Unsecured Business Loans
Raise Funds Quickly With An Unsecured Business Loan
If you’re looking to raise funds for your business, an unsecured business loan could provide you with a cash injection in days. Get the best deal with ABC Finance.
Over 30,000 loan-seekers helped
FCA Authorised – Regulated Broker
Receive your funds in as little as days
Market-leading interest rates
Experienced Advisors
No Broker Fees
Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in business loans
An unsecured business loan is a fast and simple business finance product that allows you to borrow money quickly when you need it most.
You can borrow up to £500,000 without having to provide assets or property as security.
What is an unsecured business loan?
An unsecured business loan is a fast way for UK businesses to borrow money without using their assets as collateral for the borrowing. As security is not being taken, they’re the fastest and simplest way to access finance, with funds available in as little as 24 hours.
They’re popular with businesses that don’t have, or don’t wish to offer assets or property as security for the finance.
Naturally, many businesses benefit from some form of borrowing to help move them to the next level. Business loans are a great way of doing this. While this type of borrowing is not secured, in some cases a personal guarantee is still required
In this case, the person who signs the personal guarantee is personally responsible for the debt if the business can’t repay the loan.
Key Features
Loan Size
From £5,000 to £750,000
Interest rate
Rates from 5.5%
Types
Unsecured or secured
Term
3 months – 72 months
Completion timescale
From 24 hours
Eligible borrowers
UK businesses only
How do unsecured business loans work?
Unsecured business loans work on a simple basis, you borrow money without having to put down security by way of collateral.
In simple terms, once the loan is approved, the full loan amount is deposited into your business bank. You then repay the loan over the agreed loan term through regular monthly repayments. Once all repayments have been made over the full term of the loan, the debt is repaid in full.
How To Apply With ABC Finance
Talk to our team to find the best deal. They will present the options available to you.
Once you’ve chosen a product, the lender will assess your application and issue an agreement in principle.
We work with you to complete the application form and send any supporting information required for underwriting.
Once the underwriting process is complete, you get your offer, which you sign and return.
Your application is complete and your funds are sent to your bank account.
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Will I qualify?
To qualify for an unsecured business loan with ABC Finance, you must be:
- A UK based business,
- Have been trading for at least 3 months, and
- Have a minimum turnover of £50,000
While this is the minimum criteria, businesses that have been trading for 12 months+ will find there are more options to choose from.
How much can I borrow?
We offer unsecured business loans from £5,000 – £500,000.
The amount you can borrow is assessed on a case by case basis and is assessed on the financial performance of your business. The key factors in the assessment of applications are:
- Company turnover
- Profitability and how much the business can afford to repay
- Any future changes that are expected in the company’s financial performance
- The company credit score
In essence, a small business with little profit will be able to borrow less than a large company with larger profits.
To find out how much you can borrow, get in touch. Our team of business loan experts can pre-approve your application in minutes and let you know how much you can borrow.
If you’re happy with your offer, you could receive your funds in as little as 24 hours.
How much do unsecured loans for business cost?
The cost is based on the interest charge and arrangement fee. We offer rates from 5.5%, and work with lenders from the big high street banks, through to smaller, independent lenders to ensure we’re always able to offer the best deals.
To get an accurate guide to how much your business could pay, get in touch and we will arrange a personalised quote. We can do this in minutes.
What our expert says…
“Unsecured lending is key for UK SMEs and allows business owners to get a fast, easy cash injection to drive their business forward.
Having the freedom to raise funds to improve cash flow, purchase business assets or fund expansion without the need to provide collateral is key to the health of the UK economy.
If your business could benefit from a cash injection, then consider applying for unsecured funding.”
Author: Gary Hemming CeMAP CeFA CeFA CSP
20+ years experience in business loans
Advantages
Here are the key advantages:
Fast and simple way to borrow
Applications are often handled through online portals with automatic underwriting. This means that loans can be completed in a matter of days.
No collateral required
Unsecured business loans require no collateral, so your assets won’t be at risk should you fail to keep up the repayments in future.
Simple repayment structure
Business loans are repaid over a fixed term with fixed monthly repayments, making them very easy to manage.
Very little upfront cost
Unlike other forms of borrowing, there are often no upfront costs when making a new application.
Choice of lenders
As technology has improved, more and more lenders have joined the market. This gives business owners more choice and the ability to compare lenders to find a better deal.
Disadvantages
Here are the key disadvantages:
Rates can be high for some borrowers
As above, when a lender is willing to take on an applicant with poor credit history or trading performance, the rate charged may be higher than if security was offered.
Criteria can be strict
As no security is offered, those with poor credit, or weak trading history may find it difficult to find a lender willing to accept them. This is due to the high risk nature of these loans from a lender’s perspective.
The monthly repayments will affect cash flow
As you will have to make monthly repayments to repay your loan, your monthly costs will clearly reduce your cash flow. This must be factored in, and the borrowed funds must be put to good use to ensure that the loan is worthwhile.
