As a business owner, securing funding is a critical step for any organisation looking to grow, manage cash flow, and invest in new opportunities or business assets.
For many companies, particularly small and medium-sized enterprises (SMEs), unsecured business loans offer a flexible and accessible financing solution without the need for collateral.
With a variety of lenders in the market, finding the right unsecured business loan can be a daunting task.
Whether you’re looking for a quick infusion of cash to manage operational expenses or funding for expansion projects, this guide will help you navigate the options and choose a lender that meets your specific needs.
By understanding the strengths and specialties of these lenders, you can make an informed decision and secure the financial support necessary to drive your business forward.
Top Lenders for Unsecured Business Loans
In no particular order, your best options for unsecured business loans are:
- Funding Circle
- Nucleus Commercial Finance
- Iwoca
- Lending Crowd
- Momenta Finance
- Fleximize
- Mycashline
- Swishfund
Funding Circle
Overview
Company Background
Funding Circle has become one of the largest online platforms for small business loans globally.
The company’s mission is to provide small and medium-sized enterprises (SMEs) with better access to finance, helping them to grow and drive economic progress.
Since its inception, Funding Circle has facilitated over £16.9 billion in loans to more than 150,000 businesses worldwide.
Loan Products
Funding Circle offers a variety of unsecured business loan products tailored to meet different business needs:
- Business Loans: These are term loans ranging from £10,000 to £500,000 with repayment terms of up to six years. The interest rates start from 6.9% per year.
- Line of Credit: A revolving credit facility that helps businesses manage short-term cash flow needs, with amounts from £1,000 to £250,000 and flexible repayment terms.
- Growth Guarantee Scheme: Government-backed loans aimed at supporting business growth and working capital needs, offering amounts between £25,001 and £250,000.
Key Features
- Loan Amounts: £10,000 to £500,000.
- Interest Rates: Starting from 6.9% per year for business loans.
- Terms: Up to 6 years.
- Application Process: Quick and straightforward, with eligibility checks in 30 seconds, a 10-minute online application, decisions within an hour, and funds typically disbursed within 48 hours.
Pros and Cons
- Pros: Fast approval times, competitive interest rates, no early repayment fees, and a simple application process.
- Cons: Strict eligibility criteria, including a requirement for businesses to have been trading for at least a year and be based in the UK.
Nucleus Commercial Finance
Overview
Company Background
Nucleus Commercial Finance aims to provide UK SMEs with alternative funding options tailored to their unique needs.
Nucleus combines the stability of traditional banking with the flexibility and speed of alternative lending platforms.
The company has lent over £2.8 billion to businesses across the UK, offering a range of financial products designed to support business growth and sustainability.
Loan Products
Nucleus offers various unsecured business loan options to meet different business needs:
- Nucleus Business Loans: Unsecured loans ranging from £10,000 to £2 million, with flexible repayment terms from three months to six years.
- Revenue-Based Finance: Allows businesses to borrow up to 200% of their monthly revenue, with loan amounts up to £300,000.
Key Features
- Loan Amounts: £10,000 to £2 million for business loans; up to £300,000 for revenue-based finance.
- Interest Rates: Customised based on business financials; competitive rates.
- Repayment Terms: Flexible, from three months to seven years, depending on the product and amount borrowed.
- Application Process: Quick online application with decisions in minutes and potential same-day funding.
Pros and Cons
- Pros:
- Fast approval and funding process.
- No collateral required for unsecured loans.
- Flexible repayment terms.
- Dedicated account managers for personalised service.
- Cons:
- Strict eligibility criteria, including a minimum of 12 months trading history and at least one UK-based director.
- Interest rates and terms vary based on business financial health.
Iwoca
Overview
Company Background
Iwoca’s mission is to make finance accessible for small businesses.
Frustrated by the rigid and slow processes of traditional banks, they created a fintech solution designed to provide quick, flexible funding to SMEs.
Over the past decade, Iwoca has grown into one of the fastest-growing business lenders in Europe, supporting over 90,000 businesses and approving more than £3 billion in loans.
Loan Products
Iwoca offers several types of unsecured business loans tailored to meet the diverse needs of small businesses:
- Flexi-Loan: Borrow between £1,000 and £500,000 with flexible repayment terms from 1 day to 24 months. Interest is only charged on the days the funds are used, and there are no early repayment fees.
