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In our unsecured business loans guide:
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An unsecured business loan is a type of finance that allows businesses to borrow funds without providing any business or personal assets as security (collateral) for the loan. Instead, unsecured finance relies on the trading position of your business — including your trading history, plus current and projected cash flow.
Having no security backing the debt increases the risk to the lender, making it harder for them to recoup losses if you can't repay the loan. As a result, unsecured business finance comes with higher interest rates than secured business loans (which lower the lender’s risk due to collateral). Unsecured business loans also have shorter loan terms.
An unsecured business loan can be a good option for small business owners who need quick access to cash without risking personal or business assets.
An unsecured business loan is structured similarly to a secured business loan, except the lender doesn’t have to appraise any collateral or register any interest on the Personal Property Securities Register (PPSR) until you pay off the loan.
Aside from that, it's fairly straightforward. You’ll borrow a lump sum from a lender, which you’ll repay with interest through scheduled repayments over a fixed period (called your loan term). Typically, repayments will be daily or weekly to fit in with your business cash flow, according to online lender Prospa.
Interest rates on secured business loans start from around 12-20% p.a. Rates are higher on unsecured business loans to offset the lender’s risk of providing finance without collateral.
The lender will determine your personalised interest rate when you apply for finance, based on your business creditworthiness, including:
You can try our business loan calculator to estimate your loan repayments based on different loan amounts.
Loan amount | $10,000 |
---|---|
Monthly repayments with 12% p.a. interest rate | $222.44 |
Monthly repayments with 14% p.a. interest rate | $232.68 |
Monthly repayments with 16% p.a. interest rate | $243.18 |
Loan amount | $20,000 |
Monthly repayments with 12% p.a. interest rate | $444.89 |
Monthly repayments with 14% p.a. interest rate | $465.37 |
Monthly repayments with 16% p.a. interest rate | $486.36 |
Loan amount | $30,000 |
Monthly repayments with 12% p.a. interest rate | $667.33 |
Monthly repayments with 14% p.a. interest rate | $698.05 |
Monthly repayments with 16% p.a. interest rate | $729.54 |
Loan amount | $40,000 |
Monthly repayments with 12% p.a. interest rate | $889.78 |
Monthly repayments with 14% p.a. interest rate | $930.73 |
Monthly repayments with 16% p.a. interest rate | $972.72 |
Loan amount | $50,000 |
Monthly repayments with 12% p.a. interest rate | $1,112.22 |
Monthly repayments with 14% p.a. interest rate | $1,163.41 |
Monthly repayments with 16% p.a. interest rate | $1,215.90 |
Loan amount | $60,000 |
Monthly repayments with 12% p.a. interest rate | $1,334.67 |
Monthly repayments with 14% p.a. interest rate | $1,396.10 |
Monthly repayments with 16% p.a. interest rate | $1,459.08 |
Loan amount | $70,000 |
Monthly repayments with 12% p.a. interest rate | $1,557.11 |
Monthly repayments with 14% p.a. interest rate | $1,628.78 |
Monthly repayments with 16% p.a. interest rate | $1,702.26 |
Loan amount | $80,000 |
Monthly repayments with 12% p.a. interest rate | $1,779.56 |
Monthly repayments with 14% p.a. interest rate | $1,861.46 |
Monthly repayments with 16% p.a. interest rate | $1,945.44 |
Loan amount | $90,000 |
Monthly repayments with 12% p.a. interest rate | $2,002.00 |
Monthly repayments with 14% p.a. interest rate | $2,094.14 |
Monthly repayments with 16% p.a. interest rate | $2,188.63 |
Loan amount | $100,000 |
Monthly repayments with 12% p.a. interest rate | $2,224.44 |
Monthly repayments with 14% p.a. interest rate | $2,326.83 |
Monthly repayments with 16% p.a. interest rate | $2,431.81 |
Loan amount | Monthly repayments with 12% p.a. interest rate | Monthly repayments with 14% p.a. interest rate | Monthly repayments with 16% p.a. interest rate |
---|---|---|---|
$10,000 | $222.44 | $232.68 | $243.18 |
$20,000 | $444.89 | $465.37 | $486.36 |
$30,000 | $667.33 | $698.05 | $729.54 |
$40,000 | $889.78 | $930.73 | $972.72 |
$50,000 | $1,112.22 | $1,163.41 | $1,215.90 |
$60,000 | $1,334.67 | $1,396.10 | $1,459.08 |
$70,000 | $1,557.11 | $1,628.78 | $1,702.26 |
$80,000 | $1,779.56 | $1,861.46 | $1,945.44 |
$90,000 | $2,002.00 | $2,094.14 | $2,188.63 |
$100,000 | $2,224.44 | $2,326.83 | $2,431.81 |
Generally, the minimum eligibility requirements for an unsecured business loan in Australia include:
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GET STARTEDGET STARTEDPros | Cons |
---|---|
Doesn't require personal or business collateral | Higher interest rate than a secured business loan |
Fewer upfront costs as there’s less paperwork involved & no asset valuation required | Stricter eligibility requirements may apply, as lenders will pay particular attention to the integrity of your bank statements |
No early payout fees (in most cases) | Limited borrowing amounts compared to secured finance |
Faster application process & you could get funding within one business day in some cases | May require a personal guarantee from a company director |
A business line of credit gives you access to a specific amount of funds whenever you need (up to your credit limit). You can use part or all of the funds, pay it back and use it again (think of it as an open-ended loan). You’ll only pay interest on the amount you withdraw, not the entire credit limit.
