Unsecured Business Loans

What are they exactly?

There are two types of business loans, secured and unsecured. An unsecured business loan doesn't require the borrower to provide an asset which the loan is secured against. Business loans pose a greater risk for lenders, and therefore higher interest rates are usually charged. Businesses using unsecured loans aren't at risk of losing valuable equipment, property or land. This gives the lender a disadvantage, which is why higher interest rates are implemented. In contrast, secured loans are financial products that require businesses to offer up collateral as part of the borrowing agreement.

Fast access to funds

Unsecured business loans offer a straightforward funding solution for UK businesses. Up to £500,000 can be borrowed without securing the loan against important company assets. Unsecured business loans can be accessed with speed and have short or medium repayment terms.

An unsecured business loan is ideally used by businesses that lack assets or just don't want to secure them against a loan. Funds can be accessed within hours, and an agreed repayment plan will be implemented.

"What do I need to qualify?"

To qualify for an unsecured business loan in the UK your business will need to have a UK bank account, be trading for at least 4 months and have a minimum annual turnover of £100,000. It is worth noting that although no security is taken against an asset to secure the funding, depending on the lender you may be required to have good personal and business credit history. To secure higher levels of funding it might be necessary to provide a personal guarantee. If your situation were to change and your business was unable to repay the loan, the personal guarantor may be required to pay back the remaining balance under the agreed terms on your behalf. 

If your business does not meet the criteria Winchester Corporate Finance can still help you access the funding your business needs. We have access to a multitude of lenders and can guide you through the different options that would suit your business and situation better.

It might be required that you provide a personal guarantee. A personal guarantee is a legal agreement made by the business owner or director who becomes personally liable for paying any debt should the business be in the unfortunate position of not being able to make the loan repayments. This implements the director or owner becoming the "guarantor" and can be made with or without supported security, such as a legal charge on the guarantor's personal asset.

A personal guarantor can vary between lenders. Certain lenders will insist on implementing one to reinforce security, while other lenders won't require one. Winchester Corporate Finance will discuss the terms of any arrangements if the lender does require the business to provide a personal guarantor.

If your business is a limited liability partnership (LLP) or limited company the majority of lenders will expect the provision of a personal guarantee. Directors and stakeholders with a minimum of 20% - 25% stake in the limited business could be expected to provide a personal guarantee. 

Sole traders or partnerships will receive funding based on personal credit history. Company owners with unlimited liability will customarily be personally liable. It is possible to implement an insurance policy to cover a personal guarantee to help minimise the risk to your personal assets should the company fail to make repayments.

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"We have helped so many different types of businesses achieve their goals. It doesn't matter if you own a gym, restaurant, florist, hotel, or E-commerce website, you name it we've helped them find the capital they needed to expand. Few businesses aren't considered for this type of funding"

Loan rates will be a big area of your discussion with Winchester Corporate Finance. Making comparisons between lenders' loan rates is the principle to making the right decision for your business loan deal. Unexpectedly the best figures aren't always the central focus. There are differences between secured and unsecured business loans, with pros and cons to weigh up.

On occasion, the advantages of a specific type of business loan product can supersede other loan products on repayment values. Traditionally a business bank loan could have a slower administration process and be costly, however, an unsecured business loan from an alternative provider could involve innovative repayment choices, a more streamlined admin process and faster access to the required funds. Searching through the multitudes of lending options is a tiresome daunting task. This is why Winchester Corporate Finance will compare unsecured business loan products, lenders and rates for you and present the findings to help you make the right choice for this important business decision. 

Credit Score

A poor credit history sometimes can be detrimental to finding a business loan. For fraud and affordability purposes the lenders on our panel will undertake a soft or hard credit check on your application. A regular question for us is " is there a no credit check business loan?". The simple answer is no. Credit checks form an integral part of the lending process and we don't work with lenders who would process applications without the performance of a credit check. This is in the lenders' and your best interests.

For those business owners with a bad credit history, this can be a major roadblock when trying to secure funding through their local high street bank. They will often try but fail. Winchester Corporate Finance can offer those businesses a lifeline by accessing alternative business funding through our panel of lenders. 

Poor credit history is often part of a company's business lifecycle. It is almost unavoidable and can be caused by many reasons including customers failing to pay on time resulting in the business not being able to pay suppliers. A mark against you within your credit history can often be clear cut to fix maximising your overall credit score. To give you the very best chance of eligibility this is worth addressing before you apply. However, don't let a poor credit history give you any reservations. We have helped many businesses locate an unsecured business loan with a bad or poor credit history.

Launch that startup!

If your business is a start-up it is still possible to get an unsecured business loan. There are ways to raise the start-up funds needed to get your business off the ground without securing the finance on your home or any other personal assets. If you haven't started trading yet or have only been trading for up to 24 months you can still be eligible. Winchester Corporate Finance understands how vital it is in the early set-up stages of a business not to risk company assets that grow the business development. Our partnering lenders offer specific startup unsecured business loans however, it is important to be aware that you might face higher rates of interest. 

Owing to the volatile nature of startups, Start-up unsecured business loans carry greater risk for the lender. Startups don't have the evidence of successful trading history to fall back on for successful borrowing, however, if your UK startup needs an unsecured business loan and you are willing to pay a slightly higher interest rate Winchester Corporate Finance can help you arrange unsecured funding. 

Safety First!

The Financial Conduct Authority (FCA) regulates many unsecured business loan lenders. Some business loan products can fall outside the regulatory scope and are not regulated. We only partner with professional lenders who observe best practices many of whom are part of trade associations such as the national association of commercial finance brokers (NACFB) and are governed by the FCA. It is in the lender's best interest to ensure your business will be able to make repayments when it takes on the loan, unsecured business finance for this reason is a very safe method of funding.

Unsecured business loans are classed as a low-risk form of borrowing as they do not require security. Potential risks come with any loan option, however, when you apply for an unsecured business loan through a verified loan brokerage or lender, you will receive a loan agreement that is safe for your business to take on.

Approval for an unsecured business loan usually takes less time and is easier to obtain than a secured loan. Full approval can be anticipated within a few days with funding often received the same day the loan application is submitted.

In comparison to unsecured loans, secured loans take longer to arrange because of the time it takes to organise an independent valuation of the asset that is being put forward as security. Faster funding is guaranteed through an unsecured business loan with many of our finance solutions arranged being same day business loans.