Unsecured Business Loans Explained

For small business owners in Australia, finding suitable financing options is vital to fuel growth and seize new opportunities.

What is Unsecured Business Loans and how does it work

Unsecured business loans provide access to funds without requiring collateral or asset security. Unlike secured loans, which are backed by tangible assets, unsecured loans are granted based on the borrower’s creditworthiness, business performance, and financial health.

When applying for an unsecured business loan in Australia, lenders assess factors such as your credit score, revenue history, profitability, and cash flow. The loan amount and interest rates are determined based on these evaluations. Once approved, the funds can be used for various business purposes, such as inventory purchase, equipment upgrades, marketing campaigns, or working capital.

Repayment terms for unsecured business loans typically involve regular instalments over a predetermined period, often ranging from months to several years. It’s essential to review the loan terms and ensure that the repayment schedule aligns with your business’s cash flow capabilities.

Your Prospa Business Lending Solutions in a snapshot

Prospa Small Business Loan

Quick access to $5K – $150K to cover unexpected expenses or a one-off purchase.

  • Fixed term up to 24 months with fixed rates
  • Fast decision & funding possible in 24 hours
  • No asset security required upfront to access Prospa funding up to $150K
  • Minimum $5K monthly turnover and 6 months trading to apply

Prospa Business Loan Plus

Larger loans above $150K and up to $500K to invest in your next business growth opportunity.

  • Fixed term up to 36 months with fixed rates
  • Dedicated Business Lending Specialist
  • Upfront asset security required; charge over the applying business entity(ies)
  • Minimum $1M annual turnover and 3 years trading to apply

Business Line of Credit

Ongoing access to up to $150K to keep your business moving.

  • Renewable 24 month term
  • Fast decision and funding possible in 24 hours
  • Only pay interest on what you use
  • Access funds 24/7 with the Mobile App
  • Minimum $5K monthly turnover and 6 months trading to apply

Funds to cover cash flow or help you grow

Borrow from $5K up to $150K

Apply for $5K to $150K and we'll give you a decision that same day, with fixed repayments for peace of mind.

Easy application

Apply online in under 10 minutes with minimal paperwork.

Flexible terms

We offer repayment terms of 3 – 36 months, with the freedom to pay out your loan early and save on interest.

No upfront security

No need to put your house or other assets down as security to access up to $150K in Prospa funding.

Unlock savings with early repayments

Pay off your loan ahead of schedule, with no hidden fees and enjoy extra savings.

How to apply for a business loan?

Applying for a business loan with Prospa is a streamlined process designed to meet the specific needs of Australian small businesses. Here's how you can get started:

Begin by assessing your financial requirements and determining the loan amount you need. Evaluate whether you meet the eligibility criteria. To apply with Prospa, for example, you need to be an Australian citizen or permanent resident aged over 18 years with a valid ABN/CAN and a minimum monthly turnover of $6K. For many lenders, you may also need to have business plan, revenue projections and credit history to understand your eligibility.

Submit a loan application online. Many financial services providers require lengthy forms but at Prospa the application takes under 10 minutes. You may need to provide financial statements, business details, and other relevant documents.

At Prospa, our team of business lending specialists will guide you through the application process and help you gather all the necessary information – including at a minimum your driver licence, ABN, BSB and account number.

Our team of experts will review your application promptly, considering various factors such as creditworthiness, business viability, and repayment capacity.

Once your loan application is approved, we’ll guide you through the terms and conditions, ensuring clarity and understanding before settling your loan.

Once your loan is approved, the funds are automatically transferred and could be in your account as soon as the next business day.

What is the difference between a secured and unsecured business loans?

A secured business loan requires collateral, such as property or equipment, to secure the loan amount.

This collateral serves as a guarantee for the lender, reducing their risk and typically resulting in lower interest rates and larger loan amounts.

In contrast, an unsecured business loan doesn’t require collateral, making it accessible to businesses without valuable assets to pledge.

While unsecured loans often have higher interest rates and smaller loan amounts, they offer faster approval times and greater flexibility, as they don’t involve the lengthy process of assessing collateral value.

Ultimately, the key difference lies in the presence or absence of collateral securing the loan.

How do I know what the repayments and interest rates will be before I apply?

