Unsecured Business Loans – Monzi’s Guide To Finance For Your Business

Unsecured business loans may be a quick, hassle-free finance option for your business. Borrow the money you need to fund your operations and avoid having to provide an asset as security. However, will lenders offer these products and what else should you consider? Find out with Monzi’s comprehensive guide to unsecured business loans Australia.

Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

What are unsecured business loans?

Let’s start with the basics. An unsecured business loan is a type of unsecured loan that you can use to fund your business operation. For instance, maybe you need a little bit of cash to cover marketing costs or to purchase new equipment. The money you borrow is then often repaid via a series of payments over a fixed term.

Most importantly, as the loan is unsecured, there’s no need for your business to provide an asset as security. However, lenders deem unsecured loans to be riskier, so it’s important to be aware that you may be charged higher rates or additional fees on these loans.

So, now that we’ve covered what an unsecured business loan is, it’s easier to explore the details. Read on as Monzi explains everything from unsecured loans for startups to the features you should compare to find the right loan for your business. Let’s go.

How much can I borrow with unsecured business loans?

In short, that depends.

As a guide, business loans may vary from as little as a few hundred dollars into the hundreds of thousands of dollars. As a result, the amount you can borrow will be determined by the type of loan you’re after and your business.

On the one hand, if you apply for an unsecured loan, then you typically will not be able to borrow as much as if you were applying for a secured loan. Moreover, if you’re a small or growing business, then it’s unlikely you’ll be able to borrow as much as a large business.

Given this, it’s difficult to say how much you can borrow. Generally speaking, you may be able to borrow amounts ranging into the thousands to help fund your operations. However, consult various lenders or make use of comparison sites to determine how much you can potentially borrow.

Can I get an unsecured loan for my start-up business?

In short, potentially. However, in most cases, lenders typically will be reluctant to offer unsecured loans for startups, given the risk involved. As a result, Monzi cannot guarantee if you will be able to access unsecured business loans for new businesses. You simply must do your research to determine what’s available.

For lenders, startups are a risk as there is no track record of success. In other words, not only does your business have no credit history, but it may not have consistent or substantial cash flows either. Couple this with the fact that a high percentage of startups fail and you can see why lenders will usually require you to provide security on the loan.

With this, if your startup business has no assets, you may apply for a secured loan using your personal assets in some cases. For instance, some lenders may allow you to secure the loan with your car. However, not all lenders may offer this option. Moreover, consider the risks associated before signing over your vehicle as collateral.

What about if my business has bad credit?

It doesn’t matter if you’re applying for a fast loan for personal expenses or a small business loan, having bad credit will undoubtedly make things more difficult. Moreover, this will be particularly true if you are looking to apply for an unsecured loan.

In short, with an unsecured loan, lenders are putting their trust in you to make your repayments. After all, there’s no security on the loan. As a result, they’ll be looking to make sure that you’re a borrower that they can trust. Unfortunately, if you’ve got bad credit and a few defaults on your credit record, then this won’t be the case.

Given this, if you’ve got bad credit, your only option may be to apply for a secured loan by attaching one of your assets as security. If you do this, then lenders may be more willing to consider your bad credit loan application. However, approval is never guaranteed.

Can I get fast unsecured business loans online?

Yes, you can.

For as long as most of us can remember, banks have been the traditional suppliers of business loans. However, in recent years, the business loan market has undergone a shake-up. These days, there are a host of specialised online lenders who may offer the business loan you need for your organisation.

Best of all, as these lenders operate exclusively online, they often have lower overheads. In other words, because they don’t have to pay to operate branches, they may be able to pass those savings onto you in the form of more competitive rates.

However, keep in mind that Monzi cannot guarantee if you will be offered a lower rate by an online credit provider. As a result, you must compare your options to determine which loan may come with the lowest costs. Finally, note that not all lenders may offer unsecured business loans.

How do I compare unsecured small business loans Australia?

The process for comparing business loans should be similar to how you would compare personal loans. Realistically, you’re looking to weigh up the key factors to decide which loan is the right deal for your business. So, as a guide, try to compare the following features:

  • The type of credit: business loans may not all take the traditional principal and interest structure. Options such as lines of credit or overdraws may be available too and could fit your needs and objectives.
  • Amount: how much can you borrow? Lenders may offer maximum or minimum amounts so ensure you can borrow the amount you need.
  • Costs: what’s the interest rate and do you have to pay any fees? As a guide, it’s usually wise to try and find the lowest costs possible.
  • Terms: are you able to repay your loan over a term that’s affordable and reasonable for your business?
  • The lender: banks can offer business finance, but other specialised lenders may too. As a result, you must compare all options to find out which one might offer suitable terms for your business.