A business overdraft is a line of credit facility linked to your business transaction account. It allows you to access an agreed amount if your bank balance drops below zero. You only pay interest on the funds you draw upon. Businesses may use a business overdraft to cover short-term cash flow shortfalls (e.g. to pay employee wages or suppliers).
You can use a business credit card to access funds up to an agreed limit. There’s usually an interest-free period when no interest is charged on purchases if you pay your closing balance in full each month. You must repay the minimum balance each month to continue accessing that limit.
According to Money.com.au lender data, the most common reasons businesses apply for unsecured financing include:
Unsecured loans are particularly suited to small businesses who need accessible funding, but lack assets to offer as security for their finance. This is beneficial when:
The vast majority of businesses in Australia (around 98%) are small businesses, according to the Australian Banking Association.
Lenders will review applications for an unsecured loan based on your business’ monthly revenue and the intended use for the loan. Each lender will have its own approval criteria and the process may be different depending on the loan amount (e.g. a director guarantee may be required)
You can generally apply online with a bank or non-bank lender, including those who provide loans designed specifically for small businesses.
The approval process will be fairly simple. You’ll need to provide:
If you can’t provide standard business documents with your application, you could consider a low doc business loan.
Your lender will require additional documentation to assess your loan application, including:
Here are some of the main lenders offering unsecured business loans in Australia:
Currently, unsecured business loan interest rates in Australia range between 12-20% p.a. Rates may be higher in some cases, as lenders tend to classify borrowers into either 'prime' (gold) or 'near prime' (silver) categories.
Based on an analysis of select lenders by Money.com.au, here are some of the standard fees you may find on an unsecured business loan:
Fees can significantly impact your borrowing costs, so consider negotiating with your lender (and broker) to reduce them.
A collateral is an asset or something of value owned by your business that can be used as security on a loan. It can include company vehicles, equipment, and inventory or be a personal asset such as your home or any other residential property. Unsecured business loans do not require collateral, which is why they are referred to as ‘unsecured’.
A personal guarantee is a legal commitment (as a company director or including a group of directors) to cover any outstanding loan amounts should you default or fail to meet your repayment obligations. Personal guarantees are unsecured, which means they aren’t tied to specific assets you own. They represent a legal obligation to repay an agreed amount. There are several types of personal guarantees:
Unlimited personal guarantee: This is a promise to cover the entire loan cost should the business be unable to repay the loan. This is the riskiest option for borrowers and the least risky for lenders.
Limited personal guarantee: This involves the lender setting a figure of how much you’d owe in the event of a default or business failure.
Joint or several guarantee: This is similar to a limited personal guarantee, where a number of business owners offer personal guarantees for a fixed percentage of the loan amount. A joint or several guarantee means each guarantor will be responsible for paying off the full loan amount should the others be financially unable.
No, you generally won’t need a deposit to get an unsecured business loan if your business financials show you can comfortably service the loan. A deposit is essentially a type of upfront collateral that can help reduce your monthly repayments and potentially help you get a better interest rate.
Yes, most lenders in Australia will allow you to repay an unsecured business loan early. Most lenders analysed by Money.com.au do not charge early payout fees or break costs. But when in doubt, it’s best to check with the specific lender before you repay your finance early.
Yes, you can still get an unsecured business loan if you have impaired credit, although some lenders may not provide finance if you’ve had a prior or recent bankruptcy. Consider applying for a bad credit business loan via a specialist lender, but keep in mind that higher interest rates apply.
If you default on an unsecured business loan, the lender will generally proceed with a debt collection, and a default may be recorded on your credit report. According to Equifax, payment defaults can stay on your credit file for up to five years. This may make it more difficult to get approved for future loans.
Business Loan guides and resources
Learn more about your business finance options and how to get the funding you need to grow your business.