An unsecured business loan is a loan that doesn’t require collateral, meaning you don’t have to put up assets like property, equipment or future sales as a guarantee. Compare options below and read on to learn what makes these loans so special.
A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.
A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.
Business Loans from $5,000 to $5,000,000 with high approval rates. Access to funds on loans up to $500,000 in as little as 3 hours. Cash flow friendly repayments and open minded offers.
Business Loans from $5,000 to $5,000,000 with high approval rates. Access to funds on loans up to $500,000 in as little as 3 hours. Cash flow friendly repayments and open minded offers.
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An unsecured business loan lets your business borrow money without having to promise your assets, like buildings or equipment, as a guarantee.
One key thing about these loans is they're based on trust—how reliable your business looks to the lender, rather than what you can offer as security. Because there's no collateral, lenders see these loans as a bit riskier, which is why the interest rates might be higher.
Here are some key features of unsecured business loans in Australia:
Feature |
Description |
Interest rates |
Expect them to be a tad higher since there’s no collateral. The exact rate you get can depend a lot on the financial security of your business. |
Loan terms |
Loan terms can vary from a few months (short-term business loan), while others can stretch up to seven years (long-term) and anywhere in between. |
How much you can borrow |
This can range quite a bit, from a few thousand dollars up to half a million, based on what the lender thinks your business can handle. |
Getting the money fast |
You can often get the funds within 24 hours after approval, depending on the lender and the complexity of your application. |
Paying it back |
You've got options here too, from monthly to even daily payments, depending on what fits your business best and on the structure of the loan. |
Paying off early |
Some loans let you pay back early without extra fees, which can save you on interest. |
Redraw facility |
Made too many payments? Some loans let you take that extra money back if you need it for something else. |
The big advantage of an unsecured loan is that you don’t need to put up any collateral. But this isn’t the only benefit. Let’s delve into these further, as well as some of the drawbacks:
Benefits |
Drawbacks |
✅ No collateral needed. You don't need to secure the loan with assets like property or equipment. |
❌ Higher interest rates. Typically, these loans come with higher interest due to the greater risk to the lender. |
✅ Handy features. Access to early repayments and redraw facilities. |
❌ Smaller loan amounts. The available borrowing amount may be less than with secured loans. |
✅ Fast access to funds. Quick processing times mean you get the funds you need swiftly. |
❌ Shorter loan terms. You might find the repayment period is shorter compared to secured loans. |
✅ Better value for big moves. Opting for an unsecured loan can be wiser than using a credit card or dipping into savings for major business expansions. |
Here are a few banks and non-bank lenders that advertise unsecured business loans in Australia:
Banks |
Non-bank lenders |
What are the typical interest rates for unsecured loans? After reviewing over 40 loan products, we found that rates range from as low as 9% to as high as nearly 26% as at 13 September 2024. Go ahead and compare for yourself in the table at the top of this page.
Just keep in mind that many providers advertise a range, and that your individual interest rate will depend on quite a few factors, including the loan size, your business’ health and the RBA’s cash rate.
Additionally, when applying for an unsecured loan, you may be offered—or required, if deemed too risky—to provide collateral. This can help lower your interest rate and/or minimise the lender's risk. At that point, it becomes a secured loan.
To secure the best interest rate, you may need to obtain multiple quotes, which typically require providing accurate information about your business. However, you can usually request these quotes without formally applying or affecting your credit score.
LEARN HOW TO GET AN UNSECURED BUSINESS LOAN IN AUSTRALIA
Taking out a business loan is a major financial decision, so it’s important not to jump in too hastily. Here are some tips to help you compare your options so you’re able to land on the right deal for your business:
Understand all the expenses. Pay attention to not only interest rates, but also the fees - to get a full understanding of the true cost of the loan.
Look into the features. Finding a great deal is important, but features also have their place. Things like a redraw facility and penalty-free early repayment can be quite valuable.
Compare all your options. You may be familiar with business loans from major banks, but did you know about the emerging number of online lenders? Comparing offers from both will give you a more complete view of your options.
To get started, scroll up to Mozo's business loan comparison hub for up-to-date rates and information on a great selection of banks and business lenders alike. Once you’ve found a lender that suits the needs of your business, click the blue ‘Go to site’ for more on what your options are or to get an individualised quote.
An unsecured business loan isn’t going to be the best way to fund or pay for every business need, so it may also be worth considering:
Secured business loans: With (generally) lower rates, longer terms and larger possible loan amounts, a secured business loan could be a better fit for your business if you’re happy or to provide the required security.
Business credit cards: A business credit card could offer a more flexible and convenient way to manage your business cash flow and pay for smaller purchases than going through the loan process.
Business cash reserves: If you’ve got money sitting idly in your business bank account or business savings account then using it over a loan or credit card could be a smart way to avoid any unnecessary fees or interest.
Equipment finance loan. With an equipment finance loan, the equipment you’re purchasing serves as the collateral. If you can’t make your payments, the specific piece of equipment you’re purchasing could be repossessed - but the upside is that your other existing assets are generally not at risk.
These are just a few of your other options. For a detailed list of the most common types of business loans, check out our main guide to business loans.
Still have some unresolved queries? To help you understand all the ins and outs of unsecured business loans, we’ve answered some of the frequently asked questions (FAQs) about them below. For an even more detailed run through of the whole business loans process, don't miss our ultimate guide on how to get a business loan.
Most unsecured business loans range between $1000 and $500,000, though your limit will be determined by how your business does financially.
Factors that affect how much you can borrow include how long you’ve been in business, your average sales, your credit history and more.
Here are some of the common ways Australian businesses use unsecured business loans to their advantage:
Purchasing inventory
Expanding your business
Buying new equipment
Hiring new staff
Yes, it is possible to get an unsecured business loan as a small business. If you can demonstrate good credit history, cash flow and overall financial health, lenders will be more likely to offer you a loan without the need for collateral.It can get trickier if you are just starting out and need the funds to get your new small business up and running - but it’s not impossible. A solid business plan and a good personal credit history can go a long way. If you’re unsure, it’s always a good idea to talk to a few lenders about your options.
Without assets to assess, most loans will only take 24 hours to a few business days to be approved. It’s important to keep in mind that just because an unsecured business loan is quick to access, doesn’t mean it’s the best option for you. If you can afford to wait or have collateral available, securing your loan can grant you lower interest rates.
