Compare finance types
Trade finance vs Unsecured loan: which is right for your business?
The main difference between a trade finance and a unsecured business loan is how they are secured and repaid: a trade finance suits importers, wholesalers and distributors with proven sales and reliable suppliers, while a unsecured business loan suits established businesses needing a set amount fast without pledging an asset.
Trade finance vs Unsecured loan at a glance
| Trade finance | Unsecured business loan | |
|---|---|---|
| What it is | Trade finance is a revolving facility that pays your suppliers for goods at the time of order and gives your business 60–180 days to repay, bridging the gap between paying for stock and being paid for it. It covers both imported and domestic purchases. | 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 | $50,000 – $5,000,000 | $5,000 – $500,000 |
| Term | 2–6 months | 3–36 months |
| Indicative rate | 9% – 20% p.a. | 9.9% – 29.5% p.a. |
| Rate type | Variable | Fixed or variable |
| Security | Secured by receivables | Unsecured (guarantee may apply) |
| Repayments | Each drawdown repaid in full at the end of its term | Daily, weekly or monthly |
| Typical speed | 1–3 weeks to establish, then 24–48 hours per drawdown | 24–72 hours after documents are received |
| Best for | Importers, wholesalers and distributors with proven sales and reliable suppliers | Established businesses needing a set amount fast without pledging an asset |
| Consider the other if | Service businesses with no stock, or one-off purchases that do not justify a facility | Long-term purchases of vehicles, machinery or property where secured finance is cheaper |
| Tax | Interest and facility fees on trade borrowing are generally deductible. Confirm with your accountant. | 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 trade finance
A trade finance is usually the better fit for importers, wholesalers and distributors with proven sales and reliable suppliers. Its main advantages are pay suppliers upfront and often negotiate better pricing, revolving limit recycles with each repayment, works alongside invoice finance to cover the full cycle. Consider the alternative if service businesses with no stock, or one-off purchases that do not justify a facility.
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.
Trade finance
Trade finance is a revolving facility that pays your suppliers for goods at the time of order and gives your business 60–180 days to repay, bridging the gap between paying for stock and being paid for it. It covers both imported and domestic purchases.
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.