Unsecured Business Loans
It’s not easy running a business. You’ll have several costs to juggle and it can be a huge challenge to stay on top of your ongoing expenses and even debts. Unsecured business loans are flexible and fast means to get access to cash to help manage your finances. Whether you are planning on getting new inventory or you need a bit of cash boost to cover your employees’ salaries, there are so many benefits out of unsecured business financing that differs from personal loans
Benefits of unsecured business loans
Borrow up to $500,000
You have the option to apply for both small and big loans, depending on what your business needs. Starting loan amounts can be as low as $5000 with maximum borrowing allowed being at $500,000. This ensures that you will have access to ample funds for a wide range of spending.
Loan terms of up to 5 years
You can get your instalments spaced in a manner that will make them easier to manage. Lenders will allow you to sign up for a loan term of up to 5 years. You can tailored-fit the repayment term to ensure that your paying capacity is taken into account.
Fast access to funds
You won’t need to wait for a long time to get the loan approved and for you to get funded. It is common for lenders to have business unsecured business loans funded on the same day one has applied for them. In fact, there are even those lenders that can get the loan funded within 2 hours of sending a loan application.
Use the funds for a variety of purposes
Unsecured business loans can be used for a whole host of expenses. They are very flexible which allows businesses to use them for covering a variety of expenses. You won’t be restricted in terms of how you wish to spend the funds.
No penalties for early repayments
If your business’ financial situation changes for the better while you are still in the middle of your loan term, you have the option to make more repayments to get the loan paid off sooner than scheduled. Other lenders will give you grief for doing so by charging you early repayment penalties. Not with our lender partners though. You won’t be asked to pay any fees if you decide to settle the debt before the actual term is finished.
Start-ups and new businesses are welcome
You do not need a business that has been around for years in order to qualify for unsecured business loans. Most of the lenders we work with at MoneyScout will only require a minimum of six months so you can apply for financing a long term loan
Reasonable fee options
We work with a wide network of lenders who are known not only for their top-notch reputation but also for the competitive rates and fees they offer.
Low doc financing options
Businesses who are still new to the since may have a hard time complying with the financial paper requirements that some lenders set. Thankfully, there are low doc options available out there so your business loan application can still get approved despite the lack of certain documentation.
Why work with MoneyScout?
We do the work for you
We work with a number of lenders that offer a wide range of unsecured business loans. This makes it easier for you to compare different quotes from different providers. What’s even better is that you only need a single application to get access to such a service. We will take care of getting you paired with the best lender there is.
Trusted and highly reputable lenders
We took the time to review all the lenders in our network to ensure that we are partnered with people who have the best interests of our customers at heart.
Understanding unsecured business loans
How it works
Unsecured business financing refers to business loans that do not require the borrower to present an asset to secure the borrowing. They are structured considerably similar to any type of standard loan where, upon approval, a lump sum is given to the borrower which can then be used for a variety of business purposes. The borrower then starts paying off the debt through instalments within a predetermined period until the borrowing is successfully paid off.
This is considered one of the most commonly available types of business financing out there that Australian small and medium businesses can take advantage of. It is also easier to get approved for this type of loan. After all, not a lot of businesses have assets and properties that can be used for securing their loans. Due to the lack of loan security, this type of business financing is easier and faster to process so borrowers do not need to wait for a good amount of time before they can get funded.
Types of unsecured business loans
There are several types of financing available for businesses that do not require any security as loan collateral. Understanding these options and the pros and cons they offer is crucial prior to getting started with the application process. Making comparisons on what each of these financing types offers will help you maximise their value.
Standard business financing
The most common type of financing for businesses, it is known for its basic repayment structure along with the interest and fees which are paid within a predetermined term.
