Unsecured Small Business Loans Australia

Consider your unsecured loan options with Savvy by comparing from a range of lenders across Australia.

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, updated on July 26th, 2023       

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One of the more common terms you’ll come across when talking business finance is an unsecured loan, but what is an unsecured business loan, how does it work and how do I compare my options? Learn about loans for small Australian businesses with this useful guide. 

How do unsecured small business loans work in Australia?

An unsecured business loan is a type of loan which requires no security or collateral, meaning you’re not offering a significant asset, like a property, as security on the loan. They’re a very common type of loan in Australia today, and you can secure one with most business lenders, from banks to small online lenders. They’re also one of the easiest business loans to secure.

For most lenders, loan applications are about risk – the chance that a loan won’t get repaid and the lender will lose money. Therefore, lenders are often quite cautious with loan applications unless they can be confident there’s little risk. An unsecured loan, however, works around this issue. By charging higher rates on the loan, they lower the sense of risk to the lender associated with not having any collateral.

All of this means that lenders can be a lot more relaxed about approving unsecured loans – making them one of the most accessible types of business loans on the Australian market, and far more accessible for new businesses and sole traders. Risk will still affect things like the interest rate you’re offered, but with an unsecured loan it’s not normally a barrier to getting approved.

In Australia, unsecured loans are also geared to be far more short-term than secured loans – intended to be paid off in a matter of years (or even months) rather than a decade or more. This makes them a useful problem solver loan – providing finance for a self-employed business owner, which can be tailored to a specific business need and be paid off sooner rather than later.

What are the advantages of unsecured small business loans?

There are various factors that make unsecured loans an attractive prospect for businesses. Firstly, the application is generally far simpler, and the lender doesn’t need to spend days (or even weeks) going through your finances and business records. This also means unsecured loans can be turned around more quickly – normally within a few days, sometimes within hours.

Because lenders are far more tolerant of risk for an unsecured loan, they’re generally accessible to customers that might struggle to get other types of loan approved. For example, lenders will often be far more accepting of a business’ credit rating when assessing an application for an unsecured loan – they're more interested in whether you can currently make your repayments and whether you have any recent defaults than your past credit history.

One of the most significant advantages of an unsecured loan, of course, is that there’s no deposit or collateral required. Some lenders may charge a fee at set-up, but this will normally be quite small (a few hundred dollars is common). This, combined with the more open approach to applications, makes unsecured loans potentially one of the best loan choices for a small business or start-up in Australia.

If you’re on the lookout for an unsecured loan, Savvy’s a great place to start. You can compare business loan options from some of Australia’s top lenders all in the one place and find the best fit for your business.

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How do lenders assess your unsecured business loan application?

Frequently asked questions about unsecured business loans

In Australia, how much can you borrow with an unsecured business loan?

The amount a lender could offer your business will be specific to you and the lender in question. The lender will examine your business’s situation before deciding on a maximum amount to offer, but in Australia lenders can generally offer in the area of $200,000 to $300,000 to the right customer. However, you might decide your business only needs a small, quick cash advance of just $5,000 to be repaid in a short timespan.

Are business loans available to sole traders?

Yes – you can apply and get approved for a business loan as a sole trader. Provided you meet all the eligibility criteria and show that your business can support your loan’s repayments, you can get approved for funding for your tradie company or your side hustle.

How small can an unsecured business loan be?

Unsecured loans can potentially be for quite small amounts – down to only a few thousand dollars. This can make them handy for specific business needs, but you need to be careful not to apply for too many – the hard credit checks each loan application generates can put a dent in your business’ credit score.

How quickly can I get an unsecured business loan in Australia?

Unsecured loans are among the quickest business loan options on the market. Although speeds vary from lender to lender, most can turn an unsecured loan around in a few days. Some can even do it within a one business day.

Is it worth offering a deposit on a small unsecured business loan if I'm able to?

It’s not necessary to provide a deposit for an unsecured business loan, but it is a possibility and it can increase your chances of approval. You might even find that because it lowers the risk for the lender thanks to your investment in the loan, it improves your interest rate a little.

In Australia, can I get a small unsecured business loan for a start-up business?

Yes. Unsecured loans are available for start-up businesses. There are also specialised types of loan specifically to provide finance for start-up businesses.

Does the state my business is based in affect my loan application?

No – you could be running a business and applying for a loan in Adelaide or looking for business financing in Brisbane and stand the same chance of approval. Online business lenders can approve applications no matter where you’re based, making them widely available to operators all around the country.

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