An unsecured business loan is financing that is obtained without providing collateral. Collateral is something that you or your business owns that you pledge as security for repayment and could include property, such as your home or vehicle, your savings, unpaid invoices, inventory and more.
Essentially, the loan is issued and supported only by the borrower's creditworthiness. With unsecured business loans, the lender cannot seek repayment by going after your assets. However, you still need to meet income and credit requirements, and many alternative lenders ask for a personal guarantee from the directors of the business.
Financial institutions understand that, for many small businesses, the business’s financial health is directly tied to that of its owner. That’s why many lenders may enquire about your personal credit history or require a personal guarantee.
A personal guarantee is a written promise from a business owner or executive guaranteeing payment on a loan. If the business cannot repay the debt, the individual guarantor is personally responsible. If you sign a personal guarantee and you don't repay the loan, it could hurt your credit score.
There are many reasons why an unsecured loan might be better for your business situation. Here are just a few:
There are several key differences between unsecured and secured loans. The main difference, however, is that a secured loan is backed by collateral such as property, and an unsecured loan is not.
Unsecured loans carry more risk than a secured loan, which is reflected in the interest rate. A higher interest rate reflects the higher level of risk from the lender’s perspective, but the benefit for businesses is that they don’t have to tie their personal property to the loan itself.
Unsecured business loans are a tailored finance solution based on the health of your business and your ability to repay. You need to be confident you can pay the loan back – and quickly – and in doing so, unsecured business loans can have a hugely positive impact on your business.
Unsecured loans can be used by businesses of all shapes and sizes, but they might be most applicable for certain types of situations including:
While unsecured loans don’t require collateral and often have less stringent requirements, there are a few things to know before you apply. Specific qualifications will depend on your lender, but generally, you will have to meet a few requirements.
Thankfully, Sail has streamlined the traditional loan application process, now allowing you to apply online within just a few minutes. Gone are the days of having to wait endlessly for approval. With Sail, you receive your application outcome within just 24 hours. Once approved, small business owners can expect their funds to be deposited the following business day. To find out more about Sail’s fast unsecured business loans, check out our FAQ page.
To date, Sail has funded hundreds of Australian small businesses across a wide range of industries. We’re one of the only direct lenders that allows small business owners to repay their business loan early with no fees or penalty, plus once approved, you can expect to receive your funds the following business day. It’s that simple.
With our quick and easy online application and continued support throughout your loan journey, Sail provides Australian SME owners, just like you, with the capital they need to sustain or grow their business.
What are the minimum requirements to apply for an unsecured business loan with Sail?
To qualify for our loans, you must run an Australian registered business that has been operating for at least 6 months. Additionally, your minimum gross annual turnover must be $50,000.
What is the interest rate of your unsecured business loans?
Because the majority of our loans are over a 6-month period, we don’t use an annualised interest rate to describe our loans. We pride ourselves on offering predictable and transparent loans, therefore the entire loan repayment amount will be disclosed upfront.
How can I find out what my weekly repayments would be before I apply for an unsecured loan?
We offer a free loan repayment calculator that allows you to quickly and easily work out what your weekly loan repayments will be. However, all repayments will be set out in black and white from the beginning, before you sign off on the funds.
Are there any fees associated with an unsecured loan?
Our only fee is a 2.5% establishment fee that is deducted at settlement. From then on, your weekly repayments are calculated up front and the same amount will be direct debited each week. A Sail loan contains no hidden charges or additional fees.
What industry do I have to be working in to apply for an unsecured business loan?
We provide unsecured business loans to any Australian registered SME that qualifies! Just some of the industries we’ve funded so far include hospitality, franchises, retailers, professional services, trades and labour, creative agencies, health and beauty services and much more.
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