Apply for an Unsecured Business Loan To Help You Grow Purchase Stock Employ Staff Expand Pay Suppliers
Looking to obtain an unsecured loan for your business? We can help. We work with hundreds of lenders to get you the best loan terms possible.
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From 8.9%
Interest rates per annum
£50,000 +
Annual turnover
1 month – 6 years
Companies only
£10k - £2M
Funding requirement
Our lending partners
Unsecured Business Loans
What is an unsecured business loan?
Unsecured business loans allow your business to borrow without using any tangible assets as security. This means that the loan will not be directly linked to any business or personal assets if you default on your loan.
They are usually a much quicker and easier option than a secured loan because the lender doesn’t need to evaluate and value any potential security assets.
However, because they can be riskier for lenders, they can be slightly more expensive, and the maximum loan is capped at £500k. However, unsecured business loans are more suited to the SME market where businesses are looking to borrow between £10k and £500k.
Key features
- Suitability: Ideal for businesses looking for short to medium-term financing without using an asset as collateral.
- Purpose: They can be used for most business purposes, including stock purchases, boosting cash flow, growth or refinancing debt.
- Amount: Unsecured loans typically range from £10k to £500k. How much you can borrow can be based on a percentage of your turnover or a multiple of profit.
- Term: Loan terms available between 1 month and 6 years.
- Cost: Interest rates vary depending on the lender, but rates start from 8.9%.
An unsecured business loan provides your business with a one-off lump sum that you repay via fixed monthly payments. You’ll pay back the loan over a set time period, usually between 1 and 6 years, and pay interest on what you’ve borrowed.
You can use an unsecured business loan for almost any reason, as long as it’s a legitimate business expense. Common uses of an unsecured business loan include:
- Cash flow
- Stock purchase
- Business growth
- Refurbishment
- Settling bills
- Refinancing debts
Unsecured loans can be slightly more expensive than secured loans because they are seen as a higher risk. There is no tangible security for the lender, although a personal guarantee may be required, to fall back on if you’re unable to repay the loan, so they tend to charge a higher interest rate and offer lower loan amounts.
When you apply for a loan, the lender will assess your business to determine whether or not you qualify. They need to be confident that you can afford to repay what you borrow, so they check things like:
- Your borrowing history
- Your business credit report
- Your current debts
- Your revenue
This will give them a clearer picture of how reliable your business is and how well you’ve managed credit in the past. They will also have general eligibility criteria, typically including:
- You’re over 18 years old
- The business has been trading for at least three months and has a turnover of more than £8k per month
- The business is trading and registered in the UK
- Your business has a UK business bank account
Unsecured business loans are a common way to raise funding, but they might not be suitable for your company. Weigh up the pros and cons to help you determine if they could be the best option.
Pros of unsecured business loans
- No security needed: Your business doesn’t need to have any high-value assets like property, land, or equipment to use as collateral, making it an attractive option for new or small businesses. However, a personal guarantee may be required.
- No risk to assets: As you don’t put any tangible assets down as security, there is no risk you’ll lose them if you’re unable to keep up with your loan repayments.
- Quicker and easier: The application process can be more straightforward because the lender won’t need to value and evaluate your assets.
- No early repayment costs: There are usually no early settlement penalties for unsecured loans.
- Easy budgeting: Paying a fixed monthly repayment for a set term makes it easier for your business to manage and budget the cost.
Cons of unsecured business loans
- Higher interest rates: Unsecured loans usually have slightly higher interest rates to offset the lender’s increased risk because they have no assets to repossess if you can’t repay the loan.
- Small loan amounts: Due to the increased level of risk, lenders tend to offer lower loan amounts compared to secured business loans. However, most of our lenders can still lend up to £500k.
- Stricter eligibility: Lenders set tougher eligibility requirements because they need to be confident that your business can make the repayments, as having no security increases the risk.
- Personal guarantee: Some lenders may ask for a personal guarantee in place of the security of an asset. This means you will be personally responsible for the debt if your business fails.
If you’re unsure whether an unsecured loan is the right funding option for your business, there are several alternatives you could consider.
- Secured business loans: This type of loan allows you to borrow more over a longer period and at a lower interest rate. You need to provide a valuable asset as security.
- Bridging loans: A business bridging loan is designed to bridge a gap between a big purchase and an influx of money. It’s a secured loan designed to be taken out for a short period.
- Asset finance: This type of business finance allows you to purchase a new asset and spread the cost over time.
- Revolving credit line: This works in a similar way to an overdraft or credit card and gives you instant access to credit as and when your business needs it.
