If you are a business owner who’s looking for financial support, a good option would be to acquire a business loan and ultimately minimise its risk, maximise the benefits, and reduce costs. Unsecured business loans offer access to funds with minimal risk because the borrower is not required to pledge an asset as collateral. The borrower can also get the loan fast with flexible repayment options.

Non-traditional lenders, and even some banks are now offering unsecured business loans as they are aware of the increase in the need for this type of loan. Banks have started to offer their own unsecured business loan products targeting small businesses. Instead of collateral, lenders look at the business’s loan repayments capability by determining the cash flow and monthly sales.

The amount for unsecured business loans also depends on how much the business makes every month and the total amount of money being transferred into and out of the business. It can range between $1,000 and $1,000,000. Cigno Business Solutions can offer business loans up to $10,000.

Eligibility and Requirements for Unsecured business loans

The eligibility criteria and requirements for unsecured business loans may vary depending on the lender. Commonly, you need to meet and submit the following:

• ABN or ACN — The borrower needs to have an Australian Business Number (ABN) or Australian Company Number (ACN). An ABN is a unique 11 digit number issued by the Australian Business Register (ABR) that identifies your business to the government and community. If you have an existing ABN, you can look it up here. Applying for an ABN is free and can be done online. ACN is a 9 digit number issued to every company by the Australian Securities and Investment Commission (ASIC).

• Business turnover — Your turnover amount ($50,000 – $200,000+ p.a.) may be looked at to assess your eligibility. Lenders can also calculate what you can afford to borrow by using your business’s accounting software or financials in the application process.

• Age of operation — A certain amount of time of operation may be required, but generally your business should have been operating for at least a year. Although some lenders and banks also offer unsecured financial support to startups.

• Credit profile — The company’s credit profile along with the directors’ personal credit histories may be checked to see if the business has tax debt or unpaid defaults.

• Premises — If you are leasing, your business location may be required to have been in the same location for a time.

• Documents — Identification documents for business owners and any loan applicants; bank statements and business financials; details of your business accounting software OR; and rental forms for the business premises.

Comparing Unsecured business loans

There are different features and options for unsecured business loans you can compare. Check the following to determine which is right for you:

• Amount of loan — The minimum and maximum loan amounts are set by the lenders based on your qualification. There are also other factors in determining how much you can borrow. Make sure to contact the lenders and enquire about this beforehand.

• How long will it take? — Once approved, the lender can credit the funds directly to your account within 24 hours or within a few days. Look for a financial institution that can accommodate you in time of need.

• Interest rates, fees, and charges — Competitive loans can be determined by looking at the interest rates, fees, and charges. Watch out for upfront or ongoing fees such as application and monthly fees that may be included in your business loan. There could also be a loan documentation and direct debit fees which affect the cost and affordability of your loan. Default or late payment fees may definitely apply.

• Loan terms — Business loans traditionally have flexible repayments terms based on your business’s cash flow fluctuations. Your cash flow history and projections, business type, and loan amount can be served as bases when the lender allowed structured repayments. Loan terms for unsecured business loans are usually between 3 months and 5 years.

As long as the loan amount is reasonable to your business needs and you can afford it, you are good to acquire an unsecured business loan. Always consider in the equation your business’s cash flow and profits and do not forget to find out how long it takes to complete the repayment terms. Once you find the right loan options that suit your business, you can start the process by applying here.