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Five Common Unsecured Business Loans in Australia

unsecured business loans in Australia

If you are running a growing business, access to funds can be a challenge – especially if you don’t have property you can use as collateral. Fortunately, there’s a range of unsecured business loans in Australia that you can choose from. If you need funds to grow your business, here are some unsecured business loan options available.

Business loan from family and friends

In Australia, unsecured business loans from family and friends are a popular form of business finance. Unless you agree to offer collateral for the loan, it falls into the unsecured business loans category. When getting a business loan from family and friends in Australia, be sure to keep it professional.

This means creating an agreement on paper and having all parties sign it. The agreement should include the payment frequency, amount of payments and term of the loan. If you agree, repayments could be based on cash flow. This way you won’t need to pay during times when you don’t have the cash flow to cover it. Find out more about the pros and cons of getting a business loan from family and friends.

Personal and business credit cards

You sometimes hear stories about successful businesses in Australia that were funded in the beginning using credit cards, which can be classified in the unsecured business loans category. Be careful when using a credit card and make sure you can meet the monthly payments.  Although a personal credit card is not secured by collateral, you are ultimately liable, and your personal assets could be at risk if you can’t pay.

If you are considering a business credit card, you will need to specify who is liable for the debt. It could be you as a sole trader, you and a business partner, or your company. Learn more about business credit cards.

Business overdraft

Business overdrafts are popular as unsecured business loans in Australia. A business overdraft is attached to your regular transaction account and it enables you to carry a negative balance on your account. You pay interest on the amount that is overdrawn plus regular fees. There are also secured overdrafts which are usually secured by the borrower’s property. With an unsecured overdraft, you won’t be able to borrow as much as with a secured overdraft, and you will pay a higher interest rate. Find out more about both secured and unsecured business overdrafts.

Business line of credit

A business line of credit is similar to a business overdraft, except it’s usually not directly connected to the transaction account of the business. A business line of credit can be secured or unsecured. As with other unsecured business loans in Australia, you will pay a higher interest rate.

Online unsecured business loans in Australia

When approaching banks, most small businesses don’t qualify for secured term loans (which require a large amount of paperwork and can take up to eight weeks to determine if you have been approved). The lack of options for small businesses looking for unsecured business loans in Australia has led to the rise of online lenders serving small business.  

Based on leading-edge technology, companies like Moula can analyse your finances safely and securely online and provide an answer on whether it has been approved within 24 hours. If approved, funds are transferred into your account immediately.  Go to Unsecured Business Loans for more information.

Get comprehensive information on business loans in The Complete Guide to Business Loans in Australia. Also, check out our business loan calculator to get an estimate of principal and interest repayments.


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