Here at Business Expert, we’ve collected a diverse range of unsecured business loan providers to help you source the best quote possible.

Read on to discover everything you need to know about this critical tool for business growth.

What is an Unsecured Business Loan?

Whereas traditional business loans are always secured against assets, unsecured business loans can be arranged without the need for collateral such as property or equipment.

This makes it a fast, flexible form of business funding which fits the bill for businesses who don’t own many assets, or where the assets may already be secured against finance.

They are short or medium term loans which required a good credit rating from the borrower to obtain.

What are the Advantages of Unsecured Business Loans?

  • No Asset Security Required
  • Repay after a month or 5 years
  • Easy to arrange with minimal admin
  • Funds are released quickly to improve cash flow
  • Unsecured loans are usually dischargeable in insolvency, unlike secured ones
  • A reusable source of funding
  • Flexible repayment terms
LenderMinimum Loan AmountMaximum Loan Amount
Barclays£1000£100,000
Natwest£1000£50,000
Ultimate Finance£7,500£250,000
Lloyds£1000£50,000
Santander£1000£25,000
Bank of Scotland£1000£50,000
Bank of Ireland£1000£25,000
Esme£10,000£150,000
Nucleus£25,000£1,000,000
Fleximize£5000£250,000
Capital on Tap£1000£50,000
Spot Cap£10,000£250,000
White Oak£5000£500,000

How Does it Work?

Obtaining unsecured business loan offers is straightforward and relatively fast. Firstly, you submit your loan application to the business loan provider of your choice, or to a comparison service like ours who can offer you a range of options.

Based on perceived risk, loan amounts and duration, they will offer you loan terms which include an interest rate and and a proposed offer.

These interest rates may be fixed or flexible depending on the particular lender. Obviously, fixed rate loans offer more stability as you calculate your ability to repay the loan over time.

It’s vital that you spend as much time necessary considering the offer you are made, and reading any fine print within the contact. Ensure there are no hidden costs, fees or charges, or clauses which may make the loan less appealing than it first seems. Watch out for early repayment fees also.

Once you’ve completed your due diligence and decided to sign the paperwork, you could expect to receive your funds in as little as 48 hours.

Personal Guarantee Clauses

Almost all lenders will ask for a personal guarantee when offering a loan without security. These documents mean that, should the loan repayments be defaulted on for any reason, the lender has a level of risk protection in place.

Personal guarantee documents, typically signed by company directors, will place a personal asset as security for a business loan in the event of default.

It’s somewhat paradoxical that even so-called ‘unsecured’ loans require these, since they are themselves a form of security.

They should never be signed lightly, since these legal documents are specifically designed to breach the corporate veil.

Where personal guarantees are required, we always recommend the use of personal guarantee insurance policies. These can be paid by the company and offer a powerful level of reassurance for directors who have put their family homes on the line for the sake of business growth.

Is My Business Eligible for an Unsecured Business Loan?

While every lender has a slightly different criteria, the basic requirements are as follows:

  • Trading for at least 4 months
  • UK Bank account
  • Sole Trader, LTD Company or Limited Liability Partnership (LLP) registered in the UK
  • Minimal Annual Turnover of £10k

What if we Have bad Credit?

Obtaining an unsecured loan with bad credit is difficult, since the lender must assess risk before agreeing funds.

Where your business’s credit history indicates high risk, it may still be possible to agree a loan but the amount will be lower and the interest likely higher as a result. Good credit is always a precursor to being able to secure higher levels of funding.

There are lenders out there who specialise in higher risk lending so it’s certainly possible, assuming a personal guarantee can be offered.

As long as the lender perceives the loan repayments to be affordable, a range of finance options do exist so contact us to find out more about the right provider for your business needs.

What are the Average Interest Rates?

Interest Rates will fluctuate widely depending on:

  • the amount of the loan
  • duration
  • your company credit score
  • Your business history, how long you’ve been trading and overall reputation

Rates range from around 1.3% APR.

Enterprise Finance Guarantee Loans

For companies with no proven track record or who have been turned down for other forms of business finance due to poor credit, the British business bank backed Enterprise Finance Guarantee may be the ideal way to get your foot on the finance ladder.

With EFG backed finance, the government essentially agrees to take on primary responsibility for loans which default, thereby offering heavily reduced risk to lenders. Eligibility for EFG loans rests solely with the provider, however, who would be following governmental criteria.

EFG scheme loans mean the borrower pays fees to the lender exactly as usual, as well as a quarterly fee to the government. This extra fee can mean this type of finance is more expensive than some other loans, but since it makes loans available to businesses who wouldn’t otherwise have qualified it is a popular option for many.

Compare Business Loans and Find the Best Unsecured Finance Deal

Here at Business Expert, we have relationships with over 50 finance providers. It isn’t quite as simple, however, as saying that the lowest business loans rate equals the best deal for any company. In some cases, slightly higher interest rates may actually mean a far better overall deal.

We’ve found that a wide range of factors combine to mean that each business situation will have its own best match with a particular provider.

Contributory factors include:

  • Amount of Paperwork
  • Responsiveness of lender
  • Speed of Payment – many promise ‘within 48 hours’ but do they actually deliver?
  • Charges, Rates and Fees
  • Business Sector
  • Do they Offer Flexible Repayment Terms?
  • Are there penalties for early repayment?
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