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Reasons to apply for unsecured business loans

An unsecure business loan could be described as the conventional kind of business finance.

Recent years have witnessed many innovative products and services in the field of business finance However, there remain several reasons that an old-fashioned business loan could be the best choice.

No assets are required for security

The name suggests that with this kind of loan you do not have to offer a home or other asset of your business to guarantee the loan. This means your assets as a business aren’t at risk.

Access funding quickly

The application process is generally significantly faster than that of secured loans, which means you could receive your funds within several days after starting the procedure. The companies that have benefited from these loans have complained about the minimal paperwork that the lender has to submit in order to process the loan, which is usually done online in a matter of minutes.

Fixed installments

Business loans that are unsecured loans typically have fixed rates. This means that your monthly payments aren’t subject to change over the course of and allows you to budget effectively.

Shorter repayment terms

The standard term of an unsecure business loan ranges from one to three years, which means you won’t be burdened with being in debt for the length of time.

Lower initial costs

The cost associated with loans that are not secured can be less expensive than secured loans, and with the unsecured loans, there aren’t any costs for valuation or legal fees to pay.

You can use the money to fulfill any need

If you take out an unsecured business loan UK, the lender doesn’t place any restrictions on the things that money can be employed to use. This means that you are able to use the loan for a variety of reasons. This could include raising working capital, buying stock and equipment, hiring new employees and expanding into new locations as well as launching new products or services, and so on.

It’s a highly competitive market

There are plenty of business lenders who offer unsecured loans that allow you to search to find the best interest rate and repayment period that fits your specific needs.

What is an unsecure business loan function?

Secured loans are very easy arrangement. You could be able to take out a loan of the amount of, for instance, £500,000, but the amount you can borrow will depend on the lender’s opinion as to whether you are able to pay the loan.

Then, you pay back the amount you borrowed, plus interest, in equal installments for a specific time. The usual repayment timeframe could be anywhere between one to three years. In most cases, you’ll be required to make monthly payments, however certain agreements require quarterly payments.

The rate of interest you pay will depend on various things like how long you’ve traded the last, your turnover, as well as your credit track record.

Advantages of business loans that are unsecured

We’ve looked at the advantages of loans that are not secured could be. But, some of the other features of these loans to know about include:

Although the lender does not need an asset belonging to a company to be offered to secure the loan, they could request a personal security that is signed by one director or another.
If you fail to pay your payments on time will appear in your credit file, making it difficult to get credit in the future.
The interest rates can be more than those for secured loans.
If the owner of the business has a bad credit background, it could be difficult to secure this kind of loan
The amount of loans is usually lower than secured loans, so unsecured loans may not be an choice for large-scale projects.