Every Unsecured Business Loan Provider, Reviewed
Each provider below is independently assessed. We look at who it suits, what the real cost is, and where it falls short.
iwoca Business Loan
Funding Circle Business Loan
Capify Business Loan
Barclays Business Loan
NatWest Small Business Loan
Lloyds Bank Small Business Loan
What is an Unsecured Business Loan?
An unsecured business loan doesn’t require you to provide collateral. Unlike a secured business loan, the lender has no specific asset to seize if you default.
Lenders typically offer these to businesses with good credit histories, since they take on more risk without collateral. If your business is a startup or lacks significant assets, unsecured borrowing is often your main route to finance.
However, rates are typically higher than secured loans, and in practice most require a personal guarantee from a company director, meaning your personal assets can still be at risk.
Pros and Cons of Unsecured Business Loans
| Pros | Cons |
|---|---|
| No asset security required, no business assets pledged as collateral | Higher interest rates, lenders take on more risk without security |
| Flexible duration, repayment schedules from one month to five years | Lower loan amounts, approvals typically capped due to increased risk |
| Minimal administration, straightforward process, less paperwork | Stricter eligibility, strong revenue and credit score usually required |
| Prompt access to funds, specialist lenders can fund within 24 hours | Often requires personal guarantee, personal assets may still be at risk |
| Dischargeable in insolvency, not always the case with secured lending | Missed payments can damage business credit score |
| Unsecured business loan pros and cons. Always check the personal guarantee terms before signing. | |
5 Types of Unsecured Business Loans Available in the UK
There are several different types of unsecured financing options for UK businesses, in addition to the standard term loan.
| Loan Type | Description | Repayment Terms | Interest Rates |
|---|---|---|---|
| Term Loans | Lump sum with fixed monthly repayments over 1–5 years | Fixed | Varies, often 6–12% |
| Business Credit Cards | Revolving credit up to a set limit | Minimum monthly payment | Typically 15–25% |
| Merchant Cash Advances | Lump sum repaid as a percentage of card sales | Fluctuates based on sales | Factor rates apply |
| Business Overdrafts | Flexible short-term borrowing on your current account | No fixed payments | Variable rates |
| Peer-to-Peer Loans | Loans from non-bank investors via P2P platforms | Fixed | Often 4–10% |
| Types of unsecured business finance available in the UK. Each has different eligibility criteria and cost structures. | |||
How Do Unsecured Business Loans Work?
Application and assessment: You apply for the loan, providing financial information, revenue, profit, and credit history. The lender evaluates this to assess creditworthiness and risk. We found specialist lenders assess this faster than banks.
Loan approval and terms: If approved, the lender offers terms including the amount, interest rate, and repayment schedule. Terms reflect the business’s financial health and perceived risk.
Funding: Once terms are agreed, the lender disburses the loan. Specialist lenders can do this within 24 hours; banks typically take longer.
Repayment: The business repays over the agreed term in regular instalments covering principal plus interest. Frequency and rate are set in the loan agreement.
Closure: Once fully repaid, including any interest and fees, the agreement concludes. Some lenders offer revolving facilities that can be drawn again once repaid.
Is My Business Eligible for an Unsecured Business Loan?
Eligibility varies by lender. Here’s what you need to check before you apply:
Your credit score: Lenders look for a history of on-time payments. A poor score won’t automatically disqualify you, but it affects the rate you’ll be offered. If your score is genuinely poor, our guide to business loans with bad credit covers which lenders will still consider you.
How long you’ve been trading: Most lenders require at least 6–12 months. Funding Circle requires 1 year. Government-backed startup loans exist if you’re earlier stage.
Your revenue: Capify requires £10,000/month minimum turnover; iwoca looks for £50,000+ annual turnover for larger amounts. We found revenue requirements are the most common reason for rejection.
Your business structure: Funding Circle only accepts limited companies and LLPs since February 2026, sole traders are excluded. Most other lenders do accept sole traders.
Your industry: Some lenders exclude businesses in certain sectors. Check each lender’s excluded industries list before you apply.
How to Get an Unsecured Business Loan
Your options are applying directly to a bank, using a specialist online lender, or going through a broker. Most providers require your business to be UK-registered for at least six months with a minimum monthly turnover of around £5,000.
1. Understand what you need. Know why you need the loan, how much, and over what term. Borrowing more than you need increases your total interest cost.
2. Check your credit. Review your business and personal credit files for issues before you apply, surprises at underwriting stage slow the process.
3. Ready your financials. You’ll need profit and loss statements, balance sheets, and cash flow statements for most lenders.
