The short version
An unsecured business loan lets you borrow based on how well your business is trading, not on a property or asset you put up. With most cashflow lenders in Australia you can borrow up to nearly $300,000 this way. It usually settles in 24 to 72 hours, and the paperwork can be as little as six months of bank statements.
Two things often get missed. First, unsecured always costs more than a loan backed by property, because the lender is taking a bigger risk. Second, "unsecured" only means you don't put up a property. Most lenders still ask the directors for a personal guarantee, and many take a general security agreement over the business assets.
Below we cover what an unsecured business loan is, how much you can borrow, what sets the rate, how fast it moves, and when it is the wrong choice.
What is an unsecured business loan?
It is a loan given against how your business is trading, not against a property. The lender looks at how money moves through your business instead of valuing a house or a building. With no property to fall back on, they rely on your bank statements, your trading history and your credit score.
That is also why it is quick. A cashflow finance lender can read a year of your turnover and decide in hours, while a property-backed loan has to wait for a valuer. You pay for that in the rate. With no bricks and mortar behind the loan, the lender charges more for the risk.
What can you borrow without putting up property?
"Without collateral" usually means "without putting up a property." A few options fit that:
- Unsecured business loans: a lump sum you pay back over a set term, based on the business and not an asset.
- Business lines of credit: a limit you draw on and pay back as cash comes in, so you only pay interest on what you use. More on the lines of credit page.
- Invoice and debtor finance: backed by your unpaid invoices, so it needs no real estate.
- Merchant or business cash advances: an advance you pay back as a slice of your daily takings.
If you are comparing these, the working capital finance guide shows what each one costs and which cash gap it suits.
"Unsecured" doesn't mean no guarantee
Many people read "unsecured" (no property needed) as meaning the lender has nothing to chase if things go wrong. Two things are still normal:
- A director's personal guarantee. The director personally stands behind the loan. If the company can't pay, the lender can come after the guarantor. This is standard on nearly every unsecured business loan in Australia. We explain what it commits you to in personal guarantees on a business loan.
- A general security agreement (GSA). It is registered on the PPSR and gives the lender a claim over the business's assets: its equipment, stock and money owed to it.
So "unsecured" really means "no property put up." The business, and usually the directors, are still liable. That is simply how the product works, and knowing it up front saves you a nasty surprise when you sign.
How much can you borrow without property?
For most cashflow lenders, the most they will lend fully unsecured is close to $300,000. Above that, a lender will usually want some security, most often property, before it lends more.
Borrowing $100,000 unsecured is normal for an established business with clean statements. So if you are asking whether you can borrow $100,000 without collateral, the answer is yes, if the trading numbers stack up. Your actual limit depends on your monthly turnover, how long you have been trading, and whether the repayments fit alongside what you already owe. A younger business, or one with uneven income, gets offered less. A steady business that has traded longer gets more.
What does it cost?
Unsecured cashflow finance always costs more than a secured loan. That is the price of speed and of not putting up property. The rate is not one fixed number, though. It moves with a few things the lender looks at together:
| What the lender looks at | Lowers your rate | Pushes it up |
|---|---|---|
| Credit score | 650+ with a clean file | Defaults or a low score |
| Time trading | Two years or more | Under 12 months |
| Owning property | You own real estate (even if you don't put it up) | No property in your name |
| Industry | Steadier, lower risk | Riskier or uneven |
| Turnover | Steady monthly deposits | Lumpy or falling |
As a guide, a business that has traded a couple of years, is GST-registered, owns property and has a score above 650 will likely get a rate in the low teens, sometimes single digits. If any of those are weaker, the rate goes up to match the risk.
Watch two things. Some lenders quote a factor rate or a flat figure instead of a yearly rate (an APR), which can make a loan look cheaper than it is until you do the sums. And the headline rate is not the whole cost, because set-up and account fees change the real number. Read the true cost of a business loan before you compare offers.
How fast is it, and what do you need?
A clean deal can go from application to settlement in as little as 24 hours. A more normal turnaround is 24 to 72 hours once your documents are in.
The paperwork is light. Most lenders only need:
- Six months of business bank statements
- Photo ID for the directors
- A signed privacy form
- Basic business details: ABN or ACN and director details
That is a big part of the appeal. Most lenders in the cashflow fintech space have loans that are cheaper than the banks and ask for far less paperwork, which is why they have won so much of this market. A broker's job is to match you to the lender most likely to say yes at the lowest rate, so you don't apply everywhere and mark your credit file each time.
A real example
A hospitality business had been trading just over three years. It was GST-registered, the owner had a home in their own name, and their credit score was around 680. They needed $90,000 to fit out a second site and did not want to touch the equity in the house or wait for a valuation.
The profile was strong: clean statements, a good trading history, and a home behind the owner even though it was not put up. The deal came in at a rate in the low teens over 18 months, with a personal guarantee and a GSA but no mortgage over the house. The money settled within two business days. A secured loan might have trimmed the rate, but it would have taken weeks and tied up the home. For a one-off job with a deadline, unsecured was the right call.
When it's the wrong choice
Unsecured cashflow finance suits some jobs and not others. It is usually the wrong pick when:
- You're buying an asset. A vehicle, machine or piece of equipment is better funded by asset finance, where the asset is the security and the rate is lower.
- You need a long term. Unsecured loans run short. Spreading a big amount over many years is cheaper against property.
- You have property and time. If you can put up real estate and you are not in a rush, a secured loan will nearly always beat unsecured on rate.
The right choice depends on the job: how much, how long, and how fast you need the money. If you want a broker's view on whether unsecured is the cheapest option for you, the application form is the place to start.