The Best Unsecured Business Loans Compared

Unsecured business loans are fast becoming the first choice for small business owners when it comes to raising business capital. This is because the terms and conditions which come with conventional (secured) lending options can often be very restrictive on a business and its operators.

Unsecured Business Loans don’t require long-term trading history or security and suit new businesses looking to get their feet off the ground, or established businesses looking for short term cash flow or capital to grow.

Benefits typically include:

Loans from $5k to $300k

same day settlement

Loan terms 3 to 24-Months

up to 60 for equipment

Fast 24-Hour Loan Approval

approval outcomes are fast

Minimal docs required

no need for full financials

An unsecured business loan may be the answer if you don’t want to put any assets at risk.

Both new and established businesses often can come up against problems when attempting to get a business loan from the bank. Even if a business has a proven track record of financial success there can still be a lot of red tape. Plus, not all businesses have a host of assets that they can put up as security on a business loan.

Whether new or established do you really want to put your assets up as security?

New businesses rarely have the assets required for use as security on a loan. Plus, established businesses often don’t want to put personal assets (such as the family home) up as security. In either of these scenarios, getting a loan from a bank can seem impossible. Unsecured business loans are the solution.

These types of loans are a great option for new businesses and companies that don’t have large asset pools. They’re also an ideal choice for businesses that have assets but don’t want to place them at risk.

The Pros
  • You require no security or collateral to gain access to this loan type. That means you take on less risk while still getting the money that you need.
  • The application process is often much simpler, especially when done online. You may be able to get approval in a matter of hours.
  • Small businesses gain access to funds that the major lenders won’t make available to them.
  • There are no asset-based constraints applied to the amount of money that you can borrow.
  • Successfully repaying an unsecured loan helps your business build a stronger credit rating. This will prove useful for future loan applications.
The Cons
  • You will typically be charged a higher interest rate for unsecured business loans. That’s because the lender is assuming more risk when offering an unsecured loan over more traditional secured options.
  • You may have to pay additional fees for an unsecured loan than you would pay with a secured one. However, these fees vary, if they’re charged at all, depending on the individual circumstances of the customer.
  • While you remove the asset-based constrictions, often the loan amount offered will be less than secured options.
  • Unsecured loans typically have shorter repayment periods. Again, this is a way of mitigating the risk created due to there being no security on the loan.
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What is an unsecured business loan?

The easiest way to think of it is to split loans into two categories. First, you have secured loans. These are the loans you’re likely already familiar with. With this type of loan, you select an asset to use as security for the money that you borrow. For example, your business may own a number of properties. You could use one of these properties as security on the loan. If you default on the loan repayments, the lender can then claim ownership of that property to replace the money you haven’t repaid.

Second, you have unsecured business loans. With this loan type, you don’t place an asset up as security on the loan. As a result, the lender assumes much more risk. However, that extra risk comes at a cost to the borrower. Lenders will usually charge higher interest rates for this loan type. That’s because they’re not able to force the sale of your asset if you default on the loan. The higher rate offers some level of protection against this possibility. Plus, it allows the lender to make a larger profit on the loan amount.

The good news is that the positives often outweigh the negatives. While you face higher interest rates, you also deal with less hassle when applying. There are fewer paperwork requirements, which means it’s possible to get approval very quickly. This speed makes unsecured business loans a great choice if you’re dealing with a short-term cash flow issue.

The type of loan that works best for your business depends on your circumstances. Unsecured loans give you more immediate access to money at the cost of higher interest rates and shorter loan terms. You have to decide if the trade-off is worth it for your business.

Secured Versus
Business Loans

Regardless of the amount you wish to borrow, it’s important you understand the difference between a secured and unsecured loan. A sound understanding of the differences will allow you to make an informed decision when borrowing money for your business.

unsecured business loans comparison

Secured Loans

Secured loans (typically provided by a bank or large financial institution) require a guarantee be provided as security that your loan will be repaid. Types of collateral often include; Family home, car or boat which is owned outright, or a percentage of ownership within your business.

If you were to fail in your responsibility to repay your loan, the bank or financial institution is then entitled to take ownership of your collateral in order to recoup the loss incurred.

