How Unsecured Business Loans Work
An unsecured loan is an excellent choice for businesses without assets suitable for use as collateral, as it allows you to get the finance injection you need without the risk to your valuable, money-making assets.
It works by providing upfront capital without a security requirement. However, several different unsecured business loan options exist, each with separate requirement details as part of the agreement. You can choose the options best suited to your business and requirements and may even receive funding within 48 hours.
Once the term agreement is in place, you’ll make payments on your loans in monthly or quarterly instalments.
Lenders will need the following:
- Bank Statements
- Trading History
- Filed Accounts
- Profit and Turnover
- Payment History
- Business Plan
Use our finance calculator for a more detailed idea of what your repayments might be.
How Much Can You Borrow with an Unsecured Business Loan?
The amount you can potentially borrow with an unsecured business loan depends on your unique business standing.
Factors which impact the amount you can borrow with an unsecured business loan include your business credit score and trading history. Suppose you’re requesting a particularly large business loan. In that case, it is worth noting that you will need a long trading history, a balance sheet that meets repayment requirements and a strong cash flow position.
Could your credit score be improved? You may also need to demonstrate a period of sustained growth. Small businesses or early-stage businesses are also unlikely to be granted a large-scale unsecured loan.
Our team of experts is ready to help
An Unsecured Loan with a Personal Guarantee
Unsecured loans may sound too good to be true. But with the high risk on the lender’s side, this is often offset by smaller loan agreements and higher interest rates. One way to moderate this is with a personal guarantee.
This means you put forward a personal guarantee as the director. You can do this regardless of your credit score. However, it does mean that if repayments fail for any reason, you will be liable to pay back the loan and interest.
Get the Help You Need from Portman
If you think an unsecured business loan is the right option for your company’s cashflow needs, we can help. At Portman, we are expert brokers and lenders able to help you find the deal that suits your needs. Contact us today to discuss your finance options and whether an unsecured loan is right for you.
What’s the difference between secured and unsecured business loans?
An unsecured loan allows you to get a cash flow injection without using company assets as collateral. However, this could mean you are offered a decreased borrowing amount with higher interest rates as the lenders are more at risk. The alternative is a secured business loan that uses your valuable assets as security. If you don’t make the agreed repayments, these could be seized to pay off the debt.
You can find out more about business loan options at Portman today.
What happens if I miss a monthly payment?
If you default on repayments for an unsecured business loan, your business will still face serious problems despite not losing company assets. Although your money-making assets will be safe, some penalties will cause just as much damage to your business. For example, you could be fined and have to pay additional fees incurred to administer the default. You will also experience a considerable hit to your credit score, which could make it more difficult for you to access business finance in the future.
Can a start-up get an unsecured business loan?
Yes, a start-up or small business can get an unsecured business loan. However, Start-up businesses typically find it more difficult to obtain business finance due to their lack of trading history and business assets. Loans for start-up businesses will typically be for a smaller amount and rates may be higher to reflect the risk of business failure. If you need a larger loan amount, you will need a strong cash flow position, demonstrable trading history and growth with a balance sheet that shows you can make repayments.
Our experts can find the right funding for you.
Excellent communication and help throughout the process. Easy and prompt emails. Highly…Daniel Cooper
Portman and the entire team are great to work with, know their lenders and products incredibly…Marney Howe
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