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Unsecured Business Loan | Interest Rates

Unsecured Commercial Loans are provided for purposes where security in the way of a physical asset or goods, ie a car or equipment, is not available. This type of loan may be utilised for a range of uses including short-term cash flow shortages, capital injection, training and marketing programs and many others.

As no security is offered against the loan, it is considered a higher risk loan than a secured loan. Higher risk loans attract a higher interest rate but each loan is considered on its individual merits.

The interest rate on an unsecured business loan may be at a fixed or a variable rate depending on the individual lender.

Business Finance Unsecured Business Loan | Interest Rates
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unsecured business loan Comparison
Compare Unsecured Loans Interest Rates with other Loans

Interest rate comparison chart allows you to quickly and easily compare rates on unsecured loans against those of other lending products. Enter your loan amount and preferred term and see the repayments for each loan. Great for comparing loans and planning your loan.

Loan Amount Loan Term
Loan Product Interest Rate Monthly Repayment
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Disclaimer: This interest rate chart is provided for comparison purposes only. The interest rates displayed may vary from the interest rate which may apply to any offer for an unsecured loan you are offered. The fees and charges applicable to lending have not been accounted for in the calculating function. This is not an application form for an unsecured loan. The results calculated do not indicate an offer or an approval. The repayments on any offer you may be made may differ from those calculated.

29 September

Today's best rate

Finance Equipment From

4.99 % Fixed

* The interest rate is calculated on a secured loan for commercial use, effective 29/09/2023 and subject to change. Warning: the interest rate is only true for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different interest rate.

29 September

Today's best rate

Finance Equipment From

4.99 % Fixed

* The interest rate is calculated on a secured loan for commercial use, effective 29/09/2023 and subject to change. Warning: the interest rate is only true for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different interest rate.

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While there may be fairly similar interest rates advertised by the lending sector for various loan categories, each lender derives their own interest rate schedule based on a number of factors which include:-

  • The individual lender’s capability and cost of acquiring funds.
  • If the lender is active in a particular loan category.
  • Risk assessment of a particular loan category.
  • Global availability of lending funds and the effects of international monetary markets.

In offering an interest rate on a specific loan to a specific business, lenders will assess individual applications based on a range of factors:-

  • Risk assessment of the individual business. Long-established businesses with good trading history will usually be assessed as a lower risk than more newly established
  • Credit score. The credit score of the business and with very small businesses possibly also the business owner’s score, will be taken into the account.
  • As a general guideline – the better the credit score, the better the interest rate offered.
  • The purpose of the loan.
  • The loan term. Unsecured loans can be offered for as little as 3 months to cover short-term requirements.

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Competitive Commercial Finance Rates

Business Interest Rate
Securing a Low Business Interest Rate

To improve their prospects of securing a lower interest rate on a high-risk unsecured loan, businesses may take a number of measures which include:-

  • Preparing thorough and comprehensive documentation which verifies their good trading history and future prospects.
  • Present documentation which clearly demonstrates how the commercial enterprise will repay the loan.
  • Attend to any issues which may improve the credit score. Bad debts and some other entries may be removed after a certain period but this usually entails applying to have these entries removed.
  • The owner providing a personal guarantee.
  • Engaging the services of a broker to negotiate with the lender to secure a better interest rate.

We have connections with both lenders that offer Unsecured Business Lending and brokers that work to achieve lower interest rate loans.

Connect with us for lenders and brokers that may be able to assist you with achieving a better interest rate for your Unsecured Loan

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FAQs
Unsecured Business Loans Interest Rates

These kinds of loans are not secured against goods or physical assets as such. Therefore the interest rates are higher than for secured loans. The interest rates can vary depending on a number of factors so we have addressed some queries to ally your uncertainties.

The interest rates applied to different types of funding products are determined by a range of factors. In regard to the difference between secured and unsecured options, one of the key differentiators is risk. Secured products are funding for physical assets such as motor vehicles and equipment. The asset is the security. The lender has the option to repossess the asset if the borrower defaults. With an unsecured product, there is no physical asset to repossess. Unsecured options do not have the same security for lenders as secured products and are rated as higher risk. This results in higher interest rates.

An unsecured funding product is one where the purpose of the funding is not provided or available as security against the funds borrowed. Secured funding will be provided for physical assets which provide the lender with the security that they have an option to recoup funds should the arrangement go into default. An unsecured option is used for purposes other than physical assets or where the asset is deemed unsuitable for security. These may include older models of equipment and expenses such as purchasing new stock which will be sold as merchandise, training and marketing and other non-asset expenditure.