Unsecured Loans

Quite different to your more traditional secured loan, an unsecured loan requires no capital be placed against the amount borrowed. This can make it far easier to secure funds for your business without having to risk valuable personal assets.

Secured Versus
Loan Comparison Table
Unsecured Loans Secured Loans
Loan Term (Length) Typically 3 – 24 Months Loans up to 5-years
Requirements ID check (Licence)
3-Months in business
Regular cash-flow
ID Check (Licence)
12+ Months in business
Full business financials
Collateral such as family home or other asset
Full business credit check
Time to Settlement Approved and settled in 24-hours Typically takes 2-3 weeks
Finance Amount $5,000 to $300,000 No limit
Unsecured Business Loans from $5,000 to $300,000

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The top Three Types of
Unsecured Business Loans

There are so many different unsecured lending options available that you could spend days wading through them all. We have summarised the top three options most businesses opt to use.

Unsecured Business Loans Compared

Unsecured Business Loans

Quite different to your more traditional secured loan, an unsecured loan requires no capital be placed against the amount borrowed. This can make it far easier to secure funds for your business without having to risk valuable personal assets.

A slightly more flexible option allowing the customer to redraw funds up to the total credit facility limit provided. This can be great for business with irregular cashflow.

Unsecured Equipment & Vehicle Finance

With longer terms available than other unsecured lending options this suits a customer who is looking to purchase a specific piece of equipment.

Unsecured Loan
Comparison Table
Loan Type Benefits & Suitability
Unsecured Business Loan Facility term 3 – 24 months
Any business purpose
Top-up & early payout options
An unsecured business loan is typically repaid over an agreed period (up to 12-months). These types of loans are usually to fund a specific business task, project or for general cash flow. With this type of loan you know exactly what the repayment commitments will be and can budget accordingly.
Unsecured Line of Credit Facility term 12 months (Revolving)
Typically used as a cash-flow facility
Line of credit with no line fees
An unsecured line of credit is perfect for businesses which have irregular cashflow. A line of credit is a flexible form of unsecured finance which only incurs fees on the amount which is drawn upon.
Unsecured Equipment & Vehicle Loans Facility term up to 60-Months (Revolving)
Balloon option
Can be more affordable due to longer terms
Unsecured equipment finance (otherwise known as rent to own) allows a business to rent equipment with the option to purchase at the end of an agreed upon term. This flexibility can allow businesses to secure expensive equipment they require without significant effect on their cash flow.
Need some cashflow? Get started with an unsecured loan now.

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How do I apply for an unsecured business loan?

Every loan application process differs depending on the applicant’s circumstances. However, there are some common steps that everyone takes when applying for an unsecured business loan with us.

  1. Complete the Business Portion of Your Application

    We’ve separated this step from the general application step for a good reason. The nature of your business can play a large part in determining the success of your loan application. We’ll ask you several questions related to your business as part of the application. These include the following:

    • What is the purpose of your loan?
    • How much money do you need to borrow?
    • What industry do you work in?

    Please answer these questions truthfully as a lack of transparency could harm your application.

    The answers to these questions will also help us to determine if we need to ask further questions. For example, we may need to talk to you in more detail if you operate within a high-risk industry.

  2. Finish Your Loan Application

    Once you’ve completed the business side of the application, it’s a simple case of filling out the rest. We will ask for some personal details, in addition to some financial figures.

    You will also need to provide proof that you’re borrowing for a legitimate business. Keep your New Zealand Business Number handy so that you can enter it when needed.

  3. Provide Us With Some Bank Statements

    You’re not quite done with the application when you’ve finished the written portion. We also require you to provide 3 months’ worth of business bank statements.

    Our online application process will prompt you for these documents at the appropriate time. They act as part of the proof that there is sufficient cash-flow within the business to service the loan facility. We go into more detail about why we need to see your bank statements in the FAQ section below.

  4. We Consider Your Application

    With all of your documents submitted, it’s time to sit back and wait for our team to assess your application.

