Compare Unsecured Business Loans

Last updated 03 Oct 2021

Unsecured business loans are loans made without requiring business collateral such as property or inventory. Unsecured loans are usually small to medium-sized loans ranging from $5k to $100k but can occasionally be as large as $500k. These loans are short in term, usually less than 12 or 18 months, and approval speeds can be as fast as 48 hours.

Unsecured loans are a fast and flexible way to address short term cash requirements or unanticipated business opportunities.

Key Features

Loan Size

$5k to $500k

Loan Term

3 to 18 months

Interest Rate

5% - 20%

Approval Speed

Fast

Common Uses of Unsecured Business Loans

Unsecured business loans are a good alternative for businesses that don’t want to post collateral in the form of property or other business assets.

Entrepreneurs and business owners also often prefer unsecured loans compared to borrowing against their personal home.

The flexibility of unsecured business loans mean that they are ideal to fund time-sensitive growth opportunities such as a financial adviser being presented with an opportunity to buy a book of business or a retailer being offered a large shipment of discounted inventory.

Unsecured finance can also be a great bridge funding gaps due to unexpected costs that can occur due to shipment delays, breakdowns or other delays.

A line of credit is a form of unsecured loan that allows you to draw down on an existing credit facility as and when you need it.

Keep in Mind

Interest rates and fees on unsecured loans are generally higher than secured loans in order to cover the risks borne by the lender.

Some finance companies will require in-depth information about your business’ performance including financial statements and contracts and even your business plan and cash flow forecasts to help the lender assess the risk of non-payment. Lenders will also look closely at your credit score and credit history.

While unsecured loans don't require a specific asset as a collateral, you may have to sign a personal guarantee which will allow the lender to pursue your personal assets in the case that the business fails.

Who Qualifies for an Unsecured Business Loan?

As unsecured loans are not supported by assets or collateral, lenders will instead focus on your ability to repay the loan out of cash flows. Lenders will therefore prioritise companies with strong cash flows. This means that companies without substantial assets can quality as long as cash flows are strong.

Borrowers who are willing to provide the lender with a personal guarantee are more likely to secure funding.

Advantages & Disadvantages

Flexible loan structure and size

Speedy approvals

No need to post collateral

Costly

Can be difficult to obtain without a strong credit history

May require a personal guarantee

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