What is Invoice Financing?

Invoice finance facility has become a very popular mode of financing in last few years.

Under an invoice finance, the business lender approves an invoice financing limit for the borrower and the borrower can instantly get up to 95% of the unpaid approved invoices which gets settled against actual payment received from their debtors. The interest is only charged on the borrowed sum and not the entire limit. This facility is also commonly known as “Invoice Discounting”.

What are the disadvantages of Invoice Finance?

• ✓ Generally, higher interest rates are charged for an unsecured business loan as the risk of lending is much higher to the lenders without any security.
• ✓ An unsecured business loan is generally offered for a shorter term.
• ✓ Some lenders may charge repayment penalties if the unsecured business loan is repaid before the maturity of the term.
• ✓ An unsecured business loan still require a personal guarantee from the business owner/directors of the company.

hat documents are required to apply for an Invoice Finance Limit?

Generally, an unsecured business loans up to $150k get low doc approval on basis of the following documents.

• ✓ Last 6 months bank statements.
• ✓ Valid identification proof.

For an unsecured business loan more than $150k, you may require to submit the following additional documents

• ✓ Financial statements
• ✓ ATO statements
• ✓ BAS statements

FAQ’s About Unsecured Business Loan

How to get an unsecured business loan?

To get an unsecured business loan, you need to meet some basis qualification criteria. To be eligible for an unsecured business loan, you must:

• Have an active ABN;
• Be operating for more than 6 months; and
• Be turning over more than $5,000 per month in last 6 months.

How can I apply for an unsecured business loan?

With the advent of technology, unsecured business loan application has become simple and paperless without any hassle to take any printouts. All you need is to submit some basic details related to your business by completing the online   application form and last 6 months bank statement of your business through a secured link provided by us.

How much unsecured business loan can I borrow?

Typically, unsecured business loan max out around $300,000 however, some small business lenders can offer up to $500,000 for a strong business. The offering may differ from business to business depending upon factors like existing financial strength, cash flow, industry, credit scores etc.

What documents I need to apply for an unsecured business loan?

In most of the cases, for unsecured business loan up to $150,000 you just need to submit 6 months bank statement and a valid Identification proof to get an approval.

For complex and large ticket loans above $150,000, you would be required to submit the financial statements, BAS and ATO transaction statements as well.

How quick can we get an unsecured business loan?

It all depends on the complexity of your case. You may get the funds into your account within 3-4 hours as well. On average it generally takes 24-48 hours to get an unsecured business loan approved.

What are the interest rates for an unsecured business loan?

The interest rate charged by the lenders differs from case to case depending up on various risks associated with the business, like Industry, cash flow, credit history, asset ownership and term of the loan.

For e.g. A borrower with poor credit history would be charged higher rate of interest as compared to a borrower with a good credit history. However, in general the interest rates typically range between 10-20% p.a.

What is the standard loan term for an unsecured business loan?

Generally, unsecured business loans are for shorter term and can be anywhere between 3 months – 36 months. In most of the cases, unsecured business loans are offered for a 12-month period.

Who offers unsecured business loan?

Generally, banks do not offer unsecured business loans as they require security in any form to back the loans. There are various non-bank lender and fintech companies who specialize in providing business loan to small businesses. We are empaneled with most of the major lenders operating in this space.   Contact us to know more.

Do I need to provide my personal guarantee?

Though you do not need to be asset backed for an unsecured business loan, a lender would require personal guarantee from director/promoter of the business to mitigate their risks to an extent.

When do lenders do a credit check?

Lenders would run a credit check only after obtaining a consent from you.

How do I submit my bank statement?

With advancement in technology, submitting a bank statement has become super quick and easy without compromising the security. On receipt of the loan application, we would provide you with a safe and secured link to share your bank statement with us. This process makes the loan approval smooth and fast as we can receive your bank statement within minutes and proceed with the loan approval process instantly.

Please note: With increasing fraud and forged documentation, lenders are no longer accepting PDF bank statements.

How do lenders assess my application?

Generally, lenders consider the cash flow of the business to arrive at your borrowing power. They look into various other fields such as your credit score, past bank dishonors, industry, number of years in the business, age of the promoter/directors, existing personal asset/liabilities etc. to make a lending decision on the file.

What are the alternative business loan options to an unsecured business loan?

An unsecured business loan may not always be the right option for your business as you may have higher funding requirements, be looking for cheaper interest rates, or looking for a more flexible business loan product. There are various alternative business loan options which we can help you with. Some of the popular options are   secured business loan, business line of credit, debtors finance and invoice finance facilities. Please reach out to us on   1300 111 222 or send us a message. One of our lending specialists would get in touch in no time to assist you.

How can Broc Finance help us?

At Broc Finance, we endeavour to get the most adequate facility suitable to the business requirements of our clients. In most of the cases logged in through us, we try to get an indicative offer from the lender for our client’s consideration before proceeding with formal application and consent to credit check. This approach helps our clients to avoid unwanted rejections and credit checks which can significantly impact their credit score.

We would be happy to answer, if you have any other questions. Please   contact us.