    We will review the information you’ve provided to ensure you meet our lending criteria. If you do, you will receive notification of pre-approval for your loan. Full approval typically follows, unless a credit check prevents acceptance of your application.

    The approval process usually takes less than 24 hours.

  5. Confirmation

    Once the loan’s fully approved, it’s just a case of singing the documentation.

    You will receive the money the same business day of signing the loan agreement. From there, your repayments will begin based on the criteria you agreed to for the loan. Typically, you’ll repay a set amount each day, though some of our unsecured loans offer weekly or monthly repayment plans.

Loan Requirements

Before you rush off to make an application, it’s important to note that we have some standard requirements.

These include the following:

  • You must have been in business for at least six months. This may get lowered to three months in special circumstances.
  • You must have a New Zealand Business Number to prove your company has registration.
  • Your company must generate a minimum turnover of $60,000 per year.
  • You must have an online bank account.
What is my borrowing capacity?

At Unsecured Finance New Zealand, we offer loans of between $5,000 and $300,000. However, the amount that you’re able to borrow depends on a number of factors.

These include the following:

Your Credit History

A poor credit rating will impact the amount of money that you can borrow. Typically, you won’t be able to borrow as much as somebody who has a good rating. The good news is that you can improve your credit rating if you make on-time repayments on the amount that you can borrow.

How Long You’ve Been in Business

Owning a new business will not prevent you from getting an unsecured business loan. However, it will have an effect on the amount you can borrow. Usually, this means that new businesses can’t borrow as much as established ones. As time goes on, your borrowing capacity will increase accordingly.

Your Average Monthly Revenue

Lenders that offer unsecured loans value business cash flow above all else. In other words, we want to see that you have the ability to make the repayments on your loan. A higher average monthly revenue gives you access to larger loan amounts.

How You Collect Payment From Customers

You may not initially see why this is a factor that determines how much you can borrow. However, things become clearer when you consider how your payment methods affect your cash flow. If you accept payments upfront and in cash or via credit card, you have an immediate source of income. This may put you in a better position in regards to what you can borrow. However, if you issue invoices, you may have to account for payment delays. This includes the time taken to create the invoice and any grace periods that you offer to customers. We must also consider the possibility of late invoice payments affecting your cash flow.

Need some cashflow? Get started with an unsecured loan now.

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Unsecured Business Loan interest rates explained

Lenders that offer unsecured business loans take on more risk. They don’t have the security of an asset to fall back on. That means they have to account for that extra risk in their calculations. This calculation typically manifests as a higher interest rate. The more risk your business presents to the lender, the higher your interest rate on an unsecured loan will be.

For example, let’s assume that you have a business that’s just hit the one-year mark. It’s likely that you have inconsistent cash flow, as well as the initial startup costs to absorb. Plus, you obviously don’t have a track record of business success beyond whatever happened in your first year. This places you in a high-risk position. As a result, you will likely pay a higher interest rate on an unsecured loan.

Let’s look at a few examples of how an unsecured lender may look at and review a business loan application to determine rate.

Typical start-up / newly trading business

Time in Business – 8 months
How does the business receive payments?
80% through invoicing
10% direct cash at point of purchase
10% electronic funds transfer at point of sale (EFTPOS)

In this example, the business only has 8 months of financial records, which creates risk. Furthermore, it collects the majority of its income via invoices. This creates the potential for delays and missed payments on behalf of the business’ clients. As such, this business presents a higher risk. It’s likely they would receive a loan with a slightly higher interest rate than that of an established business.

Established business with consistent revenue

Time in Business – 3 years
How does the business receive payments?
30% through invoicing
20% direct cash at point of purchase

In this case, the business has operated for a much longer time period. They also collect the majority of their income via cash transactions and EFTPOS. This means they have access to more immediate sources of cash flow. As such, the business presents less risk and will likely achieve a more competitive interest rate.

Looking Beyond Risk

It’s clear that bringing increased risk to the table increases the cost of your business financing. A traditional bank loan would usually offer lower interest rates. However, that added cost also unlocks some benefits that traditional lenders don’t offer.

For example, the young business in the first scenario we presented likely wouldn’t even get a loan in their situation. The high risk they present would lead to most lenders turning their noses up at them. An unsecured business loan helps this type of business access the funds that it needs.

