How much can I borrow on an unsecured loan?

All lenders work slightly differently from each other, but most will either lend on a percentage of your turnover or a multiple of profit. Usually, they will only lend a maximum of 40% of annual turnover. So, if your annual revenue is £500,000, you will be able to borrow up to £200,000.

Lenders will look into your historical financial data and your credit profile to assess your affordability. Loans typically range from £1k – £500k.

What are the advantages of unsecured business loans?

Unlike a secured loan, where you will have to put tangible assets up as security, unsecured loans do not require this. As the name suggests, you don’t need to have any assets behind you, meaning tenants can also apply for this loan.

Unsecured loans can be sourced a lot quicker than other loans, sometimes within 48 hours, as there is no need to obtain a valuation on your assets. Although rates are likely to be more expensive than a commercial mortgage, interest rates can still be very competitive.

In addition to this, with an unsecured loan, most lenders will not penalise you for settling early. Therefore, if your business is performing better than expected you can pay off your loan before the maturity date and save yourself interest on the deal. Some lenders will also allow you to make over-repayments any time throughout the contract, free of charge.

What types of businesses do you lend to?

We can look to assist companies that have been trading for longer than 6 months and have a minimum monthly turnover of £10,000. Unsecured loans are not available for start-ups.

Will I be credit checked?

Yes, your credit score will be checked. Once your application is submitted, and with your permission, we will run credit checks on the business, as well as its directors/shareholders. If you have bad credit, this doesn’t automatically mean that you won’t be approved, but your chances are higher the better your credit is. This is because the loan isn’t secured against property or assets, so there is a higher risk for the lender.

How much does it cost to get an unsecured business loan?

This will vary from lender to lender, however you can expect interest rates to start from 5% per annum. Some lenders may also charge an admin fee – this will be a percentage of the loan amount and will likely be deducted from the loan, so there is no need for any upfront fees to be paid.

Will my credit score affect my application for an unsecured small business loan?

Yes, like any line of credit, your credit score may affect your application for an unsecured loan with some lenders.

If your business is in need of finance and you have a poor personal or business credit score, we still have lenders that could assist. This will all depend on your individual circumstance and why you have poor credit. If you have any unpaid CCJs, recent liquidations, bankruptcies or IVA’s it is less likely that unsecured lenders will approve your deal. However, there are plenty of other options available to companies with poor credit, such as a merchant cash advance or secured loan.

Can I get an unsecured startup business loan for my business?

Unsecured startup loans are not available to small businesses. Instead, a secured loan would be better or a specific startup loan.

How do I find an unsecured loan lender?

As business lending specialists, we can match you with a lender from our panel of providers across all types of business financing. When you apply for an unsecured business loan through Aurora Capital, we’ll take your information and find the lender who is best suited to your requirements and who is offering the best terms. We have unparalleled access to the entire business finance market, allowing us to guarantee the very best loan deals for our clients, every time.

What happens if I can’t pay back my unsecured business loan?

When you take out an unsecured loan, you’ll agree to payment terms and interest rates payable over the course of your loan or at the end of the term. If you can’t meet your monthly repayments, each lender will have a different loan recovery process. When you apply, you can learn more about different payment terms and collections.

How long does it take for an unsecured business loan to be approved?

When you apply with Aurora Capital, a decision for your application can be received in as little as 24 hours.

Is a small business loan secured or unsecured?

Small business loans can be both secured and unsecured depending on your needs and available assets or property.