Compare finance types
Invoice finance vs Unsecured loan: which is right for your business?
The main difference between a invoice finance and a unsecured business loan is how they are secured and repaid: a invoice finance suits b2b businesses with reliable customers on long payment terms, while a unsecured business loan suits established businesses needing a set amount fast without pledging an asset.
Invoice finance vs Unsecured loan at a glance
| Invoice finance | Unsecured business loan | |
|---|---|---|
| What it is | Invoice finance is funding advanced against eligible unpaid business invoices, typically 70–90% of the invoice value upfront with the balance (less fees) paid when your customer pays. It uses your receivables as security rather than property. | An unsecured business loan is a lump sum repaid over an agreed term without property or equipment pledged as security. Lenders on our panel assess trading history, turnover and cash flow instead, and a director’s guarantee usually applies. |
| Amount | $20,000 – $5,000,000 | $5,000 – $500,000 |
| Term | 1–12 months | 3–36 months |
| Indicative rate | 8% – 18% p.a. | 9.9% – 29.5% p.a. |
| Rate type | Variable | Fixed or variable |
| Security | Secured by receivables | Unsecured (guarantee may apply) |
| Repayments | Settled when the customer pays each invoice | Daily, weekly or monthly |
| Typical speed | 24–48 hours per invoice once set up | 24–72 hours after documents are received |
| Best for | B2B businesses with reliable customers on long payment terms | Established businesses needing a set amount fast without pledging an asset |
| Consider the other if | Businesses that sell to consumers or are paid at the point of sale | Long-term purchases of vehicles, machinery or property where secured finance is cheaper |
| Tax | Fees are generally a deductible business expense. | Interest on business-purpose borrowing is generally tax deductible. Confirm with your accountant. |
Rates shown are indicative ranges observed across our lender panel for the period stated. They are not an offer or quote. Your rate depends on your business, the lender, the amount, the term and the security offered. The lender makes the final credit decision.
When to choose a invoice finance
A invoice finance is usually the better fit for b2b businesses with reliable customers on long payment terms. Its main advantages are grows with your sales, no property security, can be confidential. Consider the alternative if businesses that sell to consumers or are paid at the point of sale.
When to choose a unsecured business loan
A unsecured business loan is usually the better fit for established businesses needing a set amount fast without pledging an asset. Its main advantages are no property or equipment pledged, fast decisions once documents are in, flexible use of funds. Consider the alternative if long-term purchases of vehicles, machinery or property where secured finance is cheaper.
Invoice finance
Invoice finance is funding advanced against eligible unpaid business invoices, typically 70–90% of the invoice value upfront with the balance (less fees) paid when your customer pays. It uses your receivables as security rather than property.
Unsecured business loan
An unsecured business loan is a lump sum repaid over an agreed term without property or equipment pledged as security. Lenders on our panel assess trading history, turnover and cash flow instead, and a director’s guarantee usually applies.