Unlocking Growth: A Guide to Unsecured Business Funding for Australian Business Owners

Having access to quick and flexible funding is crucial for business growth, innovation, and sustainability. Unsecured business funding is an increasingly used solution business owners turn to.  

This is especially true for enterprises that may not have extensive business assets to use as security or who are not prepared to put their family home on the line. In Australia, where small to medium-sized enterprises (SMEs) form a significant chunk of the economy, unsecured business funding plays a pivotal role in propelling business growth. But not all unsecured business loans and lenders are right for all businesses.  Understanding how unsecured business funding can be tailor made to suit your business is important in ensuring you get the right business loan solution for your needs.  

Unsecured Business Funding Features for Business Growth

Loan Amounts	$5,000 to $2 million
Interest Rates	Starting from around 8% p.a. (at time of writing)
Loan Terms	From 6 months to 5 years
Approval Times	As fast as within 24 hours
Loan Purposes	Working capital, purchasing stock, equipment, or business expansion
Eligibility	Business ownership, ABN, GST registration, minimum operating time

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Benefits of Unsecured Business Funding

The appeal to unsecured business funding lies in its simplicity and the ease of accessibility for business owners. Here’s a summary of key benefits:

• Quick Approval:

• Speed is critical when business owners need a fast business loan solution.  Unlike secured loans that might require a lengthy approval process, a hallmark of the unsecured business loan application process is how fast approval outcomes occur. Applications for loans under $500,000 are usually completed in a few hours by a read only assessment of business bank account statements and, once approved, funds can be settled on the same day.

• Flexibility:

• Unsecured business loans are not restricted to specific loan purposes with loans able to be utilised for any legitimate business purpose ranging from working capital, investing in business opportunities and can even be used for paying out tax debt. 

• No Property Security Requirement:

• Unsecured business loans don’t need to have property security but it’s important business owners understand that an unsecured loan is not the same as a ‘no recourse loan’.  Directors still need to provide personal guarantees and directors who are property owners will usually be offered higher loan amounts and limits than those directors who do not own property.

• Improving Cash Flow:

• Billionaire hedge fund manager Bill Ackman once said the only thing you should care about is free cash flow.  While his statement might have been meant for investors it’s equally relevant to business owners.  Because of the speed of their application process, Unsecured Loans can be an important solution to a cash flow emergency and we’ve even used them as bridging loans while clients wait for other commercial loan facilities to settle.  

How to Choose the Right Unsecured Business Funding Solution

Unsecured Lenders are some of the best marketing companies going around and with a near universal online presence it can be difficult to know which is right for you.  The key to making the right lender choice is finding the funder that aligns to the strength of your credit history, the size of your business and who has a successful track record of settling loans of the size you’re after. 

Here’s a roadmap to making an informed decision:

• Understand Your Needs:

• It’s no good going to a lender whose terms are a maximum of $150,000 over 12 months when you need a $300,000 loan with a 5 year term.  Assess the amount you need, the term that would suit your repayment capacity, and that the purpose of the loan is acceptable to the lender you’re dealing with.

• Comparing Different Lenders:
• The obvious comparison to make is on rates and fees – it’s also important to compare lenders’ service offerings and repayment schedules.  Some unsecured finance lenders charge daily direct debits for repayments which can be a cash flow killer and negatively impact business.  Be sure to look at how repayments are charged along with the rates and fees and the lender’s reputation for how they handle disputes.

• Checking Eligibility Criteria:

• Lenders have specific eligibility criteria and this is true for secured and unsecured business loans alike. Ensuring you meet these criteria before applying can save time and avoid potential hits on your credit score. A common reason business owners are declined is if their credit score is not high enough for their chosen lender – a declined application and hit to your credit file then further negatively impacts the credit file.  If you’re not sure how to assess lender policy seek the help of an unsecured loan expert like darkhorsefinancial.com.au.

• Read the Fine Print:

• Understand the terms and conditions and any additional fees – like what happens if a repayment is dishonoured. A thorough understanding of the business loan terms can help you understand your obligations and what happens when things don’t go to plan.

Unsecured Business Funding Case Studies

Case Study 1: Additional $300k unsecured line of credit (on top of a bank overdraft)

Seeking greater credit support but not wanting to change banks? Our client came to darkhorsefinancial.com.au believing there wasn’t a solution.

The business was growing and needed to extend their overdraft to support their expansion.

Their bank wanted to see results before agreeing to a higher limit.

One of our preferred non-bank lenders offers an unsecured overdraft that can sit behind a bank overdraft.

With no establishment fees, no line or management fees it’s a fee effective solution to extend your credit or keep as a backup.

Limits are available up to $1M with property security and up to $500k unsecured but limits up to $300k is their sweet spot.

With a no-doc application over the phone, time of settlement occurred in 2 days.

Case Study 2: $1.5M Major Bank Unsecured Overdraft (time to take back the family home?)

Our client came to darkhorsefinancial.com.au after months of delays with their existing bank after seeking a line of credit to support their business plans.

Despite clearly being profitable and having upside to their business, their existing bank couldn’t deliver a line of credit that didn’t involve taking security over director property.

Second tier unsecured lenders offer both term loans and unsecured overdrafts or lines of credit – but SO DO major banks.

Provided servicing stacks up for the bank facilities along with other lending criteria, lines of credit can be secured with accounts receivable or with directors guarantees – neither of these arrangements require property security by default.

Understanding our clients business we positioned an application with our recommended bank and achieved an approval for $1.5M overdraft limit within a week of submission.

Work With An Expert For Your Unsecured Business Funding

Whether it’s bridging cash flow gaps, investing in an opportunity, or supporting working capital, unsecured business funding is an important solution for business.

The steps to a successful loan approval process are to understand your business needs and match those with lending criteria and settlement outcomes.  To get expert business lending guidance with this process contact an expert at darkhorsefinancial.com.au.