Are there any unsecured business loans offered by the government?

The Australian government typically will do what they can to assist and support small business. As a result, there may be a range of grants, funds, programs and tax benefits available to help you grow and develop your business. However, in terms of unsecured business loans, it is unlikely that the government will offer these loans.

In any case, it is important to maximise any potential benefit that you can access. Any small business support provided by the government may help your organisation to succeed. So, do your research to determine what you may be eligible for. However, note that programs, grants or tax benefits may vary based on the size of your organisation and location.

What are the benefits of unsecured business loans?

Some key benefits of unsecured finance that may make it an attractive option for your business include:

  • It’s easy: given that there’s less information required (e.g. no need to provide security), your unsecured loan may be processed fast so that you receive an outcome before you know it.
  • Borrow the money you need: you could get cash today with an unsecured loan that you can use to cover a range of different business expenses.
  • You aren’t putting your assets at risk: by applying for an unsecured loan, you don’t have to worry about repossession occurring if you default on your loan. However, keep in mind that if you fail to repay your unsecured loan, then your credit history will take a hit which could limit your ability to access online loans in the future.

What are the downsides?

As we’ve touched on, the downsides of unsecured loans for your small business may include:

  • The costs: as unsecured loans are riskier for lenders, you may need to pay a high rate to compensate for this. So, make sure you look at the rates and fees before applying.
  • Your options are limited: not all lenders will offer unsecured loans or loans for bad credit. As a result, rather than having many lenders to pick from, you may find that your options are few and far between.
  • Approval is difficult: lenders may apply more stringent criteria to unsecured loans. As a result, if you’re after unsecured business loans for bad credit, then you may need to demonstrate that you’re in a strong financial position to be considered for approval.

Ultimately, when it comes down to it, you must weigh up the pros and cons to decide what is right for your business. If you are still unsure, then it may be worth approaching a qualified professional who may provide advice tailored to your business.

Business loans unsecured: what do lenders look for?

Lenders usually focus on what are known as the five C’s when assessing your business loan application. These five C’s are what lenders use to calculate your creditworthiness. In other words, the likelihood that you will repay your loan.

The five C’s are as follows:

  • Character: does your business have a reliable repayment history and management who can be trusted?
  • Capacity: this relates to cash flows. Are you earning sufficient income to cover your existing expenses and debts?
  • Capital: how much capital does the organisation have? Are you putting any of these funds towards the investment?
  • Collateral: do you have any assets that you could use to secure the loan?
  • Conditions: are the terms of the loan affordable for your business based on your current cash flows?

Based on their assessment of these criteria, your lender will determine your outcome.

What is the easiest business loan to get?

In most cases, lenders are more willing to offer secured rather than unsecured loans. Moreover, this will be especially true if you are looking for unsecured startup business loans.

As we know, with a secured loan, you must provide an asset as collateral on the loan. This collateral works to reduce your lender’s risk, given that they have an avenue to recover their losses should you default. As a result, lenders will usually favour these products.

So, if you are only worried about finding the easiest loan approval and security isn’t an issue, then you’ll usually be better off applying for a secured business loan. However, if your business does not own an eligible asset, then unsecured business finance may be your only choice. Although, in some cases, you may be able to use your personal assets (e.g. your car).

business owners considering whether to apply for unsecured business loans

What is the average interest rate on a business loan?

In short, as Monzi is not a lender, we cannot say what your business loan interest rate may be. Moreover, interest rates can vary significantly depending on the type of loan you are applying for, the amount and the nature of your business.

To illustrate this, in most cases, large and established businesses will be offered much lower rates than startups, given that they typically have a lengthy credit history and reliable income streams. In addition to this, lenders may also offer lower rates on secured loans than unsecured loans as they tend to be less risky.

So, if you’re looking for the average rate on unsecured small business loans for new business, then you may need to shop around. Compare lenders and the terms they offer or use a business loan calculator to get an idea of what your costs may be.

What forms of unsecured business loan are there?

