Whether your business is newly blossoming or you’ve been in the game for years, unsecured business loans can provide you with the opportunity for growth. We want you to find the best deal with a competitive interest rate and low fees, so your business can thrive.
To help you understand the ins and outs of unsecured business loans, we’ve answered some frequently asked questions below.
How much money can I borrow with an unsecured business loan?
Most unsecured business loans range between $1000 and $250,000, 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: It’s unlikely you’ll be approved for an unsecured business loan if you’re in the early stages of your first business. Without prior evidence of good trading, a lender will struggle to assess whether your loan is a risk worth taking. A better option for a start-up business might be a secured loan.
- Your average sales: A mature business that can provide evidence of good cash flow and a steady repayment history will be more likely to secure a larger lump sum than a new business. Don’t stress out if your monthly average sales have been low, your lender could consider your cashflow forecast in deciding how much you can borrow when approving your loan.
- Your credit history: Unsecured business loans come from either banks or non-bank lenders. A business account with a high bank balance and no history of overdraws or exceeded credit limits will be looked upon more favourably than one with bad credit.
What are the benefits of an unsecured business loan for my small business?
Small businesses can cost an arm and a leg and sometimes you just can’t predict when you’ll need extra cash flow. Typically, an unsecured business loan will bring the most benefit if the value of the loan outlasts the loan itself.
Here are some ways in which taking out an unsecured business loan can be beneficial to you:
- Purchasing inventory: Inventory is one of the biggest expenses for small business’. Whether you’re in need of new stock or have the opportunity to purchase a large amount of inventory at a sale price, a small unsecured business loan could provide you with the fast buck you need.
- Expanding your business: Is your business bursting at the seams? Do you need more space for operations? An unsecured business loan can give you the opportunity to grow your business and ultimately put more money in your pocket.
- Buying new equipment: In most cases, you’ll have to purchase new machinery to either replace the old or to introduce new products. As much as your office employees would love a self-serve-soft-serve machine, it’s probably wise you only take out a loan for this if you own an ice-creamery.
- Hiring new staff: Your business model could suffer if you or your staff are overwhelmed with work. Hiring new staff members means a load-off for everyone, and your return on well-performing employees will help pay back your loan.
TOP TIP: Really think it through. Be money smart. Don’t take out an unsecured business loan if you’re not going to make much money out of your new investment.
I need a fast loan. Can I get that from an unsecured business loan?
Absolutely. 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.
How much interest will I pay on my unsecured business loan?
High interest rates go hand-in-hand with high risk, meaning that unsecured business loans will often rack up higher costs than secured loans.
Here are some factors that affect your interest rate:
- Your personal credit history: It’s not just your business’ finances that get caught up in the crossfire, your personal credit history could also impact the interest you’ll pay. If you’ve got bad credit, some lenders are likely to make up the risk of lending to you by jacking up interest rates. Don’t fret, you can always work on getting your credit score back on track before making an application.
- Your loan amount and duration: As with any loan, the bigger your loan, the more you should expect to pay in interest. When it comes to the length of your loan term, shorter loans may mean you pay less interest overall, but the monthly repayments will be higher, and vice versa for longer loan terms. It’s better to be safe than sorry so pick a loan term that suits you, and don’t forget, if business is doing well, you may have the option of making extra repayments to pay your loan off quicker.
TOP TIP: Don’t forget about fees. It’s easy to be blinded by low headline interest rates when looking for a loan, so don’t forget to check if the lender has upfront or ongoing fees.
What flexible unsecured business loan features will I have access to?
The flexibility of an unsecured business loan will help put your heart (and bank account) at ease. Without assets on the chopping block you can stress less, and with a range of great flexible features your business can grow to its full potential.
Here are just a few benefits you may enjoy:
- Flexible loan amount and repayment time: With an unsecured loan you have a wide range of loan options. If you need more time to pay off your loan, keep in mind you’ll be paying more in interest.
- Fast application and approval: Do you need money to appear in your bank account overnight? With unsecured business loans, this can become a reality. Depending on your case, your loan can be approved in the space of a few hours.
- Extra repayments: Some lenders will allow you to make extra repayments on your loan so you can pay it off quicker. Check your terms and conditions to see what options you have available to you.
Where can I find the best interest rate for my unsecured business loan?
Right here! 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 start an application