Unsecured Lending

Where can I Get an Unsecured Loan?

  • If you’re a start-up or a small business looking for an unsecured loan to help you cover running costs and grow your business, Funding Market can help.
  • Compare business funding from the top UK lenders.
  • See the most competitive APR and loan rates suited to your business needs.

Do you need a fast loan to execute a project? Are you a start-up looking for a small loan you can pay back with ease? Unsecured lending is an option for your business.

What is Unsecured Lending?


An unsecured loan is supported by your creditworthiness, instead of collateral. They are approved without the use of assets.

The risk is higher on the lender because there’s no guarantee they’ll get their money back. Hence, the higher interest on unsecured lending.

Some unsecured loans require you to have a high credit score. Your credit score is the numerical representation of your ability to pay back a loan.

How Does Unsecured Lending Work?


You can borrow up to £500,000. The period to repay the loan is usually one to five years.

The lender examines the CEO or Director’s track record and that of the business. The lender will usually ask for a personal guarantee. Unsecured loans are a great option for businesses that need fast financing and flexibility.

The ideal candidate for an unsecured loan is:
  • Business with a good credit score.
  • A 1-2 year history of trading.
  • A balance sheet that shows they can afford repayments.

Sadly, start-ups (trading less than a year) are capped at £10,000.

What Should You Consider Before Applying for an Unsecured Loan?


When considering an unsecured loan, factor in:
  • Credit record.
  • Revenue
  • The amount you want to borrow.
  • How long you will borrow for.

What Are the Types of Unsecured Lending?


Personal

You can borrow a large sum and pay back over an agreed timeframe.

Peer-to-peer

You borrow money from people online. The interest on the loan is the return on investment.

Guarantor

A family, friend or colleague is a guarantor against a loan.

Debt Consolidation

Get finance to pay off your existing debt or make it cheaper and easier to pay back.

Benefits of Unsecured Lending
  • If you don’t want to use your assets as security, an unsecured loan is a better option.
  • Available to a wider range of businesses and individuals.
  • Flexibility to choose how long you repay the loan, usually between one to five years.
  • The loan repayment can be customised for businesses who experience a lean period, up to three months’ grace at the start of the agreement.

Examples of Unsecured Loans


Revolving Credit Facility to finance your business:Ideal for businesses that need finance to cover a lean period. The loan is usually repaid within three to twelve months.

Merchant Cash Advances: Rather than the money owed to your company, this loan is based on predictions of future card terminal sales.

Working Capital Loan to be fully repaid within two years.

Secured vs Unsecured lending: Which Is Ideal for My Business?


The major factors that determine the right choice for your business are based on:

  • How much you want to borrow
  • How long you’ll need the loan for
  • The interest rate.
  • Are you willing to pay more for a fast loan or do you want the cheapest product?

If you choose an unsecured loan, your creditworthiness is crucial because the lenders have to trust you. However, unsecured lending is sometimes the only option for new businesses that do not have the asset spread to secure a large loan.