- Revenue-Based Finance: This option allows businesses to borrow up to 10% of their annual revenue, with a limit of £500,000. This type of loan is ideal for businesses looking to align repayments with their revenue cycles.
Key Features
- Loan Amounts: £1,000 to £500,000.
- Interest Rates: Starts at 2% per month for Flexi-Loans, with interest charged only for the days funds are used.
- Repayment Terms: From 1 day to 24 months, with flexible and early repayment options.
- Application Process: Simple online application that takes minutes, with decisions typically made within 24 hours and funds available shortly after approval.
Pros and Cons
- Pros:
- Fast application and approval process.
- No early repayment fees.
- Flexible repayment terms.
- No need for detailed business plans or financial forecasts during application.
- Cons:
- Interest rates can be relatively high compared to traditional loans.
- Requires a good business and personal credit score for the best rates.
Lending Crowd
Overview
Company Background
Lending Crowd is a fintech lending platform designed to support small and medium-sized enterprises across the UK. Their goal is to provide fast and flexible funding options to help businesses grow.
Leveraging cutting-edge technology and a dedicated credit team, Lending Crowd has facilitated over £310 million in loans to more than 2,200 businesses.
The platform aims to offer a transparent, efficient, and customer-centric lending experience.
Loan Products
Lending Crowd offers several types of unsecured business loans:
- Business Loans: These loans range from £75,000 to £500,000 with repayment terms of 6 months to 5 years. The loans are designed to help businesses manage cash flow, purchase stock, fund expansion, or refinance existing debt.
- Recovery Loan Scheme (RLS): Available for businesses affected by the Covid-19 pandemic, offering loans from £25,001 to £500,000.
Key Features
- Loan Amounts: £75,000 to £500,000.
- Interest Rates: Starting from 6.9% annually.
- Repayment Terms: 6 months to 5 years.
- Application Process: Quick and easy online application with decisions typically made within days and funds disbursed shortly after approval. No early repayment fees.
Pros and Cons
- Pros:
- Competitive interest rates.
- Fast application and approval process.
- Flexible repayment terms with no early repayment fees.
- Accessible to businesses with a minimum turnover of £100,000 and two years of trading history.
- Cons:
- Requires personal guarantees for loans up to £350,000.
- Not covered by the Financial Services Compensation Scheme (FSCS).
Momenta Finance
Overview
Company Background
Momenta Finance offers a range of alternative finance solutions tailored to support UK-based SMEs.
With a mission to provide transparent and accessible funding, Momenta Finance has become a trusted partner for businesses seeking financial support.
The company has secured significant funding from partners like Barclays and Quilam Capital to expand its lending capabilities.
Loan Products
Momenta Finance provides various unsecured loan options to cater to different business needs:
- Unsecured Business Loans: These loans range from £50,000 to £250,000 with terms from 6 to 60 months. They are designed to support working capital, business growth, asset purchases, and more.
- Business Cash Advance: Loans up to £150,000, calculated as up to 120% of monthly card takings, with no fixed term and flexible top-up options available after 4 months.
Key Features
- Loan Amounts: £50,000 to £250,000 for unsecured business loans.
- Interest Rates: Variable, dependent on business financials.
- Repayment Terms: 6 to 60 months.
- Application Process: Simple online application with no impact on credit score until the applicant decides to proceed. Decisions and funding can be quick, often within a few days.
Pros and Cons
- Pros:
- Tailored financial solutions to meet specific business needs.
- No early repayment charges after the first 12 months.
- Quick and efficient application process.
- Transparent fee structure.
- Cons:
- Requires personal guarantees.
- Interest rates may vary based on business financial health.
Fleximize
Overview
Company Background
Fleximize is a multi-award-winning digital business lender providing flexible and accessible funding solutions for UK SMEs.
Fleximize has lent over £350 million to thousands of SMEs.
The company’s goal is to offer tailored financial products that help businesses grow and thrive, with a strong emphasis on customer service and innovation.
Loan Products
Fleximize offers a range of unsecured business loan products designed to meet various business needs:
- Flexiloan: Suitable for businesses trading for at least 12 months, offering loan amounts from £10,000 to £500,000 with terms of 12 to 60 months. Interest rates range from 0.9% to 2.9% per month.
