Unsecured business loans for the things you need to buy

An unsecured business loan lets you borrow against the strength of the business itself rather than a house or a piece of equipment. The lender reads your bank statements, looks at your turnover and decides how much the business can comfortably repay. For a business that rents its premises, or an owner who’d rather not put the family home on the line for a stock order, it’s often the first place to look.

At LendFriend we think about it from the other end: what are you buying, and how quickly does it earn its money back? Unsecured money is brilliant for purchases that pay for themselves within a year or two. It’s less brilliant for a big asset you’ll be using for a decade.

What is an unsecured business loan, exactly?

It’s a lump sum, paid into your business account or straight to a supplier, repaid in regular instalments over a fixed term. No mortgage or caveat goes on a property title, and no asset is registered against the loan. Instead, the lender relies on three things:

• Cash flow. Regular deposits that comfortably cover the new repayment on top of everything else.
• Conduct. Bank statements without a pattern of dishonours, overdrawn days or gambling transactions.
• A guarantee. Directors usually sign a personal guarantee, so the lender has someone to chase if the business can’t pay.

That combination is why the decision can be quicker than secured lending: there’s no valuation to order and no title to search. It’s also why the amount is capped. Even a strong business rarely borrows unsecured beyond about $500,000.

What can you buy with one?

Pretty much anything with a business purpose. The purchases we see work best are the ones with a short, clear payback:

Purchase	Why unsecured can fit
A big stock order before a busy season	Sold within months, so the loan clears quickly
Used tools or a second-hand trailer	Modest cost, immediate use, no asset paperwork
A marketing campaign or new website	Nothing physical to secure it against
Covering a supplier deposit on a larger job	Repaid when the client pays the progress claim
A small shop refresh	Fit-outs are hard to use as security

For a new truck, a medical laser or a commercial kitchen worth six figures, it’s worth comparing an unsecured loan against equipment-secured finance or a property-backed loan before you commit. The longer the asset lives, the more a longer term and security can lower the pressure on cash flow.

How do lenders decide how much to lend?

Every lender has its own formula, but the questions are similar. Lenders want to know:

1. What comes in. Average monthly deposits over the last six to twelve months, and whether they’re steady or lumpy.
2. What already goes out. Existing loan repayments, merchant cash advances, tax payment plans and leases.
3. How long you’ve been trading. A longer history makes the numbers more believable.
4. Your credit file. Recent defaults or a run of credit enquiries count against you, though a past problem with a good explanation isn’t always fatal.
5. What the money is for. A clear purchase with a supplier quote is easier to approve than “general purposes”.

A useful rule of thumb: if the new repayment would eat most of what’s left in the account each month after normal bills, the amount is too high, whatever a lender is willing to offer. Our purchase payback calculator shows how the repayment sits against what the purchase brings in.

What are the trade-offs?

Unsecured lending is fast and keeps your property out of it, but there are things to weigh up honestly:

• Shorter terms. Repayments are often weekly or fortnightly, and terms tend to run months rather than years.
• Higher cost. More risk for the lender usually means a higher total cost, so compare offers in dollars.
• The guarantee is real. It isn’t secured against your house on day one, but a judgement on a personal guarantee can end up there.
• Stacking risk. Taking a second unsecured loan to cover the first is the classic trap. If you need more than one at once, talk to us about a single, properly sized facility instead.

If any of those sound uncomfortable, a business line of credit might suit better for ongoing needs, or a secured loan for one big purchase.

Illustrative example. A Brisbane landscaping business turning over about $60,000 a month wants $45,000 for a second-hand mini excavator and trailer. The machine will let them take on jobs they currently subcontract out, adding roughly $6,000 a month in margin. An unsecured loan over two years keeps the house out of it, and the machine pays its way from the first month. The same business looking at a $250,000 new truck would be better served by a longer, secured structure.

How do I apply without wasting time?

Have these ready and the conversation moves quickly:

• Six to twelve months of business bank statements (most lenders can pull these electronically with your permission).
• Your ABN and, for a company, ACN and director details.
• A supplier quote or invoice for what you’re buying.
• A list of current business debts and repayments.

Then tell us what you’re buying. It takes about a minute.

When is unsecured the wrong choice?

When the purchase is large and long-lived, when you’d need to stack it with other short-term debt, or when the repayment only works in your best month. In those cases a longer, secured structure or a smaller purchase will usually serve the business better.

Ready to see what fits your purchase?

You’ve got something to buy and a business that’s trading well. That’s the starting point for unsecured funding. Ask us first and nothing touches your credit file; a check is only discussed once you decide to go ahead. Your enquiry isn’t blasted out to a pile of lenders, either. One person at LendFriend reads it, works out whether unsecured is the right fit or whether security would serve you better, and calls you to talk it through.

Be accurate on the form, especially turnover, time trading and what you’re buying, and the first answer you get will be the useful one. See what you could borrow unsecured.