How does unsecured business finance work? | finder.com.au

How does unsecured business finance work?

Need quick funding without risking your assets? Find out how to get funds in as little as 24 hours with no collateral involved.

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Perhaps you're experiencing cashflow problems and have maxed out your credit, or you're looking to expand your enterprise with new real estate or equipment. Maybe you'd simply like peace of mind knowing your business has emergency funds available.

If so, you may want to consider an unsecured business loan. These loans can offer upfront lump-sum funds or a line of credit. If approved, you might be able to access your funds in as little as 24 hours.

Moula Business Loan

Moula Business Loan

  • Borrow up to $250,000
  • Flexible lending criteria
  • No hidden fees
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100% confidential application

Moula Business Loan

An unsecured business loan with online application and no upfront or early repayment fees.

  • Interest rate type: Fixed
  • Loan security: Unsecured
  • Upfront fee: 2% Establishment fee
  • Minimum loan amount: $5,000
  • Maximum loan amount: $250,000
  • Maximum loan term: 2 years
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Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Moula Business Loan
$5,000
$250,000
1 to 2 years
2% Establishment fee
A loan of up to $250,000 that can be approved and funded within 24 hours. Available to businesses with 6+ months operating history and $5,000+ monthly sales.
ebroker Business Loan
$5,000
$5,000,000
1 month to 30 years
$0 application fee
Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.
Valiant Finance Business Loan Broker
$5,000
$1,000,000
3 months to 5 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 70 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
Lumi Unsecured Business Loan
$5,000
$300,000
3 months to 3 years
2.5% establishment fee
Apply for up to $300,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
Prospa Unsecured Business Loan
$5,000
$100,000
3 months to 3 years
3% origination fee
An unsecured business loan available up to $100,000 that can be funded in 1 business day. You must provide 6 months of trading history, 3 months history of existing business purchases and have a turnover of $6,000+ per month.
Max Funding Unsecured Business Loan
$3,000
$30,000
1 month to 1 year
$0 application fee
An unsecured business loan from $3,000 that offers convenient pre-approval and no early repayment fees.
OnDeck Business Loans
$10,000
$250,000
6 months to 2 years
3% of loan amount
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
Westpac Business Loan
$20,000
$1,000,000
1 to 30 years
$0 application fee
Purchase a new vehicle, equipment or support your cash flow with a business finance solution from Westpac.
ANZ Unsecured Business Loan
$10,000
$1,000,000
Up to 15 years
$600
Apply for a loan from $10,000 with no security required and benefit from flexible repayment terms.
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What exactly is unsecured business finance?

An unsecured business loan doesn’t require any assets to be attached as security. Depending on the lender and your average monthly sales, you can acquire funds of anywhere between $1,000 and $1,000,000 and have access to them in as little as 24 hours.

What are the main types of unsecured business finance?

There are four main types of unsecured business loans:

  • Term loans. These are lump-sum loans with the funds paid to you upfront. Repayments are made according to a predetermined schedule ensuring the loan is paid off by the end of the term, which can range anywhere from three months to 15 years or more, depending on the lender.
  • Short-term loans. These have shorter repayment schedules than term loans. Based on your lender, the terms ranges anywhere from 3-12 months. Interest rates may be higher for these loans but they are repaid in a shorter period.
  • Overdraft. As a line of credit linked to your primary business account, overdrafts allow you to draw up to a predetermined limit. This is especially convenient to manage daily monetary fluctuations in your business.
  • Lines of credit. A business credit line helps you draw as much money as needed up to a certain limit. As you repay borrowed funds, you regain access to them. A line of credit account is linked to your lender, not to your business account as in overdraft financing.

What do I need to know before applying for an unsecured business loan?

  • What do I need the funds for? If you plan to expand your business, for instance, buying real estate or equipment, consider a business loan that gives you a lump sum payment, such as term loans. If you’re unsure how long you will need the funds for or if you’ll need to borrow more soon, a line of credit may be more suitable.
  • How much do I need? Lenders usually provide anywhere between $1,000 and $1,000,000 depending on your qualifications and requested amount. Check what loan amounts the lender offers and determine how much you need. Asking for too much can hinder your approval chances but asking for too little means you may need additional funding.
  • When do I have access to my funds? It's important to ask your lender when you can access your funds. You may need your money before a certain time although, depending on your lender, it may only take a few business days or, in some cases, just 24 hours for your funds to be transferred.

How much do unsecured business loans cost?

Make sure you understand the difference between fixed and variable interest rates. If you have a low profit margin, beware of variable interest rates that may rise above your ability to repay. Also, learn the types of fees that lenders may charge. One-off fees may include application fees, exit/discharge fees and termination fees. Ongoing fees may include service fees or line/credit advance fees.

Loan amounts that are paid to you upfront, such as term loans, cost a portion of your loan amount plus the interest you’ll pay back over your term. The repayment amount depends on your loan term as well as the total loan amount. Line of credit loans such as overdrafts will have the interest charged on what you owe, but you may also need to pay ongoing fees.

How do lenders approve unsecured business finance?

You'll have to meet certain criteria that differ from lender to lender. Generally, most lenders look at two categories to make a decision: your business history and your repayment ability.

Criteria for your business history may include:

  • How long you’ve been in business (usually for a minimum of three to six months)
  • How long you’ve been renting your premises for
  • That there is a minimum lease period left in your lease agreement
  • Your credit history (personal and/or business)

Criteria for your repayment ability may include:

  • The purpose of your loan and the amount requested
  • The minimum required average monthly sales revenue (this may be around $50,000-$60,000)
  • Average monthly turnover
  • Debt obligations
  • Amount and types of assets and liabilities

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Watch: 5 winning strategies to improve small business cash flow


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