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Business Loans Without Security
Consider your business loan options without having to worry about putting up any assets as collateral with Savvy.
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What business loans can I get without any security to offer?
If you’re looking for a loan to support your small business but don’t have any readily available assets to use as collateral, an unsecured business loan is one of the best options on the table. These are one of the more accessible types of loan on the Australian market and are available without the need for a deposit or any kind of security or collateral. You can borrow anything from $5,000 up to around $300,000 (for a customer with a strong enough application) and can run for loan terms from less than a year up to around 5 years. They do have higher interest than you might get with a secured loan, but you get a lot of benefits for that cost.
Another possibility for a no security business loan is invoice financing. This is a kind of business finance where you pass on a collection of your unpaid invoices (i.e. the money other businesses owe you), and a lender pays you most of their value and collects those debts themselves. It’s technically a secured loan, but the only security involved is the invoices. And because you don’t need to pay the lender anything (the lender collects their money from your customers), it’s quite low risk for your business.
And if you’re in need of short-term finance with no collateral, it’s also worth considering a business credit option, such as a line of credit, an overdraft facility, or a business credit card. Once set up, these are very handy for getting fast, easy access to business funds. However, the high interest rate makes them a poor long term finance solution.
How do I apply for a no security business loan?
If you’re opting for an unsecured business loan, you’ll be pleased to know that the application process is a fairly easy one. Unsecured loans are available from a wide variety of lenders – they're one of the most ubiquitous loans on the market – and are also one of the easiest to get approved. They can generally be turned around in a matter of days, and if you choose an online lender, the application process is normally very quick and easy, and can be completed entirely online from the comfort of your own office.
The best way to start is by getting online and using a comparison website. This allows you to quickly examine a range of loans and lenders and find the best option for your business. Savvy’s website, for example, allows you to compare a range of unsecured loan options from some of Australia’s top lenders and quickly find one suited to your situation. Once you’ve done that, it’s generally an easy process to head to your chosen lender’s website and fill out an online application.
You’ll need some records and documents for your application. Different lenders have slightly different requirements, but as a baseline it’s worth having financial records and bank records for your business, personal bank statements and ID, and your business’ ABN all easily to hand. If you’re applying to an online lender, having electronic copies of these can make the process a little easier.
Types of business loan
The most common type of business finance, unsecured loans enable businesses to access the funds they need without attaching an asset to the loan as security. Some lenders may allow you to borrow up to $500,000 and, because there's no collateral, offer same-day approval.
If your business already owns valuable assets, such as property or expensive equipment, you may choose a secured business loan instead. These loans may increase your borrowing power beyond what an unsecured loan can offer and, crucially, typically come with lower interest rates.
Business loans don't always have to be worth hundreds of thousands. If you're operating a small business and need a boost to help you keep on top of your expenses or expand your company, you may be able to take out a loan starting from as little as $5,000 and unlock further capital.
Just because you don't have all the required documents for a standard business loan doesn't mean you're out of options. Low doc finance enables you to use alternative documentation, such as other business financials, in the application process to access the funds you need.
A commercial line of credit allows you to draw from your loan account whenever your business needs access to their funds, instead of managing a lump sum and repaying it like a regular loan. This can add flexibility to your finance arrangement, providing money when you need it.
Invoice finance presents another option to business operators looking to free up cash through outstanding invoices yet to be paid by their customers. Your invoice finance can either be invoice discounting or factoring, which present different options when it comes to your invoices.
A common reason for seeking out a loan is to purchase commercial equipment. You can do this either with an unsecured arrangement or one with the equipment itself as collateral, with the latter potentially increasing your borrowing power and lowering your interest rate.
With this finance, when your business purchases product, your supplier provides an invoice which you send to your financier and pledge to repay by a set date. From there, your supplier sells the invoice to your financier at a discounted rate, while you repay the full amount to your financier.
Under an inventory finance agreement, your lender pays your supplier directly for inventory, which allows it to be signed off and sent to you. From there, you can pay off your debt within a pre-determined period to your lender, which may be longer than the regular debtor period.
An overdraft facility is attached to an existing financial account belonging to your business, such as a transaction or savings account, and enables you to borrow up to a set limit after the account’s balance reaches zero. These overdrafts are repaid with interest, but only on what you use.
You may simply be in a position where your business needs a boost to its cash flow. If this is the case, there’s a range of stop-gap solutions which may be suitable for your situation, from standard unsecured loans to specialist cash flow loans, invoice finance or even an overdraft.
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Advantages of getting a business loan without security
No need to own an asset
For many businesses, securing a loan isn’t an option simply because there are no assets available to secure it. For new businesses in particular – as well as those with more cash flow than cash reserves – no security business loans are a handy thing.
No risk to your assets
Although it doesn’t happen very often, the reason secured loans need an asset is so that the lender can sell in to recoup costs of something goes wrong with the loan. An unsecured loan doesn’t have this possibility.
Maintain control of your property
If you’ve offered an asset as security, your lender then gets some control over what happens to it. So if your business property is collateral for a loan, you can’t sell it and move to a smaller property to open up capital, or significantly renovate it without the lender’s permission.
With an unsecured business loan, you retain control over your assets and all these options are available to you.
Simpler application process
Secured loans have a reputation for being fairly long and involved to apply for, with some big banks potentially taking weeks or even months to grant approval and requiring a lot of supporting information. Unsecured loans, by contrast, are generally a lot more straightforward and can normally be turned around in a few days.
Frequently asked questions about no security business loans
You can’t add security to an existing unsecured loan, but normally you’re able to refinance the loan – paying off the existing loan, and transferring the debt do another one with better terms. You’ll want to check your existing loan doesn’t have hefty fees for early settlement though, or you could lose some of the financial benefit of switching – it's best to know what fees your lender charges before taking the loan in the first place.
Quite possibly. As a rule, secured loans have longer loan terms than unsecured, so you’ll generally need to pay them off sooner. There is some overlap though – so you could potentially get secured or unsecured loans with a five year term.
You can get them from most types of lender. Unsecured loans are one of the more common types of loan on the market, and you’ll generally have a wide variety of options when it comes to lenders. There might be a few modern Fintechs (modern financial technologies like PayPal and Cryptocurrency websites) that don’t, but they’re generally very specialised forms of lender, and probably shouldn’t be your first port of call for a business loan.
There are myriad potential uses for business finance which you can take advantage of as an operator. For instance, you might wish to fit out the front of house at your restaurant or café to freshen it up. Alternatively, if you’re running a vineyard or microbrewery, you can purchase inventory or help cover the cost of production. Any other small business can use a loan in a range of ways, from boosting available cashflow to covering the cost of renovations or other necessary repairs.
No. Unsecured loans don’t require any deposit. Sometimes it’s possible to offer one to improve the terms of your loan, but this is very much optional.
A guarantor almost always helps – if you have someone in a relatively strong financial position who’s willing to step into that role. It’s a big ask – the person is volunteering to pick up the bill if you can’t make your repayments. But it can mean better terms on the loan, and better chances of approval.
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