The use of the term ‘security’ in the financial sector refers to security of the funding from the lender perspective. Funding may be secured or unsecured by the goods or other purpose for the funds. The lender has the security that they can repossess the assets if required. An unsecured product does not have that security for the lender but does not present any increased or otherwise risk to the borrower. The definition of security in financial terms may be interpreted as ‘safety’ for lenders.

Unsecured funding may present a flexible and workable option for operators requiring funds for non-asset expenditures. The product allows enterprises to source funding for a wide range of needs where an asset acquisition funding product is not suitable. Interest rates may be fixed or variable, offering borrowers with flexibility in structure and other conditions.

A secured product is suited to the acquisition of physical goods that can be offered as security or guarantee against the funds. These products include Chattel Mortgage, Leasing, Rent to Own, Hire Purchase and general secured funding. An unsecured product is selected where the purpose is not a physical asset or goods which can be used as security. A lender may not accept the goods based on age and condition or the purpose may be a non-asset expenditure.

No. Interest rates on all funding products can vary across the market. Credit providers set their own rates based on their own criteria and guidelines, costs of sourcing their own funding, outlook for rates and the economy, the risk associated with different products. The rates advertised will be for applicants with a good credit profile. The specific rate offered will be based on the lender’s assessment of the application. Lenders can vary in their assessment of risk based on their guidelines.

The reason why unsecured funding is applied for may impact the interest rate which is offered. An assessment is made by the lender of all aspects of the application when an offer is being prepared. This includes the creditworthiness or risk associated with the applicant, the amount requested and the purpose of the funding. Lenders may have their own criteria around for what purposes they will extend funds.

Unsecured funding may be sought for a wide range of non-asset expenditure by businesses. The purposes may include:- purchase of stock for a retail, import or wholesale operation; training and development courses; marketing campaigns; consultancy services; some IT systems which may not be considered suitable for asset acquisition products; costs associated with the initial setup of an operation; product research and development expenditure; and many others.

Although an unsecured product is not secured by a physical asset, some form of collateral or guarantee may be requested by the lender. A personal guarantee from the owner of the enterprise may be accepted as such security. A risk assessment of the individual providing the guarantee would be undertaken. This would involve a review of the credit profile and financial position. Where the risk is rated as lower based on the quality of the personal guarantee, a lower interest rate may be applied to the unsecured funding. This is subject to lender approval and may vary across the market.

An alternative to an unsecured funding product may be a non-bank overdraft. An overdraft may be used for a wide range of different purposes. It may be established for a short period or as an ongoing line of credit. The purpose for which an operation requires funding may determine which is the more appropriate solution. Both products offer flexibility and versatile. The interest rate on overdrafts may be higher than an unsecured product. But it may provide greater flexibility to finalise the commitment earlier and attract lower total interest payable.

The interest rates offered on all funding products are based on the assessment by the lender of the individual application. This includes the assessment of risk which is based on the credit review and review of the financial position of the enterprise. With some applications, the personal credit profile and financial position of owners or directors will also be assessed. To obtain a specific rate for an individual funding request, a quote would need to be requested and/or application submitted.

Interest rates on unsecured funding products may be at a fixed or a variable rate. This will be determined by the lender and potentially in discussion with the borrower at the time of application. Some lenders may attach a variable rate to all unsecured products, while others may attach a fixed rate. With a fixed rate, the rate will remain unchanged over the full term. With a variable rate, the rate is subject to change. Changes to interest rates can occur when the Reserve Bank announces changes to the cash rate and/or when individual lenders change their rates. Lenders may change their rates based on market conditions and their outlook for rates and the economy.

The type, size and structure of an enterprise may impact the interest rate offered on funding products. Structures include corporations, partnerships, sole traders, ABN only holders, SMEs and others. The size of the enterprise and the time they have been operating may reflect on the lender’s risk assessment of the application. A small enterprise that has been trading for a long period and has a good credit profile and strong financials may be assessed as low risk, in the same way as a larger corporation. Some may be seen as higher risk and attract a higher rate.

The amount requested is a major consideration in the overall assessment of a funding application. A smaller amount may be perceived as having lower risk compared with a higher amount. The lower risk assessment attracting a lower interest rate. The ability to furnish a debt of any amount forms an integral part of the application assessment and may influence the interest rate offered.

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Our Lenders

Trusted by 60+ lenders Australia-wide

Westpac
Liberty
Automotive Financial Services
Macquarie
Finance One
Commonwealth Bank
Pepper Money
Morris
National Australia Bank
RACV
Get Capital
Prospa
Grow
Selfco Leasing
Scottish Pacific