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An unsecured business loan is a commercial finance option where no collateral is needed to secure the loan. Business Owners, Companies & Sole Traders can apply.
Apply for an unsecured business loan with UK Business Loan in under 2 minutes using our quick and easy 4 step process. UK Business Loan provide the best unsecured business loans in the UK through our trusted lenders. We provide a free eligibility check and a fast, confidential and secure application process. At UK Business Loan, we can provide an unsecure business loan to suit you and your business, apply online or speak to one of our experts today to learn more.
Unsecured Business Loans Explained
An unsecured business loan is a type of loan where you do not have to offer anything to a lender in order to secure your loan. UK Loan companies will generally lend between £500 - £1,000,000 for purposes such as tax, VAT, refurbishment and working capital loans.
The below table outlines the types of unsecured business loans available.
|Business Loan Option||
Loan Type Explained
|Unsecured Tax Loan||
A tax loan is a loan taken out to cover a business’ tax payment. This can be used when a tax payment comes at an unexpected time or when a company does not have the cash flow to pay in full. This allows the company to avoid late payment fees from HMRC and set up regular, fixed payments to a lender instead.
|Unsecured Partner Buyout Loan||
A partner buyout loan is a loan that allows you to buy out your business partner so that you can take full control of your business. This type of loan is ideal to obtain the capital to allow you to buy your business partner out however it does mean you will be taking on more debt.
|Unsecured Refurbishment Loan||
A refurbishment loan is used to refurbish a commercial property, this type of loan is great to cover unexpected costs or increase the budget on a refurbishment project. The amount you can borrow from a lender is calculated on the predicted value of the property once refurbished. This type of unsecured business loan relies on your property being sold or rented to make repayment.
|Unsecured VAT Loan||
VAT is the tax added to goods and services in the EU, if a business is struggling to pay their VAT, they may take out a loan. Similar to a Tax Loan, a VAT loan allows a business to pay their tax and avoid late payment fees from HMRC and set up fixed payments to a lender instead.
|Unsecured Working Capital Loan||
A Working Capital Loan is a loan that is used to cover a business’ day to day expenses such as rent, payroll or supplies. Unsecured small business loans can be used to tide a business over and can be helpful for business’ that rely on seasonal cash flow.
|Unsecured Asset Finance||
Asset based finance is a type of finance secured by an asset owned by the borrower. The loan is usually secured by property, equipment or inventory. This lowers the risk factor for the lender as they have the security of the assets if repayments are not made. This type of loan is ideal for a business that may be going through a period of limited cash flow as they can use an asset to secure a loan instead.
|Secured Business Loan||
A secured business loan is a loan taken out for your business secured by something you own, often a property or equipment. The amount a business can loan using a secured business loan is calculated by the value of your asset. The lender can then take payment from the sale of your asset if repayments are not made.
Different to an unsecured business loan, a secured business loan is a loan secured by something you own, this may be a commercial property, your home or possibly equipment or your business’ inventory. It is often easier to be eligible for a secured business loan as there is less risk for the lender as they have your assets as collateral. The lender is therefore able to take payment from your assets if your repayments are not made.
Can I apply for an Unsecured Business Loan?
You can apply for an Unsecured Business Loan if you meet the following criteria:
- Aged 18 +
- A UK resident
- A listed shareholding director of the business
- Other factors that may be considered include credit score, annual business revenue, business maturity and more.
The best way to find out if you are eligible for an unsecured business loan for UK business is to fill out our 2 minute online application form today.
How much can I borrow?
Lenders typically offer between £500 and £1,000,000 for unsecured business finance however, the amount you and your business can borrow depends on a range of variables including your credit score, company cash flow and more. Fill out our short application form today to get an estimate on how much your business could borrow.
How much will it cost?
Interest rates vary based on a range of things including credit risk and the length of the loan. Unsecured business loans interest rate in the UK is typically between 3% and 10% per year. You can find the estimated cost of your business loan by starting our simple 4 step application process today or by speaking to one of our trusted experts.
What happens if I can’t make my repayments?
The effects of not making your repayments will vary depending on your lender and their policies. Late payments are likely to incur a fine and possible other costs that result from your late or missed payments. Late payments on an unsecured loan cannot put your assets at risk however, your business credit rating will be badly affected. Unsecured business loans with no personal guarantee will not affect your personal credit.
Do I need a good credit score?
When applying for an unsecured business loan in the UK, you can expect your credit score to be reviewed especially if you have not previously applied for a loan. This is because your credit score may indicate the likelihood of you and your business making your repayments. You are much more likely to be eligible for a loan and be able to borrow a larger amount if you have good credit. However, there may be other options if you do not have adequate credit, a loan can be co-signed or your business may take out a secured loan if you have the assets to use as collateral.
The government also offer unsecured business funding. The government offer unsecured small business loans of between £500 and £25,000 to start or grow your business. To be eligible you must be a UK resident, be over 18 and plan to start or have a business that has been trading for less than 36 months. The unsecured business loans rate in the UK charge a fixed rate of 6% for government-backed start up loans.
Does this affect my personal credit score?
Unsecured business loans with no personal guarantee will not affect your personal credit score. This is because when a business loan is taken out under your business’ name (as long as it is a limited company) the company takes on the liability of the debt and your personal credit should not be affected.
What do I need to apply?
To apply for an unsecured business loan in the UK, you need to have the following information:
- Your Name, Contact Information and Marital status
- Registered name of your business, Company Registration Number and all Company Contact Information
- Official launch date of your company and your company sector
- Annual Business Revenue
- Personal Bank Account Information and Personal Income
- How much you would like to borrow, how you plan to use your loan and your estimated Return on Investment
Pros and cons of unsecured business loans
|You are not putting your property at any risk by using it as collateral.||Higher interest rates due to the risk factor being higher for the lender – more debt.|
|This type of loan may offer more flexibility than a secured loan.||It can be harder to be eligible for an unsecure loan if you do not have good credit.|
|Often a simpler/quicker application process.||Your business may be as risk if you default on your repayments.|
There are a range of both pros and cons to applying for unsecured business finance, at UK Business Loan, we can provide an unsecured business loan for UK business through our trusted lenders such as HSBC, Barclays, Funding Circle and more. Complete our two minute application form to get started or request a call back and receive free expert advice today!