Unsecured Business Loans

An unsecured business loan is a loan that:

  • Requires no collateral
  • Utilises a financial product that lends against the cash flow of your business.

If you start a new business or you want to expand an existing one, you may consider third-party financing, such as a business loan.

There are two types of business loans: secured loans and unsecured loans. While a secured business loan is backed by collateral, an unsecured business loan is not. Obtaining an unsecured business loan has advantages and disadvantages.

How we help you to get the Best Unsecured Business Loan

At Hubbe we have partnered with various leading lenders across the country to help your business find the perfect solution that matches your business finance needs. We help you in connecting your business to a hub of lenders which enables you to choose from a wide variety of offers from all the different lenders. As soon as you decide to move on with the deal of your choice the credit team will assess your application and provide you a decision within hours. If fully approved you will be notified and instructed on the terms and conditions, also the loan agreement will be sent to you electronically to review, sign and send back electronically. Once received with all your banking details, the funds will be released and credited into your account. This entire process is very swift and you could have the funds in your account in as quickly as 24 hours.


Why use Unsecured Business Finance?

Access the funds you need without tying up your assets

Reduced Risk

With little or no recourse offered to lenders, you’ll be able to take on an unsecured business loan without the stress of putting assets at risk. They can also act as a viable, accessible option for businesses with little or no tangible assets.

Quick Access to Capital

With no security needed to source these loan types, you’ll often find that unsecured loans can be assessed and approved far more quickly than other financing options. Many of our lenders aim to finalise applications within just a few hours.

Affordable Repayments

The lender will build your loan around the financial circumstances of your business, ensuring that the repayments remain transparent and affordable.

Specialist Lenders

We’ll only match your business with unsecured business loan lenders who are experienced in providing these loan types to your sector. You’ll not only have a higher chance of acceptance but will be able to draw on their years of experience helping businesses just like yours.

Secured vs. Unsecured Business Loans

When you’re searching for the right business loan, you’ll be faced with two choices: an unsecured loan or a secured loan. What’s the difference? An unsecured business loan is a loan made to a business without collateral. A secured small business loan is a loan made with something used as collateral for the lender to recoup the losses if the business defaults.

Collateral

Secured — Collateral is a must. Typically it is something of value equal to that of the loan amount. It acts as the insurance for the lender.

Unsecured — These business loans are given without any security from the borrower other than their credit rating and the financial strength of their company. A lender would judge their ability and history of repaying debt.

Rates & Terms

Secured — As secured loans are less risky, hence often the interest rates are lower than other types of loans. They are also typically longer term loans than an unsecured loan. The amount of the loans will vary based on the amount of collateral available, but can be very high.

Unsecured — Unsecured loans are considered short-term streams of financing. To minimize the risk exposure, the lenders allow a tighter re-payment schedule for the borrowers to adhere to. Flexible repayments include daily, weekly, fortnightly or monthly repayment options.

Unsecured Business Loans for New Business

  • High approval rate for new business owners with a registered ABN and trading for more than 6 months.
  • Easy approvals of an unsecured business loan by demonstrating the ability to repay the loan.
  • The key benefit of unsecured business loans is NO collateral or security is required, protecting your assets.
  • Unsecured Business Loans are usually used by businesses for general cash flow purposes.
  • The advantage of using unsecured business loans is fast settlement within 24 hours.
  • With unsecured business loans the lender takes into account the cash flow being generated by the business to provide an approval.

The Advantages of an Unsecured Business Loan:

  1. No collateral required.
    Drawing an unsecured loan does not require the borrower to present some personal, or business asset as collateral. This contrasts with secured loans, where lenders disburse the loan only after assessing the property being presented as collateral — and can repossess the property in case you default on your payments.
  2. Amount of loan not constrained by the value of an asset.The amount being disbursed as secured loan usually depends on the property or asset being presented by the borrower as collateral. The loan amount is generally around 60 to 70 percent of the market value of the asset — as assessed by the lender. Unsecured loans are not constrained by such conditions, and the amount sanctioned by the lender depends purely on the cash flow of your business.
  3. Faster turnaround time.
    Unsecured loans have a much faster turnaround time. Since lenders don’t need to assess the value of a physical asset, the application can be completed and processed online. The loan can be released to your account in as little as 24 hours after you put in your completed application. This makes unsecured loans a lifesaver when you need an urgent infusion of cash to prop up your business.
  4. Builds up your credit history.
    If you manage to successfully pay off all the instalments of your unsecured loan, it will help build a credit history for your business and make the process of obtaining future loans easier.
  5. Your business assets are safe.
    Lenders often turn to the seizure of business properties in case the borrower is unable to repay a secured loan. Since there is no collateral hypothecated to the lender, there is no possibility of seizure of a property.

