In today’s fast-paced business environment, quick access to funds can be a crucial factor in seizing opportunities and driving growth. Unsecured business loans have emerged as a popular financing option for businesses in the UK, offering the flexibility and speed often required in the modern marketplace.
This article will provide an overview of unsecured business loans, identify leading providers in the UK, and discuss key considerations when seeking this type of loan.
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Best unsecured loan providers in the UK
| Unsecured loan provider | Loan amount range | Repayment term range | Interest rate type | Unique features |
|---|---|---|---|---|
| Aldermore Bank | £1,000 – £1,000,000 | 1 – 20 years | Fixed | – |
| Atom Bank | £25,000 – £1,000,000 | 1 – 5 years | Fixed | – |
| Barclays | £1,000 – £100,000 | 1 – 10 years | Fixed | Offers repayment holidays |
| BIZL | £10,000 – £350,000 | 6 months – 5 years | Unknown | Fast and flexible funding |
| Boost Capital | £3,000 – £500,000 | Unknown | Unknown | High approval rates, flexible repayment plans |
| Capify | £3,500 – £500,000 | 6 months – 10 years | Unknown | Flexible repayments, fast approval |
| Capital On Tap | Up to £100,000 | Up to 12 months | Competitive | No early repayment fees |
| Cashplus | Up to £50,000 | 1 month – 18 months | Competitive | – |
| ClearFunder | £10,000 – £100,000 | 6 months – 3 years | Competitive | Fast approval |
| CubeFunder | £5,000 – £100,000 | 3 months – 3 years | Competitive | No early repayment charges |
| Esme Loans | £10,000 – £250,000 | 1 – 5 years | Unknown | No early repayment fees |
| Everest Business Funding | £5,000 – £500,000 | 4 months – 2 years | Unknown | Fast approval and funding |
| Fair Finance | Up to £20,000 | 6 months – 3 years | Unknown | Tailored repayment schedules |
| Fleximize | £5,000 – £500,000 | 1 month – 48 months | Unknown | No penalty for early repayment |
| Funding Circle | £10,000 – £500,000 | 6 months – 5 years | Fixed | No early repayment fees |
| Growth Street | £25,000 – £2,000,000 | 1 month – 15 months | Competitive | Fast approval |
| HSBC | Up to £25,000 | 12 months – 10 years | Fixed | Fixed monthly payments |
| Iwoca | £1,000 – £200,000 | 1 month – 12 months | Case-by-case | – |
| Lloyds Bank | £1,000 – £50,000 | 1 – 10 years | Fixed | Repayment holidays option |
| MarketFinance | £10,000 – £50,000 | 3 months – 3 years | Fixed | – |
| Merchant Money | £5,000 – £150,000 | 1 – 24 months | Competitive | Flexible repayment plans |
| Metro Bank | £2,000 – £25,000 | 1 – 5 years | Fixed | – |
| Monzo | £1,000 – £3,000 | 1 – 3 years | Competitive | – |
| NatWest | £1,000 – £50,000 | 1 – 10 years | Fixed | – |
| Newable | £26,000 – £150,000 | 1 – 3 years | Competitive | – |
| Novuna (formerly Hitachi Capital) | £10,000 – £500,000 | 1 – 5 years | Fixed | Flexible repayment plans |
| Nucleus Commercial Finance | £3,000 – £50,000 | 3 months – 5 years | Unknown | Fast approval and funding |
| Paragon Bank | £25,000 – £500,000 | 1 – 5 years | Fixed | – |
| Qardus | £25,000 – £200,000 | 6 months – 5 years | Fixed | – |
| Revolut | £1,000 – £500,000 | 1 month – 5 years | Competitive | No early repayment fees |
| Santander | £2,000 – £25,000 | 1 – 5 years | Fixed | – |
| Shawbrook Bank | £250,000 – £25,000,000 | 3 months – 7 years | Fixed | – |
| Spotcap | £10,000 – £250,000 | 1 month – 2 years | Flexible | Fast funding |
| Starling Bank | Up to £250,000 | 1 month – 5 years | Competitive | Flexible repayment plans |
| Tide | £1,000 – £150,000 | 1 month – 5 years | Competitive | Fast decision times |
| Together Money | £26,000 – £2,000,000 | 1 – 30 years | Competitive | Flexible repayment options |
What are unsecured business loans?
Unsecured business loans are a type of financing that doesn’t require the borrower to provide collateral as security against the loan. This contrasts with secured loans, where assets such as property or equipment are used as collateral that the lender can claim if the loan isn’t repaid.
The absence of collateral makes unsecured loans more accessible to businesses that don’t have substantial assets, but it also introduces more risk for lenders. Consequently, unsecured loans often carry higher interest rates than their secured counterparts. They also tend to have shorter repayment terms, typically ranging from 1 to 5 years.
How do unsecured business loans work?
The loan process usually begins with an application where the business owner provides information about the business, including its financial history and the purpose of the loan. The lender then evaluates the business’s creditworthiness, which might include reviewing credit scores, cash flow, and financial projections.
Once approved, the lender will provide the loan amount to the business, which will be repaid over a set term. The repayment term, interest rate, and any other fees are typically outlined in a loan agreement.
Considerations when seeking an unsecured business loan
When considering an unsecured business loan, there are several factors to keep in mind:
Interest rates
Unsecured loans typically have higher interest rates due to the increased risk to the lender. It’s essential to calculate the total cost of the loan, including the interest, to ensure it’s affordable for your business.
Repayment terms
Shorter repayment periods can mean larger monthly payments, so make sure your business cash flow can comfortably support the repayment schedule.
Credit score
Lenders often base their decision on your business credit score. A higher score can lead to better loan terms. If your business is new or has a low credit score, you may need to improve it before applying.
Fees
Some lenders charge arrangement fees or early repayment fees. Be sure to understand all the costs associated with the loan.
Lender reputation
Consider the reputation and customer service of the lender. Reading reviews and seeking advice from other business owners can be beneficial.
In conclusion, unsecured business loans can be a valuable financing tool for UK businesses. However, it’s crucial to understand their terms and costs, as well as the reputation and reliability of the lender, before making a decision.
Unsecured business loans FAQ
An unsecured business loan is a type of loan that doesn’t require the borrower to provide collateral to the lender. This means the loan is backed solely by the borrower’s creditworthiness, not by any type of collateral.
Most business entities, including sole traders, partnerships, limited companies, and more, can apply for unsecured business loans. It’s always best to check with the specific lender for their criteria.
Unsecured business loans can be used for a variety of purposes, such as working capital, expansion capital, refinancing existing debts, purchasing equipment, or covering temporary cash flow shortages.
Lenders typically look at factors like your credit score, business history, revenue, and the overall financial health of your business.
The main advantage of unsecured business loans is that they do not require any collateral. This makes them more accessible for many businesses, especially smaller ones that may not have substantial assets.
Because they are riskier for lenders, unsecured business loans may have higher interest rates than secured loans. They also typically require a good credit score and a solid business performance.
Many lenders offer quick approval and funding processes, often within a few days of application. The exact time will depend on the lender and your individual circumstances.
If you default on an unsecured business loan, the lender can take legal action to recover the debt. This could harm your business’s credit rating and make it more difficult to obtain financing in the future.
Remember, it’s always a good idea to seek professional financial advice before taking out a business loan.