Beyond that, you have the benefits of speed and a simple application process to consider. You can achieve acceptance for an unsecured business loan within 24 hours. It can take weeks, or even months, for a bank to reach a decision on a traditional loan.

In the end, it comes down to what works best for your business in its current situation. Want to know more about what interest rate your business would be able to receive? Fill out the simple application form on our website and a member of our team will be in touch to answer your questions.

In what situations can an Unsecured Business Loan help?

Perhaps you’re wondering if an unsecured business loan is right for your business. Again, it all depends on your circumstances. To help you to make your decision, let’s look at some potential scenarios where this loan type can help.

The Maintenance Issue

Stephen runs a removal firm that has three trucks. The business has been in operation for about eight months and he’s achieving a decent level of success. Of course, any issues with one of those trucks can cut the firm’s ability to earn by a third.

Unfortunately, one of Stephen’s trucks ran into some issues. It required some extensive maintenance work and had to get taken off the road until the work got completed. Stephen’s problem was that he didn’t have the immediate funds to get the maintenance work done. He needed $10,000 to get the truck operational again.

Having one of his trucks off the road cost him a lot of business. He had orders coming in from clients but he had to turn them away due to his lowered capacity. Stephen initially approached some traditional lenders to borrow the money. However, they all refused him based on the fact that he’d been in business for less than a year. The business presented too much of a risk, even though it could prove that orders were coming in.

An unsecured business loan offered Stephen the funds that he needed. Within 24 hours, Stephen received approval for his application. Another 24 hours later, he received the money, which he put towards repairing his truck.

With the truck back on the road, Stephen can now service more clients. This extra income allows him to repay his loan quickly. In this scenario, Stephen needed a short-term cash injection to solve a capacity problem. With that problem solved, the business returns to maximum capacity and can move forward.

The Seasonal Business Issue

Amy owns a landscaping business that makes use of subcontractors to fulfil its work orders. Of course, each of these subcontractors requires payment. Plus, Amy has to ensure they have all of the equipment they need to complete their jobs.

The issue she runs into is that landscaping is a seasonal business. During the winter months, poor weather conditions make it difficult to complete large jobs. As such, the company’s revenue tends to dip during the winter and rise again during summer and spring. As spring approached, Amy needs an injection of cash to pay subcontractors and buy equipment for some customer orders. At this point, she’d been in business for about three years.

However, she collects payments via invoicing, which creates the potential for delays. Plus, the seasonal nature of her business creates peaks and troughs in regards to revenue. Finally, she felt uncomfortable with the idea of placing any of the equipment she owned up as security on a loan.

All of these are risk factors that made it difficult for her to get a traditional loan. Unfortunately, this led to many traditional lenders rejecting her. If she didn’t find a loan quickly, she would have to refuse several jobs during one of the peak times for her business.

Again, an unsecured business loan proved to be her answer. Amy received fast access to money that she could use to fund the business during the initial seasonal rush. With her workflow secured, Amy quickly repaid the loan and was able to take advantage of heightened demand during summer and spring.

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Common Questions
  • What is an unsecured business loan?

    An unsecured business loan differs from a traditional loan because you don’t need to place an asset up as security. Instead, the lender assesses whether you can access the loan based on the risk your business presents.

    The benefit to this is that your assets aren’t at risk if you default on the loan. The lender cannot claim your property, equipment, or any other assets as part of their repayment.

    However, this does not mean that the lender cannot take other actions against you if you default.

  • Why do you require my bank statements?

    We need to conduct checks on your ability to service your unsecured business loan. As a lender, we take on more risk when we provide an unsecured loan. Your bank statements serve as proof that you have the ability to make repayments.

    This need for proof is also why we only accept the original statements, rather than copies. It’s possible that an applicant may alter a copy to provide an unrealistic picture of their financial situation. We require complete transparency on your part so that we can assess your situation accurately.

  • What Interest rate can I expect?

    As explained above, this depends on several factors. The age of the business has an effect. An established business will likely obtain a lower interest rate, assuming it has a healthy cash flow.

