What is a unsecured business loan?
Business loans can either be secured or unsecured.
A secured loan is a loan that is guaranteed by an asset, such as a property or a car. On the other hand, unsecured loans allow you to borrow money for your business without the need for collateral. Business owners can take advantage of unsecured loans when they are unable to obtain a secure loan.
Unsecured business loans can be beneficial for your business in several situations including:
Typical Documentation for Unsecured Business Loan Applications
Most lenders will require:
Depending on the requested loan amount or credit assessment, you may also need to provide:
Difference Between Secured and Unsecured Loans
When looking to obtain a business loan, business owners may notice that interest rates can vary between different lenders and types of loans. Our table below highlights the differences between secured loans and unsecured loans.
What can you do with a small business loan
There are many benefits in getting an unsecured business loan for your business. Perhaps you have a major business project planned and need some extra funding, or you have a seasonal business selling swimwear and need some help to absorb the impact of seasonal changes. We have provided some example scenarios below to help you as a business owner foresee the benefits of an unsecured business loan for your business.
Expanding Your Business
Samantha has recently started her own “paint and sip” business where she has rented out a local space and hosts her painting classes every day, with one session in the morning and one at night. Business has been going well, however, Samantha has noticed that on Thursdays, Fridays and Saturday nights, her classes tend to book out well in advance and she can see that there is a higher demand for classes on these days.
Samantha gets her daily coffee from the café across the road from her shop and has become quite acquainted with the café owner. The café owner is aware of Samantha’s situation and suggests using the café space for Samantha to host an additional painting class for her business on these nights. They agree on a cost for the renting space and Samantha takes out an unsecured business loan to quickly receive some funds to start renting the space right away.
Upgrading Equipment and Business Technology
With new business technology being introduced each year, it can be hard for businesses to stay modern and keep up to date with the latest gadgets. Dylan owns an e-commerce business selling pet supplies. He currently operates online and uses a spare room in his apartment as both an office and a warehouse. Dylan’s online orders have been increasing and he is finding it difficult to organise and package his orders efficiently by himself.
Dylan has been hand-writing his address labels and has decided to invest in a label printer and other packaging equipment to save time. Dylan can take out an unsecured business loan to help with these costs as well as possibly renting out a small warehouse space for managing his supply and distribution.
Small business owners can also consider the instant asset write-off from the Australian Government. This allows eligible businesses to claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used, or installed ready for use.
Seasonal Changes and Unforeseen Circumstances
Seasonal businesses often find it difficult to generate stable revenue across the year. Seasonal small businesses such as swimwear companies, vacation resorts and snow gear companies will find that small business loans can significantly help during the off-season periods. A seasonal business loan, such as a short-term loan, can help these business owners manage cash flow through their low sales months.
Kate runs a small boutique women’s swimwear store in the CBD. In Spring and Summer, her sales are good, and she makes enough money to sustain staying open for most of the Winter and Autumn months. However, when times are rough, Kate takes out an unsecured business loan to help her business stay afloat.
Eligibility criteria for an OnDeck loan:
$100,000 gross annual turnover
1 year in business
(prior or recent)
business credit score required
Minimum 3 monthly deposits
Find out how much funding you could get for your business
How much can I borrow with an OnDeck business loan?
OnDeck small business loans range from a minimum of $10,000 to a maximum of $250,000. The amount you can borrow will depend on how much you are able to pay back in weekly or daily instalments as a business. OnDeck doesn't take security over your assets, however we do require a personal guarantee
You can use our business loan calculator below to estimate how much you would be required to pay in weekly instalments based on your desired loan amount and loan term.
How It Works
So, you have decided that a small business loan is the right choice for you and your business - but what next? Follow our step by step guide:
Step 1. Small Business Loan Application
You will first need to fill out a small business loans application. The application should take no longer than 10 minutes and is in four parts: Create a login, About Your Business, About You, and Bank Statements. To streamline your application process, make sure to have your required documentation on hand and ready to submit. You will need your personal bank statements, business financial statements, and identity documents (Drivers Licence or Passport). You may also need to provide details of your personal financial circumstances, i.e. assets, debts, income, expenses. Start your application here.