When it comes to personal finance and quick cash loans, they will typically take the standard principal and interest form. However, when it comes to finance for business, you may have a few more options to choose from. As a guide, your unsecured business loan options may include:

  • Term loans: the standard loan form. You borrow an amount and it is repaid via a series of even payments consisting of both principal and interest components.
  • Line of credit: you can borrow money up to an approved amount. However, you only pay interest on the amount you use.
  • Credit cards: a business credit card will operate in the same way as a personal card. You’ll just be using it to cover your business’ running costs.
  • Overdrafts: similar to a line of credit, an overdraft allows you to use more money than what you have in your account up to a pre-approved amount. In other words, your balance can be negative, however, just be aware of any fees and charges that your lender may apply.

Note that lenders may offer other forms of business credit too (e.g. secured business loans). So, do your research to determine which option works best for your business and its current situation.

Am I more likely to receive approval on a secured loan?

Generally speaking, yes.

While unsecured business loans Australia may be a simple option for you, they are typically hard to secure approval on. In short, this simply comes down to risk. With an unsecured loan, the lender is relying on you making your repayments, meaning if you default, they could face a loss.

So, if you have some machinery or equipment that you own as a business, then it may be best to consider using this to apply for a secured loan. If that’s not an option, then some lenders may allow you to use a personal asset. However, this may depend on the structure of your business.

Finally, keep in mind that the likelihood of approval may vary depending on your business. For instance, lenders may offer unsecured finance to businesses who are established and have a strong repayment history. On the other hand, if you are just starting a business in Australia, you may find it more difficult, given that lenders may not always be able to verify your creditworthiness.

What happens if I don’t repay an unsecured business loan?

As we know, the consequence for failing to repay a secured loan is that your lender may repossess the security on your loan. However, with an unsecured business loan, things are slightly different.

In short, if you begin to miss repayments, then you may have to pay additional fees or your interest rate may be increased. If this continues, then your lender may turn the matter over to a debt collector. Finally, in some cases, court judgments may be imposed, resulting in your personal or business assets being seized to pay off the outstanding debt.

In addition to this, note that failing to repay your loan will result in serious damage to your credit score and repayment history. As a result, you may find it extremely difficult to find a lender willing to offer you credit in the future.

What assets may I use to secure my loan?

If you opt for a secured loan, then you may use one or more of the following assets as security.

  • Equipment and machinery
  • Property
  • Buildings
  • Cars or other vehicles owned by the business
  • Accounts receivable
  • Inventory
  • Personal assets such as your car (eligibility may vary)

However, note that Monzi cannot guarantee if all lenders will accept the assets listed above. As a result, ensure you read the terms and conditions or have a chat with them to determine what you may use to secure your loan.

What costs can unsecured small business loans Australia cover?

As a guide, you may use the cash you receive from a business loan to cover expenses including:

  • Purchasing new equipment, machinery or business vehicles.
  • Debt consolidation
  • Advertising, marketing and promotional costs
  • Employee payrolls
  • Increasing your inventory/stock
  • Increasing working capital
  • Business expansion (e.g. relocation)
  • Business insurance premiums

Note that you may cover many other expenses too.

What will I need to apply?

While exact requirements may vary from lender-to-lender, you typically must provide the following information as part of your application:

  • Financial statements (profit/loss, etc.)
  • Identification
  • Australian Business Number (ABN) and/or Australian Company Number (ACN)
  • Financial reports going back one to three years.
  • Business plan
  • Assets and liabilities
  • Financial forecasts

Note that this list may not cover all the information you must provide. As a result, you should consult with your lender or check their website to get a full list of the necessary details.

Finally, for more details regarding how to apply for a business loan, be sure to check out the handy guide provided by business.gov.au.

Unsecured business loans Australia-wide

Are you looking for unsecured business loans in Sydney? Maybe you’re after unsecured business loans in Melbourne?

Ultimately, it doesn’t matter where you are in Australia, there may be lenders out there who can assist you with your financing needs. In short, most business lenders and banks will now provide you with the option to apply online. So, rather heading to your local bank branch, you can get your application sorted without leaving your desk.

As a result, if you’re a small business owner who’s always pressed for time, this can be a life-saver. Best of all, as long as you can connect to the internet, then it doesn’t matter where you are in this great country. Find Australian business loans online today.

Why was my unsecured small business loan application denied?

If your lender did not approve your application, then there may be many reasons for this. As a result, Monzi cannot provide you with an answer. Instead, you’ll need to contact your lender directly and they should be able to outline exactly where your application fell down.