At Prospa, business loan interest rates can vary depending on a range of factors, the industry you operate in, the length of time your business has been established, the financial health of your business, and your cashflow.

To get an indication of how much a loan might cost at Prospa, talk to our friendly customer service team to see how they can help you get a suitable product for your small business needs.

What does 'No Asset Security' mean for business loans?

The phrase ‘no asset security’ refers to the absence of collateral or tangible assets required to secure a business loan. When Prospa provides a small business with funding we take a personal guarantee from directors, shareholders or persons actively engaged in the management of the business, such as the business owner.  

There are two circumstances under which we may also take security in the form of a charge over assets. That is, if the client’s total combined exposure to Prospa funding is (or becomes) greater than $150,000, and/or if a client defaults on their contractual obligations. 

The charge over assets allows us to register the security interest on the Personal Property Securities Register (PPSR), or we may register a caveat. If the customer’s combined exposure to our products is over $150,000 we will usually only register on the PPSR (unless the customer later goes into default). If a customer defaults under their loan, we may register on the PPSR and/or register a caveat. 

What are the interest rates on unsecured business loans?

Interest rates on unsecured business loans can vary based on several factors, including your creditworthiness, the lender’s assessment, the loan amount, and the repayment term. As there is no collateral to mitigate the lender’s risk, interest rates on unsecured loans are typically higher than those on secured loans. 

It’s important to research and compare interest rates from different lenders to secure the most favourable terms for your business. Some lenders may offer fixed interest rates, ensuring consistent monthly payments, while others may offer variable rates that fluctuate with market conditions. Consider your business’s financial situation, risk tolerance, and repayment preferences when selecting the loan option with the most suitable interest rate structure. 

What can be used as security for a business loan? 

When applying for a traditional secured business loan, lenders typically require collateral to secure the loan amount.

Acceptable forms of collateral can include: 

  • Real Estate: Property such as land, buildings, or commercial spaces can be used as collateral. 
  • Vehicles and Equipment: Lenders may accept valuable machinery, vehicles, or equipment as collateral. 
  • Inventory: Certain lenders may consider inventory as collateral, especially in industries where inventory value is high. 
  • Accounts Receivable: Unpaid customer invoices or accounts receivable can be used as collateral in some cases. 
  • Cash and Savings: In certain instances, lenders may allow cash deposits or savings accounts to secure the loan. 

At Prospa, if a customer borrows more than $150K, we require upfront asset security in the form of a charge over the applying business entity (or entities) which will be registered on the Personal Property Securities Registry (PPSR).  

It’s important to note that the specific collateral requirements can vary between lenders. Always consult with your chosen lender to determine their acceptable forms of collateral. 

What type of collateral cannot be used as security for a business loan? 

While various assets can be used as collateral, certain types of collateral are generally not accepted by lenders:

  • Personal Assets: Typically, lenders require business-related collateral rather than personal assets, such as a personal residence or personal savings. 
  • Intangible Assets: Assets such as intellectual property, trademarks, patents, or copyrights are generally not accepted as collateral. 
  • Future Revenue: Lenders usually do not consider projected future revenue as collateral since it is uncertain and not immediately accessible. 
  • Uninsurable Assets: Assets that cannot be insured or have uncertain value are less likely to be accepted as collateral. 

It’s crucial to review the specific collateral requirements of lenders before applying for a business loan to ensure your assets align with their criteria. 

Why Prospa is today's way to borrow

Securing quick financing for small businesses in Australia, especially startups, can be difficult. At Prospa, we are dedicated to supporting Australian businesses from various sectors to achieve consistent and solid growth.

No more compromising or missed opportunities with Prospa by your side. With hassle-free application, this time tomorrow you could have access to funds for growth and cash flow support. It’s just what we do.
We’re Australia’s #1 online lender to small business.


Borrow up to $500K with 10 minute application, fast decision and funding possible in 24 hours.


A dedicated Business Lending Specialist will get to know you and your business and provide a personalised solution.


Join thousands of Aussie small businesses who thrive with the support of Australia’s #1 online lender to small business.

Talk to a business lending specialist

Talk to a business lending specialist

Talk to a business lending specialist

Talk to a business lending specialist

Talk to a business lending specialist

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