Unsecured Business Loans
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The Pros and Cons of Unsecured Business Loans »
- What is an Unsecured Business Loan?
- Unsecured Business Loan - No Collateral
- Do I Need a Personal Guarantee?
- Simple Repayment Structures
- Interest Rates
- Fewer Fees
- Smaller Loan Amounts
- Easier Application Process
- Need an Unsecured Business Loan?
- FAQs
We source high-quality unsecured business finance solutions for our clients.
- Loans from £20,000 to £250,000
- Business loans, commercial property finance, cash-flow funding, merchant cash advances, asset finance, VAT loans, business acquisition finance and SaaS finance.
- Loans for retail outlets, restaurants, cafes, hotel loans, guest houses and B&Bs, offices, warehouses, industrial units, manufacturing, HMOs, nursing and care homes, gyms, investment properties, development land and buy-to-let property (portfolios and limited companies welcome)
Business Loans - how we can help
We offer a range of unsecured business loan solutions, from securing finance for an existing business to acquiring a business. Every business is unique, so our business finance experts provide bespoke financing solutions.
The Pros and Cons of Unsecured Business Loans
When looking for business loans in the UK, the basic unsecured business loan has long been a favourite.
With a relatively simple application process, easy-to-understand payment terms, and the familiar structure it shares with many personal loans, unsecured business loans provide an option that can just get the job done.
Are unsecured business loans all upside, though?
We take an in-depth look at the pros and cons of unsecured business loans with Clifton Private Finance, to help you decide if any alternatives may be a better fit for your business.
What is an Unsecured Business Loan?
An unsecured business loan provides businesses with financing without requiring assets or personal guarantees for security.
Instead, lenders assess the strength of your company based on financial statements and credit history to determine risk and set terms.
Unsecured loans often have higher interest rates and lower maximum loan amounts compared to secured financing options. However, they also avoid legal fees, valuation costs, and the risk of putting up collateral.
The unsecured business loans we can arrange at Clifton Private Finance as business loan brokers provide £20,000 to £250,000 to UK-registered limited companies and LLPs for working capital, equipment purchases, refinancing debts, and more with competitive rates.
As leading UK property finance brokers, Clifton Private Finance has unparalleled access to lenders across the market.
Key takeaways:
- Unsecured business loans are not tied to an asset for security
- Standard business loans follow a simply monthly repayment structure
- Interest rates on unsecured business loans are good, but not as low as secured loans
- Unsecured business loans are easy to apply for - Contact Clifton Private Finance to get a rapid decision on an unsecured loan for your business
Recent Related Case Studies
Pro - An Unsecured Business Loan Needs No Collateral
The first positive to come from an unsecured business loan is the word “unsecured”. This means that you, as the borrower, do not have to put up any sort of guarantee for the loan - known as either the “security”, the “guarantee” or simply, “collateral”.
This is important for many businesses. Young limited companies may not have any valuable tangible assets, while other more-established businesses do not wish to put those assets at risk or have them tied up as part of loan collateral.
As expert UK property finance brokers, Clifton Private Finance understands your situation and help various business secure the loan they need.
Con - Unsecured Business Loans May Need a Personal Guarantee
The lender will look to mitigate their risk as much as possible and this may mean having you underwrite the loan personally through a director's guarantee.
While still considered an unsecured business loan, it does mean that if the business folds or otherwise cannot make its repayments, the onus will be on you to continue repayments. At Clifton Private Finance, we work hard to negotiate terms in your favour.
Pro - Repayment Structures of Standard Unsecured Business Loans Are Simple
A standard bank unsecured business loan follows a structure to which most people are very familiar:
This simple repayment structure allows for easy financial planning and management which is a boon for many companies.
Con - Interest Rates for Unsecured Business Loans Are Not the Lowest
One of the other ways the lender mitigates their risk is to make the unsecured loan more profitable than a secured loan, and thus more worth the gamble they are taking on your business.
Clifton Private Finance works closely with multiple lenders to negotiate the lowest possible rates on unsecured business loans for our clients. Don’t hesitate to get in touch to learn more.
Pro - Fewer Fees
When obtaining a secured business loan, the cost of valuing the assets results in immediate fees that add to the weight of the loan. Unsecured business loans do not suffer this difficulty and thus do not have this additional cost.
Depending on the loan, there may be other fees, such as early repayment penalties, but these would exist on similar secured loans as well. Overall, the fees associated with unsecured business loans are far fewer than other products on the market.
