When you’re looking for finance for business purposes, there’s a few factors to consider. You need to minimise the costs of the finance while maximising the benefits it offers, as well as reducing the risk to the business itself. How do unsecured business loans work? Unsecured business loans mean that you can access credit without putting up your business as collateral. These loans tend to be smaller than secured loans, which is fair enough, because they don’t require guarantees. It’s your ability to pay back the loan, based on your monthly sales and turnover that counts, not what you can put up as security. How much can you borrow? What’s great about unsecured loans is that minimum amounts can be as little as $1,000, with the maximum being $1,000,000 with some lenders. Primarily it’ll be your monthly turnover that determines the amount; if your monthly turnover is $25,000, that’s probably around the amount you’ll be eligible to borrow. Is your business eligible for a loan? Criteria differ between lenders, but broadly speaking you need to look at: Your turnover, because most lenders will have a minimum monthly requirement. How long you’ve been in business, as lenders want to see you’ve been operating for a while. Your director credit history – your business and personal credit files may be checked. Your business premises, as you may need to have owned or leased them for a minimum time period, and. Your business structure, as you’ll probably need to be registered in Australia and some lenders may only accept partnerships or sole traders, for example. Why you don’t need security More lenders, big and small, are offering unsecured business loans as there was a gap in the market. Newer lenders and fintech companies started to offer smaller unsecured personal loans and loans to businesses, so the big lenders followed suit. Are there unsecured loans for startup businesses? Many lenders have minimum operating time requirements and don’t want to lend to untested start-ups. However, there are still some lenders that offer business loans for startup business owners, so don’t be discouraged. Comparing unsecured business loans When you compare unsecured business loans, you need to concentrate on: The loan amount, as lenders have minimum and maximum amounts; you have to be sure the amount you need is on offer. The application turnaround time, as some lenders can get your funds to you within 24 hours; if you have a deadline, make sure your preferred lender can meet it. The interest rate, as this is a good way to work out how much the loan will cost overall. The repayment period, as this will also affect your monthly repayments and the overall cost of the loan, so use a repayment calculator to see what’s what, and. The fees, as there may be initial and ongoing fees applied, which will affect the final cost of the loan. Without further ado, here are four of Infochoice’s best picks for unsecured business loans. Of course, there are plenty of other great loans listed on InfoChoice and the loan that suits your personal situation is the best one for you. The Moula Term Loan This loan offers a minimum amount of $5,000 and a maximum amount of $250,000 to borrowers. Repayment terms vary from six months to two years and the interest rate applied is fixed at 15.95 per cent regardless of the term length. There are no set up or ongoing fees, however, so if you’re looking for an uncomplicated smaller loan, this could be ideal. The Prospa Business Loan Like the Moula offering, this loan starts at a minimum of $5,000, but goes up to a maximum of $300,000. The repayment terms range from three to 24 months, and the interest rate starts at 9.90 per cent, depending on your credit rating. The NAB QuickBiz Loan This loan has a rapid turnaround online application process, so if you need your funds in a hurry, this could work well for you. The loan amounts on offer range from $5,000 to $50,000 and the repayment terms are between one and two years. Interest is fixed at 12.95 per cent pa for the duration of the loan, with no upfront or ongoing fees but you may face a penalty fee if you repay the loan early. The Capify Unsecured Small Business Loan This loan is different to many other market offerings as it doesn’t use interest rates; it uses a fixed payback amount based on your industry, your cashflow and the amount you plan to borrow. Loan amounts vary from $5,000 to $300,000 and repayment terms from four months to a year. Loan processing fees vary from $349 to $749 and Capify aims to offer a 24-hour application turnaround. You need to think about whether your business can afford the loan Look at your most recent and projected cash flow and profits to see if your monthly turnover can accommodate the repayments. Applying for an unsecured business loan Once you’ve compared your best loan options and looked at all the rates and fees, you should have a good idea as to which lender you’re going to apply to. Hit the “Go to Site” button on the comparison site page and start the application. You’ll need your ABN, the details of your business’ accounting software, your driver’s licence or passport details and the necessary information on your directors and business partners. The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007. Notes: Rates are headline rates at the time of publishing, not comparison rates, fees not included.