Step 2. Application Processing Time
Once your application has been submitted, our team will then verify your documents and review your business credit score and application. Approval can be as fast as 1 business day with the funds in your account that same day.
Step 3. Receiving Funds
Once approved, the funds will be deposited into your given bank account.
Step 4. Repayments
Our small business loan minimum term is 6 months, and our maximum loan term is 24 months. OnDeck offers flexible repayment options, including weekly and daily automatic payment options. Your repayment amount depends on your agreed loan amount and loan term. See a rough estimation of repayments with our business loan calculator.
Different Types of Small Businesses
Finance and Marketing
Businesses such as small accounting firms, tax companies or market research companies can benefit from a small business loan to:
• Upgrade or purchase powerful automation tools
• Upgrade or purchase office equipment such as printers, tables, chairs, storage cabinets
• Renovate or expand office space
Businesses such as construction/trade work, landscaping companies or house cleaning services can benefit from a small business loan to:
• Upgrade or purchase equipment such as construction machinery, cleaning supplies, or other heavy equipment required for trade jobs
• Pay contractors
IT and Digital
Businesses such as web development companies, SEO consultancies or podcast providers can benefit from a small business loan to:
• Purchase development programs or other business tools and software
• Upgrade or purchase equipment such as podcast microphones, laptops, and other hardware
Businesses such as boutique clothing stores, homeware stores and gift shops can benefit from a small business loan to:
• Purchase supplies in bulk as suppliers usually provide discounts for bulk buys
• Renovate or expand the store front
• Pay employee wages
Food and Hospitality
• Upgrade or purchase store equipment such as coffee machines, commercial kitchen equipment and POS systems
• Renovate or expand business front
• Pay employee wages
Businesses such as dog grooming, personal training or hair salons can benefit from a small business loan to:
• Purchase supplies or equipment in bulk such as gym equipment, pet supplies or salon chairs
• Pay employee wages
• Cover costs for transportation if the business is mobile
Benefits of Non-Bank Lenders
Non-bank lenders are institutions that is not either a: bank, credit union or building society. Non-bank lenders offer loans to consumers, with each institution varying in rates and features. There are some benefits of obtaining an unsecured business loan with a non-bank lender rather than a bank:
Rates and Fees
Because non-bank lenders are privately owned institutions, they are able alter their rates and fees to stay competitive against banks and other non-bank lenders.
Easier and Faster Application
Banks require a more extensive set of financial documents to be submitted with loan applications whereas non-bank lenders will not. This means that unsecured business loan applications with non-non-bank lenders are streamlined and you can receive funding faster.
More Flexible Criteria
Non-bank lenders will generally have more flexible criteria when it comes to requirements for unsecured business loan applications. This can include requirements such as time in business, minimum business revenue and minimum business credit score. Customer service and customer support can also be an advantage of non-bank lenders.
Business Plan - Do You Have One?
As an online small business loan lender, OnDeck does not require a business plan when applying for a business loan. However, it is always a good idea to have a well planned business plan so that you can see your sales forecasts and cost estimates.
Every business is unique and so your business plan should also be unique and aligned with your business areas of focus. There are many business plan templates available, although, it is highly recommended you find one that suits the scale and nature of your business.
Generally, a business plan should include:
- Executive Summary
- Details about your business including trading name, ownership details and key dates
- Describing your products and/or services
- Employment Details including key staff and management structure
- Your target market and your customers – include market research findings if you have conducted any
- Competitor Research – how they are promoting and performing and comparisons
- Your finances including any fixed costs and planned costs – including statements such as cash flow, profits and loss and balance sheet.
- Your vision and future for the business – vision and mission statements, business goals and objectives