What is an Unsecured Business Loan?

Business loans that do not require any assets as security for the funding.

Unsecured Business Loan

Unlike Secured Business Loans, for an Unsecured Business Loan lenders don’t require any assets (e.g., equipment or property) as security for the funds. Unsecured Business Loans are provided by a wide range of traditional lenders, such as banks, and alternative lenders typically for one to five years. Lenders will want to know what you are using the money for e.g. hiring a new employee or entering a new market and how it will benefit your business. Typically, suitable for businesses that are more established and profitable.

£1,000 - £500,000

Funds can be in your account within a couple of days, subject to turnover levels and affordability.

1 - 5 Years

Unsecure business loans typically have fixed monthly repayments for terms of 1 – 5 years

7% - 20% APR

Costs vary significantly based on your credit rating, volume of lending, and other factors. Expect annualised costs of around 7%-20% APR

Unsecured Business Loans at a glance

Two Years Trading

To apply for an Unsecured Business Loan you should be trading for a minimum period of two years. Your revenue exceed £100,000 per year and your business should be profitable.

Good Credit History

Some lenders require businesses and/or their directors to demonstrate a good credit history. It’s likely that they’ll want to have insight in the equity and net assets in the business. For this reason it’s less suitable for businesses with a limited track-record, that are loss-making or have recently restructured.

Affordable Repayments

An unsecured business loan is typically taken over 1-5 years, with agreed fixed monthly repayments.

Personal Guarantees

An agreement that means a director takes on a certain level of personal responsibility for the debt through their own finances/assets - is typically required when applying for an unsecured business loan.

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SME Funding Guide - Understand your options

Produced in association with our partners at KPMG Small Business Accounting.

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