Unsecured business loans: how much can I borrow?

Unsecured business loans let you borrow without putting your home or other property on the line. They’re one of the fastest ways to fund growth, stock, equipment or cash flow, and through Peak Capital you can access unsecured business loans of up to $1m. But how much can your business actually borrow? Here’s how lenders work it out.

What is an unsecured business loan?

An unsecured business loan is funding that isn’t secured against a specific asset like property. Instead, the lender relies on your business’s trading performance and, usually, a personal guarantee from the directors. Because there’s no property to value or mortgage to register, approvals can be fast, sometimes within 24–48 hours of receiving your documents.

How much can you borrow?

Unsecured loans range from around $10,000 up to $1m. Where your business sits in that range depends mostly on the factors below.

1. Turnover

This is the biggest driver. Lenders generally size unsecured loans as a proportion of your annual or monthly turnover, so a business turning over $5m a year can usually borrow far more than one turning over $500k.

2. Time in business

Most lenders want to see at least 6–12 months of trading, and the larger loan amounts usually require two years or more of history.

3. Cash flow and existing debts

Lenders look at your bank statements to see whether the business can comfortably service another repayment. Existing loans, merchant advances and tax debts all reduce how much you can borrow.

4. Credit history

Both the business’s and the directors’ credit files are considered. A clean history opens up more lenders and better rates.

5. Industry

Some lenders are more comfortable with certain industries than others. A lender that understands your sector will often lend more, and faster.

What can you use an unsecured loan for?

• Opening new sites or expanding interstate
• Buying stock ahead of a busy season
• Equipment and fit-outs
• Marketing and hiring
• Bridging cash flow gaps while customers pay

A real example

A growing Melbourne gym group wanted to expand interstate without tying up property as security. We approached unsecured lenders that understand membership-based businesses and secured $600k unsecured, settled in 4 weeks. Read more about finance for gyms and fitness businesses.

What you’ll need to apply

• 6–12 months of business bank statements
• Recent BAS
• Driver’s licence for each director
• For larger loans: financial statements and tax returns

Unsecured vs secured: which is right for you?

Unsecured loans are faster and keep your property out of it, but they usually cost more than a secured loan. If you own property and the amount is large, a secured loan may save you money. We’ll compare both so you can decide. See also: unsecured business loans and working capital finance.

This article is general information only and doesn’t take into account your objectives, financial situation or needs. Speak to us or your accountant before making a decision.