- Invoice finance: This allows you to access money tied up in your unpaid invoices, allowing you to operate while you wait for payment.
- Merchant cash advance: This allows you to borrow against future card transactions. You repay a fixed percentage of your card sales until the loan is repaid.
- Peer-to-peer lending: Peer-to-peer lending works by connecting investors with businesses directly via an online platform.
The main difference between secured and unsecured business loans is that secured loans use your assets as security, and unsecured loans do not.
Which option is right depends on how much you need to borrow and what assets your business owns. A secured loan could be the best option if you own valuable assets, like property, and need to borrow a large sum. Here’s an overview of how the two types of loans compare:
Unsecured loan | Secured loan | |
Security required | No | Yes |
Credit history | Good score required | Low score considered |
Interest rate | From 8.9% | Lower rates available |
Personal guarantee | May be required | May be required |
Time to acquire | Within 48 hours | It can take up to 6 weeks |
See how we helped a security company secure a £23,000 unsecured loan in this case study.
An unsecured business loan provides your business with a one-off lump sum that you repay via fixed monthly payments. You’ll pay back the loan over a set time period, usually between 1 and 6 years, and pay interest on what you’ve borrowed.
You can use an unsecured business loan for almost any reason, as long as it’s a legitimate business expense. Common uses of an unsecured business loan include:
- Cash flow
- Stock purchase
- Business growth
- Refurbishment
- Settling bills
- Refinancing debts
Unsecured loans can be slightly more expensive than secured loans because they are seen as a higher risk. There is no tangible security for the lender, although a personal guarantee may be required, to fall back on if you’re unable to repay the loan, so they tend to charge a higher interest rate and offer lower loan amounts.
When you apply for a loan, the lender will assess your business to determine whether or not you qualify. They need to be confident that you can afford to repay what you borrow, so they check things like:
- Your borrowing history
- Your business credit report
- Your current debts
- Your revenue
This will give them a clearer picture of how reliable your business is and how well you’ve managed credit in the past. They will also have general eligibility criteria, typically including:
- You’re over 18 years old
- The business has been trading for at least three months and has a turnover of more than £8k per month
- The business is trading and registered in the UK
- Your business has a UK business bank account
Unsecured business loans are a common way to raise funding, but they might not be suitable for your company. Weigh up the pros and cons to help you determine if they could be the best option.
Pros of unsecured business loans
- No security needed: Your business doesn’t need to have any high-value assets like property, land, or equipment to use as collateral, making it an attractive option for new or small businesses. However, a personal guarantee may be required.
- No risk to assets: As you don’t put any tangible assets down as security, there is no risk you’ll lose them if you’re unable to keep up with your loan repayments.
- Quicker and easier: The application process can be more straightforward because the lender won’t need to value and evaluate your assets.
- No early repayment costs: There are usually no early settlement penalties for unsecured loans.
- Easy budgeting: Paying a fixed monthly repayment for a set term makes it easier for your business to manage and budget the cost.
Cons of unsecured business loans
- Higher interest rates: Unsecured loans usually have slightly higher interest rates to offset the lender’s increased risk because they have no assets to repossess if you can’t repay the loan.
- Small loan amounts: Due to the increased level of risk, lenders tend to offer lower loan amounts compared to secured business loans. However, most of our lenders can still lend up to £500k.
- Stricter eligibility: Lenders set tougher eligibility requirements because they need to be confident that your business can make the repayments, as having no security increases the risk.
- Personal guarantee: Some lenders may ask for a personal guarantee in place of the security of an asset. This means you will be personally responsible for the debt if your business fails.
If you’re unsure whether an unsecured loan is the right funding option for your business, there are several alternatives you could consider.
- Secured business loans: This type of loan allows you to borrow more over a longer period and at a lower interest rate. You need to provide a valuable asset as security.
- Bridging loans: A business bridging loan is designed to bridge a gap between a big purchase and an influx of money. It’s a secured loan designed to be taken out for a short period.
- Asset finance: This type of business finance allows you to purchase a new asset and spread the cost over time.
- Revolving credit line: This works in a similar way to an overdraft or credit card and gives you instant access to credit as and when your business needs it.
- Invoice finance: This allows you to access money tied up in your unpaid invoices, allowing you to operate while you wait for payment.
- Merchant cash advance: This allows you to borrow against future card transactions. You repay a fixed percentage of your card sales until the loan is repaid.
- Peer-to-peer lending: Peer-to-peer lending works by connecting investors with businesses directly via an online platform.
The main difference between secured and unsecured business loans is that secured loans use your assets as security, and unsecured loans do not.
