Many businesses go through short-term periods when money is scarce and some extra funds are needed to cover expenses. A business loan can often be a way to cover such expenses, and nowadays can be surprisingly simple to secure. Find out about small loans to cover business expenses, and whether they’re right for your business, here.
Yes. In Australia, we’re spoiled for choice when it comes to loan options, with a wide variety of lenders able to provide finance for different business expenses. These range from traditional big banks to smaller financial institutions and online lenders, right through to advanced digital FinTechs (short for financial technology).
If you’re looking for a small loan to cover short term expenses for your business, your best option is probably an unsecured business loan. These are one of the easiest and most versatile options on the Australian loans market, and are available from most lenders. They’re built for short term expenses – a few months to a few years – and are one of the easiest business loans to get approved.
Comparing your business loan options closely is important, which is why it’s always useful to do this through Savvy. Our comparison service and rate tables allow you to contrast the best options on the market for dealing with business loans to give you an idea of what you can apply for now.
In Australia, one of the great advantages of an unsecured loan is its flexibility. There are very few restrictions on how you can use the funds or what you can use them on, so they give your business a lot of options.
Some of the expenses you could use a business loan for can include:
The funds do need to be used for business purposes (business loans and personal finance have very different licencing agreements) and you do need to specify what the funds are for in your loan application. But other than that, the choice is up to you.
No security or deposit required
Unsecured loans are built in such a way that they’re a little more risk resistant for the lender – meaning they don’t need an asset for security or a deposit on the loan. This makes them very accessible, even without assets or plenty of existing funds.
Unsecured loans are also generally very easy to apply for, as there’s less information and supporting documentation needed. With an online lender, the initial application can often take only a few minutes from the comfort of your home or office.
Unsecured loans are also much quicker to turn around than many other types of loan, especially with online lenders, who tend to use fast internet services to access credit and banking information within moments – generally within 60 seconds of an application being submitted.
The in-built risk resistance also means unsecured loans are relatively simple to get approved, particularly with a smaller financial institution or online lender (who are normally far more open-minded about loan applications that large banks are).
The reason unsecured loans are more risk resistant is tied to the fact that their interest rates are normally higher than the rates for other loans, like those of secured loans. The extra interest acts a little like an insurance policy for the lender, but it does make unsecured loans a little more expensive.
Unsecured loans don’t offer the largest amounts on the market. A lender might still offer $200,000 to $300,000 to the qualified customer for an unsecured loan, but this means they’re not suitable for expansive developments and spending.
If you’re looking for a loan you can pay off slowly over decade or more, unsecured loans probably aren’t the best choice – they’re normally geared to be paid off within a few years.
As with many loan products, unsecured loans are a set lump sum that you pay off in regular intervals over a length of time. If you need money sporadically and only for short intervals, they’re not ideal – you might be better off with something like a line of credit.