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.
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:
Sadly, start-ups (trading less than a year) are capped at £10,000.
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
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.
The major factors that determine the right choice for your business are based on:
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.