Which option is right depends on how much you need to borrow and what assets your business owns. A secured loan could be the best option if you own valuable assets, like property, and need to borrow a large sum. Here’s an overview of how the two types of loans compare:
Unsecured loan | Secured loan | |
Security required | No | Yes |
Credit history | Good score required | Low score considered |
Interest rate | From 8.9% | Lower rates available |
Personal guarantee | May be required | May be required |
Time to acquire | Within 48 hours | It can take up to 6 weeks |
See how we helped a security company secure a £23,000 unsecured loan in this case study.
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Securing business funding:
How it works
We understand that timing is key when you’re looking to find funding options for your business,so our process is as quick and as streamlined as possible.
1
Apply Online in minutes
We cater to any sized business, so to apply for business funding, we only need you to share basic information about your company. Your application will take a few minutes, and our experts are always happy to assist with any questions you have about specific loan types or alternative finance options.
2
Get Matched in hours
Our LendTech technology will compare our trusted panel of lenders and match you with your most suitable finance option. Each business funding option is different, and we’ll help to make sure you’re fully clued up on the terms and conditions as well as indicative repayment details.
3
Get Funded in days
One of our funding specialists will discuss the available options with you and guide you through the process from application to approval. Once approved, the funds can be deposited in a matter of hours.
Prefer to talk? Call us on 01371 870815
4.9/5 based on 100+ by happy customers
Navigate our range of business
funding options to find out more
We understand that timing is key when you’re looking to find funding options for your business, so our process is as quick and as streamlined as possible.
Apply for a recovery loan to help your business employ staff
A government backed loan to support businesses affected by the pandemic.
Looking to obtain an unsecured loan for your business?
Business loans up to £500k, without the need to secure on property or assets.
Apply for a secured business loan today and get matched with a lender…
Business loans up to £2M, secured against a UK property by way of 1st or 2nd charge.
It takes minutes to apply, there’s no effect on your credit score.
Acquire new or used equipment, machinery or vehicles and spread the repayments over 1-6 years.
Compare merchant cash advances to help your business purchase stock.
Borrow up to 2x your monthly card sales and repay through a small % of your future takings.
Compare revolving credit facilities to help your business grow.
A pre agreed credit facility, allowing you to dip in and out for future funding requirements.
Spread the payments of your PAYE, VAT or Corp Tax bills.
VAT/TAX loans up to £500k for PAYE payments, quarterly VAT payments or annual Corporation tax payments
Prefer to talk? Call us on 01371 870815
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Unsecured business loans: FAQs
Most lenders will either lend based on a percentage of your turnover or a multiple of your profit.
For example, lenders usually lend 40% of your annual turnover. So, if your annual revenue is £500,000, you will be able to borrow up to £200,000.
Some lenders will also consider a debt service coverage ratio to determine your borrowing limit. Several factors, such as existing borrowing, depreciation, and tax payments, can affect this.
Lenders will examine your past finances and credit profile to assess your affordability. Loans typically range from £5k to £500k.
This will vary from lender to lender, but you can expect interest rates to start from 8.9% annually. What interest rate you get can also depend on your business’s credit rating and affordability checks.
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.
When you apply with Aurora Capital, we can give you a decision in as little as 24 hours, and you could even be in receipt of the funds within 48 hours.
An unsecured business loan can be used for almost any purpose, provided it is for legitimate business purposes. Common reasons businesses get unsecured loans include buying stock, refurbishing, cash flow, settling bills, and refinancing debts.
Small business loans can be secured or unsecured. However, small businesses are more likely to qualify for an unsecured loan as they might not have the necessary assets to use as collateral for a secured loan.
Getting an unsecured loan is possible if your business has a poor credit rating, but it will be much more difficult. Unsecured loans are considered more risky for lenders, so they will need to be confident your business can afford the loan.
They can determine this by checking your credit score to see how you’ve managed credit in the past. If you have a low credit score, they may consider your application if you also provide a personal guarantee.
If you’re unable to meet your loan repayments, your business may face a number of consequences. You may incur late or missed payment fees, your credit score will be damaged, and the lender may need to take legal action to recover the debt.
If you agree to a personal guarantee as part of your application, you will be liable for the debt. That means you may have to cover the losses personally, and your assets may be at risk.
Most unsecured loans require a personal guarantee to secure the facility, however, the lender will always try to work with you before enforcing this.
It is not possible for a start-up business to get an unsecured loan. Unsecured lenders like to see businesses trading for longer than four months before they assess a proposal.
If the business hasn’t started trading yet or requires a larger investment, a secured business loan may be better suited for you.
