What is an unsecured business loan?

An unsecured business loan is business finance that does not rely on a specific property, vehicle or piece of equipment as security. Approval is generally based on factors such as the business's trading history, revenue, cashflow, existing debt and credit profile. Personal guarantees and other security documentation may still be required depending on the lender and loan structure.

What can I use an unsecured business loan for?

Unsecured business loans can be used for a range of business purposes including working capital, cashflow, growth, refinancing, debt consolidation, stock, marketing, quiet periods, equipment that is not readily asset-financed and director or shareholder buyouts.

What documents do I need for an unsecured business loan?

Requirements vary by lender and loan amount. For smaller loans, lenders may primarily require recent business bank statements and basic business information. Larger applications may also require financial statements, management accounts, details of existing debt and other supporting information.

Can I get an unsecured business loan if I owe the IRD?

Potentially. Some lenders will consider applications from businesses with IRD arrears. They will generally want to understand the amount owing, the circumstances behind the arrears and whether the business can afford the proposed lending.

Do unsecured business loans require a personal guarantee?

They can. Unsecured does not necessarily mean no guarantees or security documentation. Directors or shareholders may be required to provide personal guarantees, and some lenders may also require a General Security Agreement depending on the lender and loan structure.

What's the difference between a secured and unsecured business loan?

A secured business loan relies on specific property or business assets as security. An unsecured business loan does not rely on a particular asset as security and is generally assessed more heavily on the strength and cashflow of the business.

Can I have unsecured business loans with more than one lender?

Sometimes. It depends on the lenders involved, your existing debt and the business's ability to service the lending. Some lenders will lend alongside another unsecured lender, while others may require the existing loan to be refinanced.

Unsecured Business Loans

NEW LOANS - REFINANCING - DEBT CONSOLIDATION

An unsecured business loan allows you to borrow without providing a specific asset, such as property, a vehicle or equipment, as security for the loan.

For established businesses, unsecured lending can be a useful way to access working capital, manage short-term cashflow, fund growth or refinance existing business debt.

We work with a range of business lenders offering unsecured finance. Each lender has different lending criteria, loan terms, rates and documentation requirements, so finding the right lender for your circumstances matters.

Rather than applying everywhere, we assess your situation first and identify the lenders whose criteria you're most likely to meet.

WHAT CAN AN UNSECURED BUSINESS LOAN BE USED FOR?

Unsecured business loans can be used for a wide range of business purposes, including:

Purchasing additional stock or inventory
Providing working capital
Managing seasonal or short-term cashflow
Funding a marketing campaign or other growth initiative
Refinancing existing business lending
Consolidating business debt
Covering fixed costs during a quieter trading period
Purchasing equipment that can't readily be financed against the asset
Funding a director or shareholder buyout

If your funding requirement is linked to unpaid customer invoices, invoice finance may be another option. If you have assets available to offer as security, a secured business loan may give you access to different lending options.

How much can I borrow with an unsecured business loan?

Unsecured business finance is available for both smaller and larger funding requirements, although the amount you can borrow will depend on your business and the lender.

Lenders may consider factors such as:

How long your business has been trading
Annual and monthly revenue
Profitability and cashflow
Your industry
Existing business borrowing
The credit history of the business and its directors
Conduct of your business bank accounts
Your GST, PAYE and other tax obligations

Some lenders use revenue-based calculations to determine how much they're prepared to lend, while others undertake a more detailed assessment of the financial position of the business.

We can help you understand which lenders and lending options may be suitable before you make an application.

What information will I need to provide?

The information required depends on the lender, the amount you want to borrow and the financial position of your business.

Unsecured loans up to $150,000

For many smaller unsecured business loans, lenders can assess an application using your recent business bank transactions, credit checks and a relatively small amount of additional business information.

They will typically look for:

Good conduct of your business bank accounts, particularly the repayment history of existing borrowing
An acceptable credit history for the business and its directors
GST and PAYE that are up to date, or an agreed payment arrangement where applicable
An established trading history
Sufficient revenue and cashflow to support the proposed repayments

Depending on the lender and your circumstances, you may also be asked to provide recent management accounts or your latest annual financial statements.

Unsecured loans over $150,000

Larger unsecured loans usually require a more detailed financial assessment.

In addition to bank transaction and credit information, lenders may ask for:

Current management accounts, including profit and loss and balance sheet
Financial statements for the previous financial year, and sometimes earlier years
Details of existing business borrowing
Evidence of any IRD payment arrangement if tax is in arrears
Accounts receivable and accounts payable reports

Don't worry if you're not sure what you need. Once we've identified the most appropriate lender, we'll tell you exactly what information is required for the application.

What if I have IRD arrears?

Having GST, PAYE or other tax arrears doesn't automatically mean you can't get an unsecured business loan.

Some lenders will consider businesses with IRD arrears, particularly where there is a payment arrangement in place and the business is meeting its obligations under that arrangement. Some lenders may also consider lending that includes funding to clear IRD debt.

Your tax repayments form part of the lender's overall assessment of your business's commitments and ability to service new borrowing.

Unsecured vs secured business loans

The main difference is the security provided to the lender.

With a secured business loan, the lender takes security over an acceptable asset, which could include property or other business assets. An unsecured business loan doesn't rely on a specific asset such as property being provided as security.

Because the lender has less security to fall back on, unsecured lending will generally have different lending criteria, pricing, loan amounts and terms from secured lending.

If you have assets available and are comfortable using them as security, it's worth comparing secured and unsecured business loan options rather than assuming an unsecured loan will be the best choice.

Why use a broker for an unsecured business loan?

Unsecured business lenders don't all assess applications in the same way.

One lender may be comfortable with your industry or financial position while another isn't. They may require different trading histories, have different approaches to IRD arrears and credit issues, or offer quite different rates and repayment terms.

We ask targeted questions about your business before recommending where to apply. Where you meet the criteria of more than one lender, we can compare the available options and look for the combination of rate, term and lending structure that best suits your business.

That means you're not simply applying to multiple lenders and hoping one says yes.

FREQUENTLY ASKED QUESTIONS ABOUT UNSECURED BUSINESS LOANS

An unsecured business loan is business finance that doesn't require you to provide a specific asset, such as property, a vehicle or equipment, as security for the loan. Lenders instead place greater emphasis on factors such as your business revenue, cashflow, trading history and credit profile.
The amount you can borrow depends on factors including your revenue, profitability, cashflow, time in business and existing borrowing. We currently work with lenders offering unsecured business loans up to $250,000, although lending limits and criteria vary between lenders.
Unsecured doesn't necessarily mean that no guarantees or security documents are required. Depending on the lender and business structure, directors or shareholders may be required to provide personal guarantees, and a lender may require other forms of security documentation.
We'll explain exactly what security and guarantees apply before you proceed with a loan.
Unsecured business loans generally have shorter repayment terms than many secured loans. The term available will depend on the lender, the amount borrowed and your circumstances, so it's important to consider both the repayments and the total cost of borrowing when comparing options.
Possibly. Some lenders will consider an application where a business has GST, PAYE or other IRD arrears, particularly where an agreed repayment arrangement is in place and being maintained. Some lenders may also consider finance that includes clearing IRD arrears.
A secured business loan uses an acceptable asset as security for the lending. An unsecured business loan doesn't require a specific asset such as property to secure the loan. This difference can affect how much you can borrow, the lending criteria, interest rate and repayment term.

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