Compare Unsecured Business Loans in Australia
Easily check your rates on unsecured business finance up to $250k-$2m.
$50000
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How Lend can help you access unsecured finance
We work with 70+ lenders
We can help you access dozens of lenders who offer unsecured business loans, including large banks and specialist providers.
How do unsecured business loans work?
An unsecured business loan offers access to funds without your business needing to offer an asset as security (also known as collateral). Instead, unsecured finance is offered based on your business creditworthiness, revenue and overall financial strength.
An unsecured business loan can be suitable if your business needs quick access to capital and/or doesn’t have assets to offer as security for a loan.
You can use an unsecured business loan for any worthwhile business purpose, including for day-to-day capital, hiring new staff, covering marketing costs, purchasing stock or inventory.
Unsecured finance is offered by banks, credit unions and non-bank (online) lenders. It’s generally riskier for lenders, with higher interest rates as a result versus secured business finance options such as a chattel mortgage.
In some cases, you may be required to provide a personal guarantee, which makes you or any directors personally responsible for the debt if the business cannot repay it.
To summarise:
- Unsecured business finance doesn’t require the borrower to put up collateral (security in the form of assets) in most cases.
- Interest rates on unsecured business loans start from 10% p.a.
- An unsecured business loan does not mean no risk for your business - we’ll help you understand and minimise your risk.
- It’s possible to borrow up to $2m with an unsecured business loan – the average amount requested by Lend customers is $134,000.
Unsecured business loan rates & fees
Interest rate | Loan terms | Upfront fee | Monthly fees |
|---|---|---|---|
Starting from 10% p.a. | 3 months - 5 years | $0 to 4% of the loan amount | $0-$20, but most are now at $0. |
When is unsecured finance suitable for a business?
One of our lending specialists can offer you guidance on whether unsecured finance will be suitable for your business. But some common reasons we see customers opting for an unsecured loan include:
- The business does not own assets that can be used as security (this is common in retail, hospitality and professional services)
- The business owns assets but does not want them tied to a loan (e.g. may want to sell the assets soon)
- The business needs fast access to funding to solve a short-term cash-flow issue
- The loan is being used to fund multiple purchases (whereas a secured loan is more commonly for a single purchase)
Types of unsecured business finance
Unsecured term loan
A term loan is a fixed amount repaid in regular payments over an agreed period of time. It’s usually used to fund a one-off purchase or project involving multiple costs.
Unsecured line of credit/Overdraft
A line of credit gives you ongoing access to funds up to a maximum limit. 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 down
Invoice finance
With invoice finance you effectively sell your outstanding invoices to a credit provider who offers immediate funds up to 80-85% of the value of your invoices. There’s no security required.
Credit card
A credit card provides access to funds up to an agreed limit. You must repay the minimum balance each month to continue accessing that limit.
Unsecured merchant cash advance
A merchant cash advance allows you to borrow a lump sum which you repay as a percentage of future credit card and EFTPOS sales. It's only available to businesses with regular merchant payments.
Unsecured versus secured business loan
Unsecured | Secured | |
|---|---|---|
Interest rates | Starting from 10% | Starting from 10% |
Amounts available | $10k - $2m | Up to $20 million |
Loan terms | 3 month - 5 years | 6 months- 10 years |
Purposes | Any business purposes | Any business purpose, but most would use a secured loan for larger capital expenditure use cases for the business. |
Secured by | Personal guarantees from business owners | Personal guarantees from the business owners and security of the asset used in the transaction |
Application process | Quick and simple, but depending on the loan amount desired can become more complex | More complex as the lender will need to assess the suitability of the security but as far as approval times, they are similar to unsecured loans. |
Who’s eligible for an unsecured business loan?
The minimum eligibility criteria for an unsecured business loan include:
- Australian citizenship or permanent residency
- An active ABN or ACN
- Minimum trading history of 6-12 months
- Minimum $75,000 in annual revenue
- The ability to provide financials or bank statements
- A good credit score — the minimum credit score for business lending is around 400.
What’s my borrowing capacity with an unsecured loan?
You can borrow between $5,000 and $250,000 with an unsecured business loan. Your business’ borrowing limit will depend on its factors such as your trading history, revenue and credit history.
Because an unsecured loan is considered riskier, your borrowing capacity will be limited. Some lenders may allow you to borrow up to 80% of your business's free cashflow (the amount left over after operating expenses), while some may consider a 12-month unsecured business loan equal to your monthly earnings.
The assessment process for business lenders often come down to a few factors:
1. The conduct of your business over the last 6-12 months
2. The serviceability of the business i.e. what free cashflow is available to service the debt?
3. What will the funding achieve for the business and will it put you into a stronger position?
Unsecured business loan pros & cons
Pros
• Quick access to capital i.e. 24-48 hours from application
• Funds can be used for any business purpose
• Quick and efficient application process
Cons
• Less flexibility on repayment structures
• Some lenders products can be expensive comparatively to their secured offerings
• Albeit unsecured, all lenders will require a personal guarantee in order to fund to a business
How to apply for an unsecured business loan
Learn more about unsecured business loans
FAQ
No, depending on the lender there may be an establishment fee that is deducted from the loan proceeds, but no upfront input from you will be required.
Most lenders will require you or other business directors to provide a personal guarantee, essentially making you (or other directors) personally liable for the loan if the business cannot repay it.
There are several types of personal guarantee agreements depending on your business structure. Generally, business directors can each guarantee a fixed percentage of the loan amount.
Yes, you can still get an unsecured business loan if you have impaired credit, but keep in mind you’ll pay a higher interest rate to reflect the added risk to the lender. Some lenders also offer bad credit business loans similar to standard unsecured loans but with some restrictions.
Yes, you can typically repay an unsecured business loan early or make extra repayments to reduce your interest on the balance. However, some lenders may charge break costs and early repayment fees, so check this in the fine print of your paperwork.
An unsecured business loan can be used for more or less any legitimate business purpose. That includes everything from accessing cashflow finance to purchase inventory, to financing an existing business (e.g. buying out a competitor).
For importers and exporters, trade finance, is a popular form of unsecured business finance.