Cons of Unsecured Loans

  1. Higher rates of Interest.
    Unsecured loans represent a fair amount of risk for lenders, since they don’t have any collateral to seize in case of a default, Lenders usually charge a significantly higher rate of interest for unsecured loans to offset the risk, as compared to a secured loan. The rate of interest depends on various factors such as the time in business, industry type, cashflow and the risk profile.
  2. Smaller loan amount.
    In absence of a collateral which poses a higher risk for the lender, most lenders usually are comfortable disbursing loan amounts of upto 100% of your average monthly turnover.
  3. Shorter Tenures.
    To minimize the risk exposure, the lenders allow a tighter re-payment schedule for the borrowers to adhere to. Flexible repayments include daily, weekly, fortnightly or monthly repayment options.
  4. Liability.
    An unsecured loan does not mean that you can simply walk away without repaying what is due
  5. Loan eligibility
    Unsecured business loans do not require you to put your personal assets at stake. The business must be trading for at least 6 months under an ABN an should be generating at least $5000 in revenue per month.Conclusively, unsecured business loans can be the best, or the worst choice for you — depending on several variables including your financial condition, credit score, the purpose of the loan, and so on. As such, it may be a good idea to sit down and discuss your requirements with your accountant on what is best for your business or alternatively you can call 1800 864 769 for an obligation free consultation with a lending consultant.

Small businesses can use the Unsecured Business Loan towards

  1. General working capital
  2. Purchase stock in bulk to get bulk discounts
  3. Deposit for shipments of stock, equipment etc ordered
  4. Tendering for projects
  5. Buy an existing business or open up a new branch
  6. Consolidate Debts
  7. Marketing Expenses and advertising
  8. Pay wages during peak season
  9. Renovation on refurbishments expenses

Other Small Business Financing Options

Aside from an unsecured business loan, merchant cash advances and lines of credit are also viable options for financing.

A Merchant Cash Advance exhibits an innovative substitute for a conventional small business loan. It helps you meet your business objectives by allowing you to access the working capital from the lender, who basically uses your projected future debit and credit card sales to offer you working capital.

The benefit of using an MCA is the flexibility aspect. It allows you to repay your advance based on the daily sales income. During the repayment period of your advance, a small percentage of the debit/credit card sales is retained until you complete paying off the advance. Repaying based on your daily sales income enables you to make smaller payments in the wake of a cash flow slowdown.

You may need a Merchant Cash Advance if:

  • You need flexibility
  • Your business accepts customer payments in the form of credit cards.
  • You need a simple and swift financing solution.
  • Your sales fluctuate
  • You’re not interested in paying monthly minimums.

An merchant cash advance allows you to qualify for business cash advances based on factors including the repayment potential, past credit history and the existing business volume.

The short and simple approval process makes merchant cash advances an easy and convenient way of accessing funds. When applying for a merchant cash advance, you should keep in mind that lenders will be looking at your credit score to calculate the loan you can access at that particular time.

If you have a higher credit score, you are likely to qualify for a higher amount of money accompanied by a lower interest rate while if your credit score is lower, you are likely to qualify for a lower amount of money accompanied by a higher interest rate.

You can access an agreed amount whenever you need it. A business line of credit entitles you to pay interest only on the funds drawn, not on the entire facility.

Some finance companies also offer similar services called lines of credit to certain types of businesses. Hubbe can assist you in getting fast, flexible funding to business that needs it. For businesses looking for funds to get in on an amazing deal on inventory, or needing to ramp up personnel for an upcoming promotion, lines of credit can make things happen. That new piece of equipment to make your business more efficient can be a reality with a line of credit.

There is also a relatively new type of financing available in the unsecured financing market. Although it is not completely unsecured, it may provide the best of both worlds for both lenders and borrowers alike.