As a guide, a lender may deny your application if your credit score is not up to par, you have a history of defaults on your credit record or your business’ financial situation is not suitable for a loan (e.g. lacks adequate revenue to cover the loan repayments). Moreover, there may be many other reasons too.

Finally, if your application for small business loans unsecured was denied, then you may need to consider applying for secured business loans in the future. In some cases, attaching security to your loan may improve your chances of receiving approval.

Can Monzi offer me business loans unsecured?

No.

At Monzi, we do not offer small business loans, unsecured or otherwise. Moreover, we do not offer loans of any kind. Instead, our goal was to provide you with an in-depth, yet accessible guide to business finance to help get the ball rolling for you.

What we are, though, is an online-lender finder service for Aussie borrowers. What does that mean? In short, it simply means that we match everyday Australians just like you with a network of lenders who can offer fast personal loans up to $10,000. As a result, we may take the hassle out of accessing finance online.

Apply today.

Personal loans: what are they?

Just as a business loan may cover your business’ expenses, a personal loan may cover your personal expenses when you find yourself short on cash. With Monzi, you can apply for a small loan from as little as $300 up to a large loan of $10,000. Moreover, with repayments terms potentially ranging from 12 to 24 months, you may be able to divide the costs into a series of manageable repayments that suit your budget.

All it takes is one application. Once we receive your completed and submitted application, our automated system takes over to try and find you an available lender willing to assess your application. Apply during business hours and you may receive an outcome in 60 minutes.

Finally and best of all, these loans may be used to cover almost any personal expense. So, whether you’ve got bills to pay today or upcoming travel expenses that your budget can’t quite manage, a personal loan may be an option. Just remember that all loans must be repaid with interest, meaning there are costs involved.

So, do you need to borrow money up to $10,000? Apply with Monzi today.

Can I use a personal loan for my business?

In short, you may. However, the ability to do so may depend on your business and the lender that you are dealing with.

Generally, you can use personal loans to pay for most expenses that you encounter. With this, if you’re starting a new project or trying to get in touch with your entrepreneurial side, then a personal loan may provide you with the funds you need.

On the other hand, if you own an established small business, then you will typically need to apply for a secured or unsecured small business loan. After all, that’s why these loans exist. As a result, they will likely be a more appropriate option.

Finally, remember that personal loans can be expensive and you are personally responsible for the repayments. As a result, if you do opt for a personal loan over an unsecured small business loan, consider the risks and costs before doing so.

How do I apply?

While we can’t offer small business loans, we’ve made sure that you can apply for fast cash loans with no hassle today. Just follow these easy steps:

  1. Use the loan slider (located at the top of the page) to select your loan amount and repayment term.
  2. Complete Monzi’s straightforward online application form. Hit submit.
  3. Let Monzi take it from here as we attempt to match you with an available lender from our network.
  4. We’ll contact you with an outcome. If we find you a lender, then they’ll contact you to begin the next steps.

Note that approval is never guaranteed.

Get in touch

If you’re interested in Monzi and what our lender-finder service might be able to do for you, then we’re always happy to hear from you. If you’ve got any queries, questions or concerns, then direct them to hello@monzi.com.au and we’ll do what we can to get back to you with a prompt and polite response. We look forward to hearing from you.

With this, it’s important to note that Monzi cannot answer questions about your business and the loan options you could access. As a result, you must contact a business lender directly or get in touch with a qualified advisor. They may be able to provide the information that you need.

Unsecured business loans: all you need to know

At Monzi, we’ve done our best to provide you with the information that you need to know to help you determine whether an unsecured loan is the right financial decision for your business. Now, it’s up to you. Do your research and weigh up your options. From there, you can decide whether or not to apply with a lender.

Looking for Aussie cash loans instead? That’s where Monzi might be able to help. Apply from $300 to $10,000 now. We may pair you with a lender in just 60 minutes.

Want to stay up to date with the latest happenings at Monzi? Follow us on Facebook, Instagram, Twitter and Pinterest. We’d love to see you there.

Factor In

Costs

Two credit cards
Two credit cards

You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000

Terms

12 months

Costs

20% upfront establishment fee

+ 4% monthly fee

Example

Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate

Loan amount

$2,001 - $4,600

Terms

13 months

24 months

Costs

48% annual percantage rate

67.41% comparison rate p.a.

Example

Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principal Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Interest Rate for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.

Loan amount

$5,000 - $10,000

Terms

13 months

24 months

Costs

21.24% annual percantage rate

48% comparison rate p.a.

Example

Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principal Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Interest Rate for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.