Unsecured business loans: an alternative funding option
An unsecured business loan could provide a quick, simple, and flexible way to borrow. They are especially helpful if you’re a business that doesn’t have many assets, or if you don’t want to use your assets as security.
But how does an unsecured loan work? What are the risks? How much do they cost? How easy are they to get?
What’s the difference between a secured and an unsecured loan?
A secured business loan allows you to use an asset, such as property or equipment, as security against the amount you borrow. The lender uses your asset as a form of guarantee. An unsecured loan allows you to borrow without giving security on any business assets. They’re a quick and easy way to get an affordable cash injection for your business. Secured loans are usually for higher amounts and interest rates are usually lower as there is less risk to the lender. Unsecured loans tend to be for smaller sums and come with higher interest rates.
What can an unsecured business loan be used for?
An unsecured business loan can be used to fund most business related purposes, for example buying stock or equipment, covering ongoing running costs, business expansion or cashflow. There maybe an unmissable opportunity or an unexpected bill whereby funds are needed quickly, unsecured loans offer flexibility and are quicker and simpler to get that secured loans.
How easy is it to get an unsecured loan?
Compared to secured loans, unsecured business loans are usually simpler and quicker to arrange, as the lender doesn’t need to inspect or value any assets. As the lender has no security against the loan, they are more interested in your business profile; turnover, trading history and credit score. The lender may also look at the personal credit history of the directors. If you think you may have bad credit, it doesn’t necessarily mean that you can’t get an unsecured loan. The offer rate and term will be reflective of your history and credit score.
Are unsecured loans more expensive?
Unsecured lending is usually more expensive, interest rates are normally higher compared to secured lending because the lender is taking on more risk. But there are many lenders offering competitive interest rates currently starting from around 6.9% p.a. which is often much more affordable than a business overdraft or a credit card. If your business has a solid trading history and a good credit rating you’ll likely be offered better interest rates.
How do I apply for an unsecured business loan?
Applying for an unsecured business loan is pretty straightforward. You can either research reputable lenders, or use platforms such as Same Day Business Loans. The application itself is normally streamlined and shouldn’t take long to fill out. You’ll need to provide information about your business such as shareholder details, top level financials, and purpose for the funding. To qualify for an unsecured business loan you normally need to be a limited company or LLP that’s based in the UK and has been trading over 6 months.
How fast can I get an unsecured business loan?
As there are less checks by the lender, the process for getting an unsecured loan is quicker and simpler than with secured loans. Through Same Day Business Loans, our panel of lenders will turn round a decision within 1 working day and get the funds in your band within 2 working days, it could just be a couple of hours. It's that quick.
Things happen
Whether it’s an unexpected bill or an unmissable opportunity, apply today and we’ll help you find the cash you need fast without affecting your credit score.
- Cashflow
- Paying a bill
- Purchasing equipment
- Bridging loan
- Purchasing stock
- New opportunity
Ready to get started?
Flexible terms to suit every business
- Borrow £10k - £100k
- Repay over 6 months to 6 years
- Fixed rates from 6.9% p.a.
- No fees to settle early