The alternative option available is a partially secured business loan. A growing number of lenders now offer partially-secured loans for business, and for many entrepreneurs and lenders, this really could be the most attractive option available.

This type of business loan provides borrowers with the ability to be approved for a business loan without having to put up too much collateral. This tends to make lenders a little more willing to lend because they are still somewhat protected by the collateral that is secured.

In addition, these loans are usually not forgiven by bankruptcy courts in their entirety, so lenders can feel more secure knowing that at least some, if not all of their money, is recoverable.

While an unsecured loan may not be right for every business, it may be a viable option for yours!

Frequently Asked Questions:

We can assess any business with an Australian ABN that has been trading for 6 months or more with monthly turnover of at least $10,000.
Once you sign the Business Loan Agreement, the funds are transferred that day and should be in your account the next morning. Usually the entire process takes only 24 hours.
The loan term for an Unsecured Business Loan is 3-24 months.
Our process is simple and can be completed online. We require a completed Application Form, Drivers license and 3-6 months of bank statements to process business loan applications under $150,000. For business loans of $150,000 or more, we require Drivers License, 12 months bank statements, Interim & audited company financials (Balance sheet, Profit & Loss), Accounts payable & receivables ledger.
The total payback amount of the loan is determined during the credit assessment after which you will be advised of how much you can borrow repayments, any fees and interest. The interest rate for an unsecured business loan depends on the strength of the business, the experience of the owner, and the business’s operating cash flow.
Our business loans are generally sized according to the business turnover and they range from $5,000 to $500,000.

Grow the business you want.

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* Deferred payment offer available to new and existing approved customers on a new Prospa Small Business Loan settled between 10 June and 30 June 2019 inclusive. No loan repayments required from the eligible loan settlement date to 21 July 2019 (inclusive). Loan repayments begin on 22 July 2019. Total loan repayment term will be extended by the time equal to your loan payment deferral period. Offer only available to customers connected to electronic bank statements. Offer only available to businesses established and operating in Australia. Offer not available in conjunction with any other Prospa offer. Offer may be withdrawn without notice. Standard credit approval criteria, fees, terms and conditions apply.

** Lowest rate is 9.9% p.a. simple interest rate. It uses a risk-based pricing model to determine applicable rates using factors such as industry, years in business, cash flow and creditworthiness. Rates for small business loans range from 9.9% to 26.5% p.a. simple interest rate. The lowest rate is only available to applicants with the strongest cash flows, business experience and credit ratings. A $10,000 12-month loan with a simple interest rate of 9.9% p.a. would have a total repayment amount of $10,990 and an Annual Percentage Rate of 17.5%. Approval is subject to credit assessment. Fees, terms and conditions apply. These rates apply to small business loan product only.

Lowest rate is 14.95% Annual Percentage Rate (APR). It uses a risk-based pricing model to determine applicable rates using factors such as industry, years in business, cash flow and creditworthiness. Rates for Line of Credit range from 14.95% to 29.95% APR. The lowest rate is only available to applicants with the strongest cash flows, business experience and credit ratings.Approval is subject to credit assessment. Fees, terms and conditions apply. These rates apply to Line of Credit product only.

* Deferred payment offer available to new and existing approved customers on a new Prospa Small Business Loan settled between 10 June and 30 June 2019 inclusive. No loan repayments required from the eligible loan settlement date to 21 July 2019 (inclusive). Loan repayments begin on 22 July 2019. Total loan repayment term will be extended by the time equal to your loan payment deferral period. Offer only available to customers connected to electronic bank statements. Offer only available to businesses established and operating in Australia. Offer not available in conjunction with any other Prospa offer. Offer may be withdrawn without notice. Standard credit approval criteria, fees, terms and conditions apply.

* Lowest rate is 9.9% p.a. simple interest rate. It uses a risk-based pricing model to determine applicable rates using factors such as industry, years in business, cash flow and creditworthiness. Rates for small business loans range from 9.9% to 26.5% p.a. simple interest rate. The lowest rate is only available to applicants with the strongest cash flows, business experience and credit ratings. A $10,000 12-month loan with a simple interest rate of 9.9% p.a. would have a total repayment amount of $10,990 and an Annual Percentage Rate of 17.5%. Approval is subject to credit assessment. Fees, terms and conditions apply. These rates apply to small business loan product only.