Unsecured Business Loans in Australia - What You Need to Know

Many Australian business owners assume they need to own property to access business finance. That's simply not true. Unsecured business loans - and unsecured business overdrafts - are available for amounts up to $150,000 without any property security required. Here's everything you need to know.

What is an unsecured business loan?

An unsecured business loan is a loan where no specific asset is required as security. The lender assesses your application based on the strength of your business - revenue, credit history, trading performance - rather than on the value of an asset you pledge.

This is in contrast to a secured loan, where the lender registers an interest over a property or other asset. If you default on a secured loan, the lender can claim the asset. With an unsecured loan, they cannot - though a personal guarantee from the business director is typically still required.

How much can you borrow without security?

The maximum unsecured business loan amount through specialist non-bank lenders in Australia is generally $150,000 per lender. If your combined funding across multiple products with the same lender exceeds $150,000, property may be required.

For amounts between $150,000 and $500,000, property ownership is typically required - though the loan doesn't need to be secured against the property upfront. The property is held as a contingency rather than a first mortgage.

Eligibility for an unsecured business loan

To qualify for an unsecured business loan through our lender panel:

• Minimum 6 months trading in Australia
• Minimum monthly turnover of $6,000
• Active ABN
• Australian citizen or permanent resident (business owner/director)
• Good credit history - minimum Equifax score of 550
• No recent defaults, dishonoured payments or court judgements
• Active business bank account

What is a personal guarantee?

Even without property security, lenders almost always require a personal guarantee from the business owner or director. This means you personally commit to repaying the loan if the business cannot. It's a standard requirement in Australian business lending and applies to both secured and unsecured facilities.

A personal guarantee doesn't show on your credit file unless it's called upon - i.e., unless the business defaults and the lender enforces the guarantee.

Unsecured business loan vs unsecured business overdraft

Both products are available without property security up to $150,000. The key difference is how funds are accessed:

• An unsecured business loan delivers a lump sum with fixed weekly repayments - best for a specific planned expense
• An unsecured business overdraft is revolving - draw what you need, repay, draw again. Best for ongoing cash flow.

For a full comparison, see: Business overdraft vs business loan - which is right?

Costs of unsecured business finance

Unsecured loans carry higher interest rates than secured loans because the lender takes on more risk without an asset to fall back on. However, for amounts under $150,000, the speed of approval, lack of security requirements and simplicity of the process often outweigh the rate differential - particularly for short-term needs.