Types of unsecured business loans, and finance for higher-risk industries

Last updated 3 November 2026 · Reviewed by 360 Asset Finance Compliance

What types of unsecured business finance are there?

These are the common types in the market generally. Not every lender offers every type, and we don't arrange all of them.

• Unsecured term loans: a lump sum repaid over an agreed term.
• Lines of credit and overdrafts: a limit you draw on and repay as needed.
• Short-term working-capital loans: funds for a short-term cash flow need.
• Invoice finance and trade finance: related options, usually secured against invoices or goods.

How does an unsecured term loan work?

You borrow a set amount and repay it, with interest, in regular repayments over an agreed term. Businesses use them for one-off costs such as a fit-out or stock.

• Pros: predictable repayments, and no specific asset offered as security.
• Cons: you pay interest on the full amount from the start, and early repayment costs may apply.

How do lines of credit and overdrafts work?

A business line of credit is a revolving facility: you draw funds up to a limit, repay them and draw again. An overdraft works in a similar way but is linked to your business transaction account, so the account can go below zero up to the limit. Both can suit uneven cash flow.

• Pros: flexible, and interest is generally charged only on what you use.
• Cons: fees can apply even when you don't draw on it, and the lender may review or reduce the limit.

What is a short-term working-capital loan?

This is a smaller loan repaid over a short period, sometimes with frequent repayments taken directly from your account. Businesses use them to bridge a gap, such as buying stock ahead of a busy season.

• Pros: designed for short-term needs, with the debt cleared over a short period.
• Cons: often among the more expensive forms of business finance, and frequent repayments can strain cash flow.

What about invoice finance and trade finance?

These are often discussed alongside unsecured loans but are usually secured:

• Invoice or debtor finance: a lender advances funds against your unpaid customer invoices and is repaid when customers pay. It can suit businesses that wait a long time to be paid.
• Trade finance: funds to pay suppliers for stock or imports, repaid once the goods are sold or a set period ends. The goods or the transaction usually act as security.

What do unsecured business loans have in common?

• Higher pricing: they're usually priced higher than secured finance, because there's no asset for the lender to fall back on.
• Personal guarantors: lenders commonly ask directors or owners to act as personal guarantors, so they can be asked to repay the debt if the business can't.
• Focus on the business: the lender will assess your application against its criteria, looking at the business's trading and financial position.

If you're signing as a guarantor, consider getting independent legal advice first.

Which industries do some lenders treat as higher risk?

Some lenders see certain industries as higher risk, often because cash flow can be uneven or the industry is more exposed to economic cycles. Examples can include construction and trades, hospitality, and transport and logistics.

Lenders respond in different ways:

• some lenders avoid these industries altogether
• some specialist lenders cater to them, sometimes with different pricing
• some ask for more information about the business, its contracts or its cash flow
• some offer different structures, such as secured finance instead of an unsecured loan.

A broker who compares a panel of lenders can help you find lenders that consider your industry. 360 Asset Finance arranges unsecured business loans through its lender panel, and your broker can tell you which options the panel offers for your industry. If you're buying a vehicle or equipment, asset finance is another option. We're a broker, not a lender: the lender you choose provides the finance and decides whether to approve it.

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General information only. It doesn't take into account your objectives, financial situation or needs, and it isn't credit, tax or legal advice. Finance is provided by the lender you choose and is subject to its lending criteria; fees and charges apply. 360 Asset Finance is a trading name of Kuone Consulting Pty Ltd (ABN 75 647 329 002), Australian Credit Licence 566705.