    How you accept payments will also have an effect. Businesses that predominantly accept payment via invoicing may face higher rates. We will provide you with all of the relevant information relating to your interest rate when you make your application.

  • How much can I borrow?

    We offer loans of between $5,000 and $300,000.

    However, the amount that you can borrow depends on several factors. These include the business’ age, health, and industry. Your credit score will also play a part in the decision.

  • How long does the process take?

    One of the key benefits of unsecured business loans is that they take less time than their traditional cousins. Filling out the application will typically take between 5 and 10 minutes. You can do it all online, which means there’s no pesky paperwork to deal with.

    From there, we will take up to 24 hours to assess your application and provide you with a decision. Assuming we accept your application, we will also provide details of the loan for you to peruse. Once you accept the conditions of the loan, it may take up to one business day for the funds to appear in your account.

    All told, the process takes between two and three days. This assumes that you’ve provided accurate information in your application. If we need to contact you to confirm any details, the process may take a little longer.

  • What do I need to qualify for a loan?

    To quality for an Unsecured Finance Business Loan you will typically need to have the following:

    • A business with 3 or more months trading history.
    • Turnover in excess of $5,000 per month
    • Regular cash flow (daily, weekly or monthly)

  • How quickly will I get the money?

    This is one of the key benefits of an unsecured business loan. Generally if you apply during business hours and are approved funds can be transferred before the close of that business day.

  • How long is the standard loan term?

    Typically unsecured business loans span between three and 24-months. With most business repaying their loans between six and nine months, however, many also like to keep their payments low and spread out their payments over the full twelve month period.

    For those wishing to pay off their loans early, often a discount is offered.

  • What do I need to apply?

    With unsecured funding the lender typically only needs to identify who you are and find out some basics about your business such as:

    • The last 3-months of banks statements for your business
    • Some form of identification (Drivers licence)

  • When will I know if I have been approved?

    The benefit of an unsecured loan is that typically approvals will be provided inside the same business day. This makes unsecured loans a great option for those who require business capital in a hurry.

  • Will you check my credit?

    We do check your credit score. However, this check does not occur during the initial application process. We will go over the details of your application upon receipt to determine if we should grant you pre-approval. If we do, we will contact you with the details of the loan and inform you of the pre-approved status.

    Our consultant will also tell you that we need to conduct a credit check at this stage. This allows us to determine if there is any additional risk beyond what the application tells us. As such, it’s a requirement if you are to receive a final offer of a loan.

    We do not conduct a credit check without informing you that we will do so first. Furthermore, we do not move forward with the check if you decide not to accept the conditions of your pre-approved loan.

  • Do I need to provide more information beyond bank statements?

    We may ask for further proof of business ownership, as well as proof of your identity.

    For example, you may ask you to provide us with a copy of your driving license. You will also need to provide your NZBN when submitting your loan application.

  • Can I borrow if I’ve previously defaulted on a loan?

    You can, assuming that you meet our criteria. In this situation, we will usually conduct a deeper analysis of your finances and credit score. A default on your record suggests that you present more risk. We’re looking for evidence that the risk no longer exists and you can service your new loan.

    If we accept your loan application, we may apply a higher interest rate than we would without the default. We may also require further documentation relating to the defaulted loan, which we will request when needed.

  • I’m thinking of starting a business. Can I borrow for the costs of starting up?

    Unfortunately not. Startup businesses present too much of a risk for an unsecured business loan. The company has no financial documentation so it’s impossible to assess its serviceability. We require all applicants to have been in business for at least six months for our unsecured loans.

  • Is Unsecured Finance New Zealand a New Zealand-based company?

    We’re based in Australia but have an office in New Zealand at:

    Floor 27
    188 Quay Street
    Auckland 1010

    Our two main offices in Australia are located at:

    Head Office

    Unit 2A
    391 Martins Road
    Green Fields SA 5107

    Victoria Office

    Level 2
    696 Bourke Street
    Melbourne VIC 3000

    Furthermore, we have a number of smaller regional offices spread around the country.

Unsecured Business Loans from $5,000 to $100,000

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