Business finance
Unsecured Business Loans
Unsecured business loans are a fast and flexible way to address short term cash requirements or unanticipated business opportunities.
Loan size
$5K To $500K
loan term
3 to 18 months
Interest rate
5% to 20%
Approval speed
Fast
Unsecured business loan
Key features of an unsecured business loan
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.
Compare an unsecured business loan
Advantages and disadvantages
Advantages
What are the advantages of an unsecured business loan
- Flexible loan structure and size
- Speedy approvals
- No need to post collateral
Disadvantages
What are the disadvantages of an unsecured business loan
- Costly
- Can be difficult to obtain without a strong credit history
- May require a personal guarantee
Common uses & good to know
Everything else about an unsecured business loan
Common uses
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
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.
Entrepreneurs and business owners also often prefer unsecured loans compared to borrowing against their personal home.
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.
Good to know
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.
Alternative Commercial Lending options
Other Business Finance Products
Secured Business Loan
A secured business loan is a loan made by a bank or finance company where the lender requires the borrower to pledge assets as collateral against the loan.
Business line of credit
A business line of credit is a very flexible form of lending where you have cash available to draw down on as and when you need it.
Trade finance
Trade finance is any form of finance that is issued to support international trade, including letters of credit, debtor finance, & export credit.
Using Debtor Finance to Manage Business Cash Flows
Any business owner knows the importance of managing cash flows to ensure that liquidity remains strong and that the business has the ability to take advantage of sudden growth opportunities or big contracts Late payments impact businesses severely as cash that could otherwise be reinvested in growing stock marketing or
Unsecured business loan FAQ
Frequently asked questions
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 qualify 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.
