Business loans are a type of borrowing designed for commercial organisations rather than individuals that you usually pay back on a monthly basis. With a business loan, you could borrow between £1,000 and £15 million and pay the loan back over one month to 25 years.
There are lots of different types of business loans but they all fall into one of two categories: secured and unsecured loans.
What is secured business loan?
These loans let your business borrow money using an asset as security. A business asset is anything of value your business owns. Some of the business assets you could use to help your company borrow money include property, stock and machinery.
If you don’t pay back the loan, the lender can sell asset to get their money back. Secured loans tend to have lower interest rates than unsecured ones and are useful for borrowing larger amounts.
What are unsecured business loans?
An unsecured business loan is a type of finance that does not require the borrower to provide security. Because the loan is ‘unsecured’, businesses aren’t at risk of losing valuable business equipment, property or land when they choose this funding route. Unsecured business loans offer a straightforward funding solution for UK businesses. You could borrow up to £500,000 without having to secure the loan against important company assets.
A business loan without security provides a flexible source of funding for businesses that lack assets or do not want to secure them against a loan. You can access finance quickly – often within a couple of hours – and simply pay it back within an agreed timeframe.
We have various unsecured business loan options to help businesses of all sizes from startup business loans, sole trader loans, self-employed loans, ltd company loans and SME business loans.
What are the advantages of unsecured business loans?
There are so many benefits to choosing unsecured business finance. If you need a quick injection of cash for your business without offering the security of an asset, an unsecured business loan could offer a fast, flexible and easy funding solution and great advantages for businesses operating in the UK.
Both well-established businesses and relatively new ventures can enjoy a number of significant benefits.
With an unsecured business loan, funds can be made available faster than with other types of business loans. As assets are not required as security, they offer a highly accessible source of funding for business owners.
Whether you’re looking to invest in new equipment, expand your product range, fund training opportunities for your staff or break into new markets in the UK or overseas, there are no limits to how you use this type of business loan.
Does my business qualify for an unsecured business loan?
To qualify for an unsecured business loan in the UK, you must have been trading for at least 4 months and have a minimum annual turnover of £10,000. There are unsecured loan options for sole traders too.
It is worth noting that although you will not need to secure your loan against a person or company asset, you may be required to have a good personal and business credit history.
If you do not meet these criteria, we can still help you access the finance you need. We offer a wide range of other business loan options and can help you find the right funding solution for your business.
Will I need to provide a form of security or personal guarantee?
Possibly. 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 repay the loan.
What are the documents required for an unsecured business loan?
When applying for unsecured business loans in the UK, there are certain documents that you need to provide. These documents vary from lender to lender, but as a general rule of thumb you should be ready to present:
Are unsecured business loans safe?
Unsecured business loans do not require security, and because of this, they can be categorised as a less risky form of borrowing. All loan products come with potential risks, but 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.
As mentioned, many lenders are regulated by the FCA. It is in the lender’s best interest to ensure your business will be able to make repayments when it takes
Are business loans regulated?
Business loans are mostly unregulated. Lenders only need to be regulated if they offer loans of £25,000 or less to certain types of businesses, such as sole traders. This means they have to meet minimum standards and follow certain rules to make sure their customers are treated fairly.
What can you use business loans for?
You can use them for almost any purpose relating to your business, including purchasing stock, taking on new staff, moving premises, paying off debts, buying new equipment, and expanding operations etc..
Which businesses can get a loan?
Most businesses can get a loan of some type but your options may be limited by the type of business you have so check before you apply.
For example, government start-up loans are only available to new businesses while many cash advance loans require you to have been trading for a set period of time before you apply.
How many loans can a business have?
There is no limit to the number of loans a business can take out but you will need to show your business can afford each loan.
Robi Finance Ltd
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Robi Finance Ltd is registered with the Information Commissioner’s Office under registration reference: ZB477056 Copyright © 2021. All Rights Reserved.
Robi Finance Ltd is an Appointed Representative of Connect IFA Limited 441505 which is Authorised and Regulated by the Financial Conduct Authority and is entered on the financial services register (https://register.fca.org.uk/s/) under reference 995310.
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