- Flexiloan Lite: Targeted at early-stage growth businesses trading for at least six months, providing loan amounts from £10,000 to £500,000 with terms of 3 to 12 months. Interest rates range from 1.9% to 3.9% per month.
Key Features
- Loan Amounts: £10,000 to £500,000.
- Interest Rates: 0.9% to 2.9% per month for Flexiloan; 1.9% to 3.9% per month for Flexiloan Lite.
- Repayment Terms: 12 to 60 months for Flexiloan; 3 to 12 months for Flexiloan Lite.
- Application Process: Quick online application with decisions typically within 24 hours. Funds are often available on the same day as approval.
Pros and Cons
- Pros:
- Fast approval and funding process.
- No early repayment fees.
- Flexible repayment terms and top-up options.
- Personalised service with dedicated relationship managers.
- Cons:
- Requires personal guarantees from directors or shareholders.
- Higher interest rates for shorter-term loans compared to traditional bank loans.
Fleximize
Overview
Company Background
Fleximize was founded in 2014 with the mission to provide flexible and accessible funding solutions for small and medium-sized enterprises in the UK.
The company aims to empower businesses by offering financial products tailored to their needs, focusing on customer service and innovation.
Fleximize has become a significant player in the alternative finance market, having lent over £350 million to thousands of SMEs.
Loan Products
Fleximize offers a variety of unsecured business loans to cater to different business requirements:
- Flexiloan: Designed for businesses that have been trading for at least 12 months. It offers loan amounts from £10,000 to £500,000, with repayment terms ranging from 12 to 60 months. The interest rates range from 0.9% to 2.9% per month.
- Flexiloan Lite: Suitable for early-stage businesses that have been trading for at least six months. It provides loan amounts from £10,000 to £500,000, with terms of 3 to 12 months. The interest rates range from 1.9% to 3.9% per month.
Key Features
- Loan Amounts: £10,000 to £500,000.
- Interest Rates: 0.9% to 2.9% per month for Flexiloan; 1.9% to 3.9% per month for Flexiloan Lite.
- Repayment Terms: 12 to 60 months for Flexiloan; 3 to 12 months for Flexiloan Lite.
- Application Process: Simple online application with decisions typically made within 24 hours. Funds are often disbursed on the same day as approval.
Pros and Cons
- Pros:
- Fast approval and funding process.
- Flexible repayment terms and top-up options.
- No early repayment fees.
- Personalised service with dedicated relationship managers.
- Cons:
- Requires personal guarantees from directors or shareholders.
- Higher interest rates for shorter-term loans compared to traditional bank loans.
Mycashline
Overview
Company Background
Mycashline, trading as MCL Finance, aims to disrupt the SME lending space with a focus on providing fast, flexible, and transparent funding solutions.
The company is dedicated to helping small businesses access the capital they need to grow and thrive. Mycashline has quickly established itself as a reliable source of business finance, leveraging innovative fintech solutions to streamline the loan application process and ensure rapid funding.
Loan Products
Mycashline offers a range of unsecured business loan products to meet the diverse needs of small businesses:
- Unsecured Business Loans: Loans range from £5,000 to £100,000 with flexible repayment terms from 1 to 24 months. These loans are ideal for managing cash flow, expanding operations, or seizing business opportunities without the need for collateral.
- Merchant Cash Advance: This product is designed for businesses that accept card payments, offering an advance based on future credit card sales. It’s a flexible option that adjusts repayment amounts according to sales volumes.
Key Features
- Loan Amounts: £5,000 to £100,000.
- Interest Rates: Vary depending on the loan type and borrower’s profile.
- Repayment Terms: 1 to 24 months.
- Application Process: Quick and straightforward, with an initial decision often provided immediately and funds disbursed within hours of approval. The application process does not impact the applicant’s credit score.
Pros and Cons
- Pros:
- Fast approval and funding process.
- No early repayment fees.
- Flexible loan terms tailored to business needs.
- Dedicated account managers to assist throughout the loan process.
- Cons:
- Requires a personal guarantee.
- Higher interest rates compared to traditional bank loans.
Swishfund
Overview
Company Background
Swishfund’s vision is to prioritise flexibility, speed, and customer service in business financing.
They aim to provide straightforward, hassle-free commercial loans, helping businesses grow by offering fast and flexible financing solutions.