Use our unsecured business loan calculator to get a quick quote. Or get a bespoke business loan quotation.
Con - Smaller Loan Amounts
The one final method lenders use to minimise their risk is simply to avoid lending amounts that are too high, putting less of their money in danger.
This means that there is a cap on the size of the unsecured business loans your business will be able to obtain. While unsecured business loans exist from £1,000 to £500,000, a lot will be determined by your business credit history.
Each business will have its unsecured loan upper limits, though this will differ from one lender to another. Should you wish to borrow more, it may be necessary to consider a secured business loan. For advice tailored to your situation, contact the expert team at Clifton Private Finance today.
Pro - Easier Application Process
Getting a decision on an unsecured business loan is quick and easy. As the lender is basing the majority of their decision on your credit history, it is often possible to get a decision on an unsecured business loan in hours - with the funds available in your bank soon afterwards. The eligibility criteria is not as stringent.
Eligibility Criteria
When underwriting an unsecured business loan, lenders focus on your company's ability to repay the debt based on past financials and credit history.
Key factors lenders assess include:
- Time in business
- Annual turnover and revenue
- Profit margins and cash flow
- Business credit score and history
- Director personal credit reports
- Business plan and projections (for startups)
Our video below on business loans for limited companies summarises how they work and the eligibility criteria:
Speak to one of our business loan specialists today
See the latest market news below.
2024 Business Finance Market Update
In the past year, business finance saw significant growth, perhaps surprisingly driven by challenger lenders and alternative finance providers. Many of these lenders reached their largest milestones in 2024, primarily through supporting SMEs that may have struggled to access traditional funding elsewhere.
Businesses are continuing to face significant economic challenges carried over from 2023. High inflation, supply chain disruptions, and geopolitical tensions persist, which have complicated financial planning and made it difficult for businesses to acquire funding.
But the Bank of England has cut its base interest rate for the first time in 4 years, signalling a cautious shift toward economic stabilisation after years of inflationary pressure. Further cuts are anticipated, and businesses can expect a flurry of spending in the coming months.
As well as this, a number of banks and large firms seem to be racing to the finish line to implement generative AI and new technology that could streamline business and boost profits. Enhancing tech in banking looks like a win-win for lenders and borrowers, offering more personalised financial solutions and a quicker, more secure process.
In the tech industry, investments in AI are reshaping business. Tech giants like Alphabet, Amazon, and Microsoft have seen their market values surge, driven by the rush to implement AI.
Getting an Unsecured Business Loan through Clifton Private Finance
With so many products in the marketplace, finding the perfect unsecured loan for your business is hard, and it’s often too tempting to take the first offer you are pre-approved for without shopping around. This can lead to unfavourable terms, higher interest rates, and undesirable fees - and is best avoided.
With Clifton Private Finance, you can steer clear of all these problems. Our expert advisors have access to the widest range of suitable products and will work with you to find the loan that best suits your business needs.
If you need business funding, call us on 0203 880 8890, complete our contact form above or book an appointment.
FAQs
What credit score do I need to qualify for an unsecured business loan?
Most lenders require a minimum credit score of 650 to qualify for an unsecured business loan. Some may approve loans for scores as low as 600, but interest rates are higher. The better your credit score, the lower rate you can qualify for.
How much can I borrow with an unsecured business loan?
Unsecured loans range from £1,000 up to £250,000 or more. The amount you can qualify to borrow depends on factors like time in business, annual revenue and cash flow. Start-ups generally max out at around £50,000.
How quickly can I get funding from an unsecured business loan?
One advantage of unsecured loans is quick access to funding. You can often get approved in 1-3 days and funded in as little as 1 week. At Clifton Private Finance our advisors can get you rapid decisions from multiple lenders.
What can I use an unsecured business loan for?
Common uses for unsecured business loans include: working capital, equipment purchases, buying inventory, expanding facilities, refinancing debts, renovations, marketing campaigns and more. Funds are flexible for your business needs.
What rates and terms are available for unsecured business loans?
Unsecured loans typically have 6 month to 5 year repayment terms. Interest rates range from 5% to 30% or more depending on your credit profile. We negotiate with lenders to get you the lowest rates and long repayment terms.
Are there early repayment penalties for paying my loan off faster?
Some, but not all lenders charge early repayment penalties. We avoid lenders with prepayment penalties whenever possible. If they are unavoidable, we limit penalties to 1-3% of the outstanding loan balance.
If you have any questions about our services or want to start making things happen please contact us