4. Compare lenders. Use the table above to compare rates, terms, and eligibility. We found the differences in total cost between providers are substantial.
5. Gather your documents. Collect bank statements, your business plan, and tax returns before you start the application.
Can I Get a Business Loan Without a Personal Guarantee?
If you want to avoid a personal guarantee, your options are limited. Even loans marketed as “unsecured” usually require one from a company director.
The closest alternative is PayPal Working Capital, which advances up to 40% of your eligible PayPal sales. Repayments come as a fixed percentage of future sales until repaid.
You need a PayPal Business account for at least 3 months, at least £9,000 in annual eligible PayPal sales, and UK registration.
Government-backed startup loans through the British Business Bank offer up to £25,000 without a personal guarantee. For larger amounts, a personal guarantee is almost always required.
Personal Guarantee Clauses in Business Loans
Personal guarantee documents, typically signed by company directors, place a personal asset as security in the event of default. It’s somewhat paradoxical that even “unsecured” loans require these, they are themselves a form of security.
Don’t sign these lightly. They are specifically designed to breach the corporate veil, meaning your personal assets, including your home, can be at risk if your business defaults.
Where a personal guarantee is required, we recommend considering a personal guarantee insurance policy to limit your exposure.
Unsecured Business Loans for Startups
If your business is pre-revenue or less than six months old, your options are narrower. For amounts up to £25,000, the government’s Startup Loans scheme is worth investigating, no personal guarantee required.
For larger amounts, a director’s personal guarantee is essential. With that in place, you can find good deals on loans up to £150,000 for startups. A carefully prepared business plan, clean personal credit score, and realistic income projections will be necessary in all cases.
Alternative Finance Solutions to Consider
| Type | Pros | Cons |
|---|---|---|
| Secured Loans | Lower rates, larger amounts, longer terms | Require valuable collateral (property, equipment) |
| Enterprise Finance Guarantee | Government-backed, lower qualification bar | More expensive, limited amounts |
| Business Lines of Credit | Revolving credit, pay interest only on what you use | Lower approval amounts, need to renew frequently |
| Merchant Cash Advances | No traditional credit checks, based on card sales | Very high equivalent interest rates, daily repayments |
| Equipment Finance | Use equipment as collateral, preserve cash flow | Limited to equipment needs, complex tax considerations |
| Business Credit Cards | Quick access to smaller amounts, rewards available | High interest rates if balance carried over |
| Alternative finance options compared. Each suits different business situations and risk profiles. | ||
Unsecured Business Loan FAQs
Are unsecured business loans safe?
Since most “unsecured” business loans require a personal guarantee, there is substantial risk. Defaulting means the lender calls in the guarantee, potentially putting your personal assets at risk. Never take out a loan without being confident you can repay it.
Is it possible to get an unsecured business loan without a personal guarantee?
Practically speaking, borrowing from a private lender without any form of security is very difficult. The government Startup Loans scheme offers up to £25,000 without a personal guarantee for eligible applicants. PayPal Working Capital is another option that repays from future card sales without a traditional guarantee.
What is the maximum term length for unsecured business loans?
Term lengths vary widely by provider. Capify offers up to 12 months unsecured; iwoca up to 5 years; Barclays up to 10 years; Lloyds up to 25 years. The right term depends on your cash flow and the purpose of the loan.
What can I use an unsecured business loan for?
Unsecured business loans can be used for most legitimate business purposes: operational expenses (payroll, rent, inventory), business expansion, purchasing equipment, marketing, or hiring and training staff. Always check your lender’s terms, some exclude specific uses.
What are the average interest rates for unsecured business loans?
Rates vary significantly by provider and business profile. High-street banks typically offer 11–13% APR representative for creditworthy borrowers. Specialist online lenders range from 6.9% (Funding Circle, for established LTDs) to 49%+ (iwoca, Capify) for faster or more flexible access. Always compare on total cost, not just the headline rate.
How we reviewed this
What we covered. We compared six active UK lenders on the terms that decide an unsecured loan: headline APR, how much they lend, how fast the money lands, and who they turn down. Rates and eligibility came from each lender’s own site.
Data sources. APRs, loan sizes, funding times and eligibility criteria were checked directly against provider sites in April 2026, and each lender’s authorisation on the FCA register.
Update cadence. We re-verify this page at least monthly, and whenever a provider changes pricing, eligibility, or terms. The verification date on the page reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.
Regulatory note. This page is editorial content, not regulated financial advice. Credit products are subject to status and approval. Compare offers directly with providers before you apply.