provide additional information to see if you qualify. Banks usually have more requirements and it takes much longer to get the loan approved.

FAQs

The key to a fast unsecured business loan is to answer all the questions in the loan application and provide the business bank statements. The application on Lend is quick and easy and only takes ~6 mins (6 mins 14 seconds on average). If everything's in order you can expect to have the funds in your bank within 1 business day.
The lender is offering you an unsecured business loan (no collateral required), so needs a level of comfort that your business can afford to service the loan. It’s a simple and secure process. A third party service provides read-only access to your statements - you login to your online banking service via the third party and select which accounts/s the lender will receive the bank statements for.
Because copies and electronic versions can be altered and not up-to-date. Remember, the lender is offering you an unsecured business loan, probably because you were unable to get a loan from the bank, so the lender has to analyse your credits and debits to make a responsible lending decision.
Your credit file will not be checked during the application stage. After applying a consultant will analyse all the information provided and let you know if you’re likely to be offered an unsecured business loan or not. If you are, then they will let you know that they need to do a credit check before a final offer is made.
Unsecured business loans usually range from $5,000 to $300,000. The amount you can borrow depends on your cash flow, industry and how long you have been in business.
Every business is different and has different loan requirements and levels of risk. For this reason rates will vary depending on your requirements and the health of your business. After submitting an application someone will call you and provide you with how much you may be able to borrow, work out what repayments work for your business, the interest and a breakdown of any fees. All of this will be explained before you make a decision.

Grow the business you want.

See if you qualify