Unsecured Business Loans
Decisions within 48 hours of all documentation
Quick and easy online application
Daily, weekly or monthly repayments
Terms from 2 months to 5 years
What is an Unsecured Business Loan?
An unsecured business loan allows creditworthy businesses to borrow money with an agreed payment schedule and interest rate. The term ‘unsecured’ means that applicants aren’t required to secure the loan against an asset, such as equipment or property.
Unsecured loans are usually fast to arrange, competitively priced, and are ideal for growing SME’s. If you are looking to borrow up to £500,000 with a maximum term of 5 years read on to find out if you’re eligible.
Am I eligible for an Unsecured Loan?
Ltd companies trading for at least four months can apply for an unsecured business loan. To qualify for an unsecured loan, you do not need to be a homeowner; tenants are accepted. Unfortunately, start-ups are not eligible for this type of loan as you have to be trading for at least four months – business credit cards may be a better option.
There are no guarantees that you will qualify for unsecured loan options if you have a CCJ or bad credit history. As lenders need to put their trust in you and do not have any assets to fall back on, they will likely use your spending history to help them make their decision. However, due to the flexibility of this loan, CCJs and adverse credit can be considered, and many past cases have been approved with bad credit in place.
The criteria for Tier 1 lenders are slightly stricter. To qualify with a Tier 1 lender, your business must have been trading for at least two years as a Ltd business. You must also be generating enough profit to service a loan and have a clean credit report. The lenders will look at the EBIDTA figure when businesses are loss making, so if your depreciation and amortisation figures outweigh your loss, then they will still consider your application.
How to Apply
How does an Unsecured Business Loan work?
An unsecured business loan works in the same way as a regular business loan where repayments are made monthly, weekly or daily depending on your agreement. Loans terms can be anywhere between 2 months and 5 years according to your business needs. The loan can be used for almost any expense in the best interest of the business. Businesses usually use these loans for growth and development in refurbishment, capital expenditure and stock.
Unlike secured loans, ‘unsecured’ means your loan is not secured against any personal or business assets, such as property, equipment, vehicles or machinery. An unsecured loan does require a personal guarantee to show the lenders that you are confident your business will keep growing over the course of the loan.
We have access to 30+ lenders in a 3-tier risk model. Our rates start from 1.9% per annum and, depending on your business risk, can go up to 5.5% per month. If you can return the requested documents quickly, funding can be with you in as little as 48 hours, however, the average time is around seven working days. In most cases, lenders do not charge early settlement fees. They will usually only charge you the amount of interest you have used up to that point, so there are savings to be made when settling early.
What is a Personal Guarantee?
A personal guarantee is a form of security for the lender to ensure that they have the means to fall back on should your business fail to make the loan repayments. By providing a personal guarantee to the lender, you will act as a guarantor for the loan amount. This means you’ll pay from your own personal funds should your business default on a loan repayment.
Personal guarantees are sometimes backed up by security, which may be a charge over your home or another personal asset. While this may feel like a big commitment, it gives lenders the reassurance that you have the means to fulfil the loan amount. This kind of security theoretically makes it easier for lenders to recoup their funds should the payments default. Therefore, providing a personal guarantee when applying for an unsecured business loan could secure you a larger loan for your company.
Some insurance companies that we work with closely specialise in Personal Guarantees. If you’re worried about signing a Personal Guarantee, we can partly secure this agreement with an insurance package. This gives you more peace of mind and allows you to have a security net should you need to act upon your Personal Guarantee.
Get in touch today to speak to one of our advisors about finding the right unsecured loans for you. Our lenders can offer cheap unsecured loans with competitive terms.