What are the alternatives?
The alternatives to unsecured business loans for UK SMEs are:
- Secured business loans – A secured business loan is a similar product, but requires collateral. As the lender has taken security over an asset, it may be easier to qualify for this product over an unsecured product. That said, secured lending comes with a longer application process than unsecured lending.
- Merchant cash advance – A merchant cash advance allows you to borrow against your future card terminal receipts.
- Invoice finance – Invoice finance allows you to release funds from the invoices that you have raised for work that has been completed, but not yet settled. This is a strong option for those who accept payment on delayed terms of 28 days or more and require business funding.
- Asset finance – Asset finance allows you to borrow against a business asset such as plant and machinery or a vehicle. Asset finance can be taken out against new assets, or existing company assets and is a simple way to borrow money.
- Revolving credit – Business revolving credit facilities allow you to borrow and repay funds as needed and are a flexible option for business owners. Common options include standalone revolving credit facilities, business overdrafts and business credit cards.
What are the differences between secured and unsecured business loans
A secured business loan differs from an unsecured business loan as a secured loan sees the lender take collateral over an asset. Common assets are a property, machinery or equipment.
Secured lending tends to take longer to complete than an unsecured loan. This is because an assessment has to be made over the security asset and legal paperwork prepared to enable the lender to take a legal charge over it
There is a payoff to consider though, as the interest rates charged on secured lending tend to be a little lower than those charged on unsecured finance. This is offset by the fact that your assets could be repossessed should you fail to keep up repayments on the facility.
Ultimately, choosing the right option for you will come down to the following:
- How quickly you want the money
- The simplicity of the application process
- How interest rate conscious you are
- Whether you’re prepared to put your business assets at risk
Frequently Asked Questions
How quickly will I receive funds?
An unsecured business loan can be completed with funds in your account in as little as 24 hours.
Some lenders take a little longer, so there may be a trade off between the interest rate you pay and the speed of completion.
In this situation, our team of experts will guide you through the options. We can let you know if your application has been pre-approved almost instantly, so you’ll have a strong indication of your likelihood straight away.
Can I get an unsecured business loan with bad credit?
Yes, we offer a specialist range of bad credit business loans for those with a less than perfect credit score. There is a wide range of lenders, so we can usually find a suitable solution for most businesses.
If your credit history is particularly poor, choosing a different product that offers the lender more security may be a better option as it will usually come with better interest rates. This all comes down to lender security.
When a business loan lender lends money to a customer with a poor credit history, they are taking a greater risk. Unsecured borrowing compounds this risk.
Can unsecured business loans damage your business’ credit score?
In the UK unsecured business loans don’t damage your business credit score when you take them out. While your score could drop in the first month or two as things settle, your score will generally increase as you start making repayments, as long as they’re made on time.
That said, if you fail to make the payments as they fall due, your company credit score will be damaged and you may find it difficult to borrow again until things recover.
What can I use an unsecured loan for?
An unsecured loan can be taken for almost any need. Common uses include:
- Paying an urgent bill
- Funding business growth
Do I have to provide a personal guarantee?
In most cases, a personal guarantee will required when you take out this type of business loan. This is because the lender has no collateral to fall back on should you fail to keep up the monthly repayments.
That said, while a personal guarantee is needed in most cases, some businesses can borrow without the need for the directors to sign a personal guarantee. This tends to be businesses with a good business credit score. If you’re looking to borrow without the need for a PG, get in touch and we’ll be able to advise you on your options.
Why do lenders ask for a personal guarantee?
As funds are offered on an unsecured basis, the lenders have very little scope to recoup funds should you fail to keep up the repayments.
Limited companies benefit from limited liability, meaning that directors won’t usually be held liable for the debts of a company after it is closed down.
As such, a personal guarantee is used to ensure that the lender is protected and has more chance to get their funds back in the event of default.
How could an unsecured business loan benefit my small business?
Unsecured business loans can be used to release funds into your business and can have a huge impact on your continued success. Whether used to ease cash flow, or to fund expansion plans, when used correctly, business loans provide vital capital to help your business.
Our clients often turn to this type of finance to fund stock purchases, the hiring of new staff and the purchase of new equipment. Where a capital injection is used to drive a business forward, the increased cashflow could be used to generate profits far in excess of the cost of borrowing.
How are interest rates decided?
Your interest charges are decided based on the business financial health of the applicant.
Financial health is judged on turnover, profits, credit history and business bank account management. This is then combined with the loan amounts required and the loan term to create a bespoke quote.
Can I repay my loan early?
Yes, you can repay a business loan early.
Some lenders will reward this by reducing your interest charge, or even removing future interest charges. If you’re unsure whether to repay early, we are always happy to help our clients make the call and explain the pros and cons of doing so.