Loan Products
Swishfund offers various unsecured business loan options:
- Business Loans: Loan amounts range from £5,000 to £1,000,000 with terms from 3 to 12 months, and occasionally up to 24 months. These loans are designed to help businesses manage cash flow, expand operations, and cover unexpected expenses.
Key Features
- Loan Amounts: £5,000 to £1,000,000.
- Interest Rates: Based on business performance and risk assessment.
- Repayment Terms: 3 to 12 months, with some loans extending up to 24 months.
- Application Process: Fast online application process that takes around 10 minutes, with decisions typically within 12 hours and funds available within 24 hours of approval. Weekly automated repayments help manage cash flow effectively.
Pros and Cons
- Pros:
- Quick decision and funding process.
- Flexible loan terms based on business needs.
- No hidden charges and transparent loan conditions.
- Personalised support from in-house experts.
- Cons:
- Requires at least 12 months of trading history.
- Personal guarantees may be needed depending on the loan amount and business profile.
How to Choose the Right Lender for an Unsecured Business Loan
To ensure your business gets the best possible terms and support, you’ll need to:
- Understand Your Business Needs
- Evaluate the Lender’s Reputation
- Compare Loan Products and Terms
- Assess the Application Process
- Personalised Support
- Evaluate the Lender’s Specialisations
1. Understand Your Business Needs
- Loan Purpose: Identify why you need the loan. Is it for working capital, expansion, purchasing equipment, or managing cash flow? Different lenders may specialise in various types of business loans.
- Loan Amount: Determine how much funding you require. Some lenders offer small loans starting from £5,000, while others can provide up to £1,000,000.
- Repayment Terms: Consider the repayment period that suits your business’s cash flow. Some lenders offer short-term loans (up to 24 months), while others provide longer terms (up to 60 months).
2. Evaluate the Lender’s Reputation
- Customer Reviews: Check online reviews and testimonials to gauge the lender’s reputation. Platforms like Trustpilot and Google Reviews can provide insights into customer satisfaction.
- Case Studies: Look for success stories or case studies on the lender’s website to see how they have helped other businesses similar to yours.
- Accreditations: Ensure the lender is accredited by relevant industry bodies, such as the Financial Conduct Authority (FCA) in the UK.
3. Compare Loan Products and Terms
- Interest Rates: Compare interest rates across different lenders. Rates can vary significantly, and even a small difference can impact the total repayment amount.
- Fees and Charges: Look for any hidden fees or charges, such as origination fees, processing fees, or early repayment penalties.
- Flexibility: Check if the lender offers flexible repayment options, such as the ability to make early repayments without penalties.
4. Assess the Application Process
- Speed: Consider how quickly you need the funds. Some lenders offer rapid approval and funding within 24 hours, while others may take longer.
- Ease of Application: Evaluate the simplicity of the application process. Online applications that can be completed in minutes are often preferable.
- Documentation: Be aware of the documentation requirements. Some lenders require detailed financial statements, while others may need only basic information.
5. Personalised Support
- Dedicated Account Managers: Check if the lender provides personalised support through a dedicated account manager who can guide you through the loan process.
- Customer Service: Assess the quality of customer service. Responsive and helpful support can make a significant difference, especially if you encounter issues during the loan term.
6. Evaluate the Lender’s Specialisations
- Industry Focus: Some lenders specialise in certain industries and may offer better terms or more relevant advice for businesses in those sectors.
- Loan Types: Ensure the lender offers the specific type of loan you need, whether it’s a business loan, merchant cash advance, or revenue-based financing.
Try Our Business Loan Calculator
Whenever you’re looking for funding options for your business, be sure to take advantage of our free business loan calculator to compare terms from different lenders.
Conclusion
Choosing the right lender for an unsecured business loan can have a major impact on your business’s growth and financial health.
By understanding your business needs, evaluating the lender’s reputation, comparing loan products and terms, assessing the application process, and ensuring personalised support, you can make an informed decision that aligns with your goals.
Each lender offers unique benefits that can cater to your specific requirements.
Invest time in researching and comparing these options to ensure you secure the best possible funding for your business. By doing so, you can confidently take the next step toward achieving your business objectives and driving growth.
For more detailed information, visit FundingBay and let us help you secure the right lender for your needs.
