Top Unsecured Loans in South Africa

Updated on 6 June 2024

Subscription Form (#66)

unsecured loans in south africa

Unsecured loans are the best way to get quick financing for a small business. You can qualify for the loan on favourable terms without collateral or a well-established business.

There are various types of unsecured loans, including personal loans, cash advances, and credit cards. Businesses can use an unsecured loan for different purposes. These include growing your business, buying inventory, or covering unexpected costs like salaries or contractor payments.

If your business does not qualify for a secured loan, you can apply for an unsecured loan and receive your funds quickly, usually within 48 hours. Unsecured loans are for smaller amounts but can go up to R5 million. Also, they have higher interest rates because there is no collateral involved. The lender usually only checks the credit score of the borrower and the business.

Below we look at some of the top unsecured loan options available in South Africa.

Credit Cards

This is a revolving loan, meaning it has a credit limit that can be spent, repaid and spent again. Many banks offer credit cards for businesses. Nedbank, FNB, Standard Bank, Capitec, and Absa offer small business credit cards which are ideal for start-ups and SMEs looking to build a credit record.

Inventory Loans

Inventory loans help businesses cover any short-term gaps in inventory such as stock. The loans do not require any collateral and a set amount is paid back monthly. Lula, Genfin, and Retail Capital are some of the top inventory loan platforms in South Africa. These companies provide flexible payment terms, online applications for fast approval, and various repayment terms, making it easier for SMEs.

Cash Advance as Unsecured Loan

All businesses go through unexpected shifts which can be tough. A cash advance helps to cover the gap while your business continues.

Cash advances are short-term loans that help to cover stock shortages, payroll, or taxes such as VAT. Merchant Capital, Lula, and Swoop are some of the best platforms to get a cash advance. Loaners offer quick approval, repayment calculators online, and direct funding so the loan gets deposited into your account.

Purchase Order

A purchase order loan is designed to help entrepreneurs who are contracted to supply goods for a certain project. In South Africa, this is usually suppliers who want to fulfil government tenders.

The purchase order loan helps cover the expenses of purchasing the goods or materials for the project. A lender will look at the borrower’s credit score, the ability to fulfil the order, and the financial health of both parties (borrower and contract issuer). Purchase orders usually have high interest rates and fees, which affect the likelihood of the purchase order being approved.

Crowdfunding as a Top Unsecured Loan

Crowdfunding is the hardest form of lending because it requires you to convince people to invest in your business. This type of funding can be a loan because some funders require you to pay back the investment, while some want equity. Crowdfunding platforms in South Africa include The Investment Network and Thundafund.

With these different types of unsecured loans available, you can choose which one works best for your business needs. Unsecured loans provide useful financial help and the stability you need as a small business owner.

Unsecured loans require no collateral, and lenders are flexible when it comes to repayment terms. Additionally, taking out an unsecured loan increases your credit score and ensures that your business is up and running.

Remember, even with unsecured loans, you still need to qualify for it. If lenders reject your application for the loan, you must work on improving your credit score. Having an account that you pay off every month helps build your credit score.

Also, you need to ensure that you can repay the loan. Apply for a loan amount you know you can repay without struggling. Additionally, choosing the right lender is important. When you apply for the loan, ensure that the lender aligns with your financing requirements.

Get any of the top unsecured loans today and ensure your business’s future. For more information on unsecured loans, visit the SME South Africa website.

Get Weekly 5-Minutes Business Advice

Subscribe to receive actionable business tips and resources.

Subscription Form (#66)

Feeling Stuck?