Lines of credit
Compared to standard loans, where a lump sum is accorded to the borrower which then gets paid off within a set term, lines of credit see lenders approving borrowers a line of credit up to a certain limit. This arrangement allows the business to withdraw funds whenever necessary and up to the limit that the lender has set. Borrowers will then pay interest on whatever amount they have used. This arrangement offers considerable flexibility as the business only gets to pay for whatever funds they use.
Also, this is a revolving credit line, they will remain open for as long as they are viable and the limit has not yet been met. This does away with the hassle of having to apply for financing every time additional costs crop up. Interest rates involved with these types of arrangements, however, tend to be higher. So, it may cost you more in the process since there will still be fees charged to you despite not using the line every single month.
Similar to lines of credit, the only difference is that they are not coming directly from lenders but from a business transaction account. With this, a business operator can withdraw from his account up to a set limit. The application and funding process involved here is similar to that of lines of credit and emergency loans.
With overdraft facilities, there won’t be a set repayment schedule. This allows the business to pay off the debt at a speed that it deems most convenient. Interest is only required for every pay cycle as well. This arrangement also comes with very high interest rates, however, so clearing the debt off as soon as you can is still the way to do it.
This funding can be used by businesses that are looking for ways to settle outstanding client invoices. There are 2 types of invoice financing you can take advantage of if you ever need to sign up for one:
- Invoice factoring: This involves getting the outstanding invoices sold to an outside organisation who will then advance around 90%-95% of the value over to you. Whatever the remaining amount is will then be passed onto the business after the customer pays the invoice. The service fees are also deducted from the rest of the amount. So, technically, it cannot be really considered a loan type.
- Invoice discounting: Essentially, this is like a line of credit that is secured and taken out by whatever the value of the outstanding invoice is. This allows you to secure up to 90% of their value. In a way, this arrangement is similar to secured finance however, it does not require any asset for collateral.
Comparing unsecured business loans
Check out the borrowing range
If you are hoping to get approved for a larger loan amount, see to it that the lender can offer you the amount you need. While there are lenders who may be able to offer up to $500,000, there may be those whose limit is set at $250,000. This is true if you are only looking to borrow a smaller amount. Some lenders set their minimum at $5,000 while others have set the minimum borrowing amount at $10,000
Look into the loan terms
Always have a good idea of what you can comfortably pay as a business owner. You want to make an informed decision, especially since lenders tend to set differing minimum and maximum borrowing amounts. If you would prefer a longer loan term to pay off the debt, then make sure that the lender you are looking at can offer it. In addition, longer loan terms will cost you more so, if you can afford to pay the debt off within a shorter period, then do so and save more in the process.
Compare fees and interest rates
The costs attached to the loan should also be carefully assessed. While it is possible to claim interest charges on tax, application costs, annual costs and the like are not tax-deductible. Always take the time to look for loans that will make it easier to manage cost-wise in relation to the type of business you own.
Find out the loan eligibility criteria
Always make sure that your business meets the specific eligibility criteria that the lenders have set. Different lenders will have their own set of eligibility requirements. For instance, minimum operating time may vary from 6-12 months. Minimum revenue generated could range from $5000 monthly to $1 million annually. The types and amounts of documents required which involve financial papers and the like can significantly vary too.
The loan application process
Compare your choices
Take advantage of the presence of a variety of providers out there that can offer unsecured business loans. Do some due diligence before sending in your application so you can make an educated decision. MoneyScout is a lender finder and we will help ensure that you can get paired with the best lender with the best loan offers
Prepare the necessary documentation
Find out the specific documentation requirements that the lenders need from you. You will likely need the GST and ABN registration, photo IDs as well as bank statements for your business for a set number of months.
Send an application
After you have all the documents completed, send the loan application in and we will work towards getting you paired with the right lenders. We will do our best to get a response within an hour or so.
Sign the loan agreement and wait for the funds
Once you are successfully paired with a lender, they will send you a loan contract so you can review the terms and conditions. If you agree with the whole contract, sign it and return it to the lender. They will then process the fund transfer into your business account.