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Can you get a business loan without any assets?

Peter Terlato avatar
Peter Terlato
- 6 min read
Can you get a business loan without any assets?

When seeking financial support for your business, you may consider taking out a business loan. A business, or a sole trader, may take out a business loan to cover expenses they are unable to pay for upfront. These costs might be associated with starting or growing the business or managing cash flow.

A business loan is designed to finance specific business-related requirements and is often secured by assets, such as property.

However, it is possible to obtain an unsecured business loan, though there may be certain limitations and requirements.

What is an unsecured business loan?

An unsecured business loan is a form of financing that doesn't require you to provide collateral. Collateral typically consists of assets, such as property, vehicles, savings and more, which you offer up as security for repayment.

In the case of an unsecured business loan, funds are predominantly granted based on the borrower's creditworthiness, as well as the business’ performance, revenue, profits, costs, debts and forward earnings estimates. 

With this type of loan, the lender does not have the option to pursue your assets for repayment. Nevertheless, you must still meet specific income and credit criteria, and many alternative lenders may request a personal guarantee from any business directors or financial backers.

While a lender may approve an unsecured business loan, they may still require specific fiscal information, not only about your business but about your personal finances too. This information can provide a lender with a profile of your ability to repay your debts on time.

Why might you take out an unsecured business loan?

Unsecured business loans can be a versatile borrowing tool suitable for a range of different businesses and purposes. Here are some situations where they may come in handy:

Quick funding needs

Unsecured loans may be a sensible option when your business requires funds in a hurry and you’re seeking fast approval. The absence of collateral often simplifies the process, expediting access to much-needed capital.

Asset-light businesses

For businesses that lack valuable assets to offer as collateral, unsecured loans become a practical choice. You can access capital without the need to put assets on the line.

Startups and new businesses

If your business is in its early stages, especially if it's been operating for less than two years, unsecured loans can be helpful. Traditional lenders often demand a substantial track record, making unsecured loans a more accessible option for new ventures.

Willingness to pay slightly higher rates

While unsecured loans might carry slightly higher interest rates compared to secured options, they provide an accessible means to secure the necessary funds. Businesses willing to accept this trade-off for convenience may find this type of loan fits their needs.

Seasonal or high-volume businesses

Seasonal businesses or those with sporadic, high-dollar sales cycles often find unsecured loans advantageous. The flexibility can allow you to secure financing precisely when you need it, without tying up valuable assets.

Less-than-perfect credit

If your business has a less-than-ideal credit history, don't fret. Unsecured loans aren't solely dependent on credit scores, making them a viable solution for companies striving to rebuild their financial reputation.

What’s the difference between a secured and unsecured business loan?

When comparing secured and unsecured business loans, it may be sensible to make a decision based on your business’ specific financial circumstances and needs. Lenders often differentiate these types of loans based on the level of risk they undertake, which, in turn, impacts interest rates and other features of the loan including:


Many lenders charge an establishment fee for business loans, but you can find some exceptions. Additionally, some loans may carry monthly fees, which can affect the overall cost of borrowing. It's crucial to review these fees when applying for a loan.

Usage restrictions

An unsecured business loan typically offers the flexibility to use the borrowed funds for various business needs without restrictions. In contrast, secured loans may have limitations on how you can employ the loan. For example, if you secure a loan to purchase a specific asset, like a vehicle, you are generally obliged to use the funds exclusively for that purpose.

Are interest rates higher on an unsecured business loan?

Generally, the interest rate you’ll receive on an unsecured business loan will be higher than that of a secured loan to compensate for the risk the lender is taking on the borrowed sum. Given that you’re not putting up any collateral as a means of repaying any outstanding debt, the bank may charge a higher rate of interest to offset this liability.

Carefully comparing a number of different loans and loan types can be an advantageous way of discovering the best borrowing method for your business needs. For example, business loans generally require a substantial amount of paperwork, compared to a personal loan, which can be somewhat cumbersome. You may want to consider comparing business loans with personal loans to decide which lending facility better suits your borrowing needs and financial situation.

What to consider when applying for an unsecured business loan

When considering applying for an unsecured business loan, it's important to understand that while you may not need collateral as security and requirements are often less stringent, specific qualifications may vary from lender to lender. Some common criteria you're likely to encounter includes:

Income requirements

Lenders typically look for a demonstrated history of robust business income. For instance, some lenders might mandate a minimum annual turnover amount. This showcases your business's financial stability and ability to repay the loan.

Business requirements

Lenders often have general prerequisites regarding your business's longevity and location. They may prefer businesses registered in Australia and usually require a minimum operational period ranging from six months to over two years. However, startup businesses can receive unsecured business loans, although you’ll want to do your research before applying to avoid rejection.

Credit history

Your credit history typically plays a significant role in the approval process. Even if your business has encountered credit challenges in the past, some lenders may still consider your application on a case-by-case basis to assess the level of risk.

Intended use of funds

How you plan to spend the loan can also influence your eligibility. For example, some lenders stipulate that borrowed funds must be dedicated to business purposes. Presenting a clear and well-defined plan outlining your short-term and long-term goals, as well as how the capital will be deployed, can bolster the chances of your loan approval.

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Product database updated 15 Jul, 2024

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.