Business financing simplified

Unsecured Business Loans

Business financing simplified

Unsecured Business Loans
in a nutshell

Unsecured business loans allow businesses to borrow money without offering collateral. In contrast to a secured loan, there are no specific assets offered as security in case of default. Interest rates are slightly higher for unsecured vs secured, in exchange for the higher risk taken on by the lender. Traditional banks and fintech lenders both offer unsecured loans, typically over 1-6 year terms.

During the COVID-19 pandemic, the UK government launched schemes such as CBILS (Coronavirus Business Interruption Loan Scheme) and RLS (Recovery Loan Scheme)  to support UK businesses through the tough times. However, these schemes have now ended, and almost all lenders offering unsecured loans require directors to sign a personal guarantee. This is a promise made by the director(s) to pay back the loan if the business goes bust and defaults on their loan obligations. Since the lender has no charge over the business assets, a personal guarantee is a way of the lender sharing some of the risk burden with the borrower.

How does an unsecured loan work? Company A wants to borrow £250,000 for expansion. A lender agrees to lend the Company £250,000 over 6 years. The funds will usually be paid back following an amortization schedule. The loan will usually be repaid in equal monthly installments, made up of principal and interest.

Some of our lenders

Speed

Fintech lenders have led the charge in speeding up approval times. On average, the time from application to funds released takes 2-3 weeks. Some lenders can even make instant decisions which can shorten this time to less than 1 week.

BENEFITS

Unsecured

You can borrow up to £250,000 without a charge over your business assets or over a personal property.

BENEFITS

Easy

To apply for an unsecured loan, relatively few documents are required. Most lenders need: bank statements, latest full filed accounts, and recent management accounts.

BENEFITS

Flexible repayment

In most cases, unsecured loans have flexible repayment terms and allow you to repay early to save on future interest payments.

BENEFITS

Who is Eligible?

  • Profit-making businesses.
  • Good business credit score.
  • Good personal credit score.
  • Solvent businesses.
  • Most sectors.
  • Minimum trading history of 2 years.
  • Preferable that directors are UK homeowners.

How does it work?

1. Assessment: There are loads of lenders in the market, therefore, assessing the market and understanding which lenders’ criteria your business matches is crucial.

2. Application: Gather information and use an expert to make the applications. Ensure the narrative around the business matches the financials and the lenders’ criteria.

3. Funding: After a firm offer is made and contracts are signed, funds will be released to your bank account almost immediately.

How Much Does It Cost?

Unsecured loans are subject to a huge range of interest rates depending on the lender. This can range from a few % over base rate annually, to short-term funding at a few %  per month

In addition to the interest rate, there will likely be some setup fees of a few %, which will probably be added to the loan balance on the day the funds are released.

Pricing will depend on a few items as listed below:

FAQ's

Yes. While this reduces the number of lenders you have access to, and the amount you can borrow, you could still be eligible for an unsecured loan. Some lenders cap the amount they can lend to non-homeowners.

Yes. The amount you can borrow depends on whether you can afford to service additional funds on top of your existing debt obligations.

Not in the current unsecured loan market. However, if you are happy to have a debenture over your business assets, there are other products that you could explore such as a Revolving Credit Facility. Also, the lending market changes all the time so it is worth contacting us to get an update on any new products or market changes.

Yes. If you are looking to improve an existing rate, extend your loan term over a longer period, or move away from another lender, you can refinance your loan(s) with an unsecured business loan. Some lenders will arrange to repay the lender directly and others will send the funds directly to you and then you pay them back yourself.

Qualifing questions

Can I Borrow?

Get Invoice Finance

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Get Invoice Finance

Please pop your details in the form below and we’ll get back to you within 24 hours.

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