Unsecured business loans

An unsecured business loan is a lump sum that doesn't require business assets — such as property or equipment — as security. Instead, lenders assess your business's creditworthiness and may require a personal guarantee.

In this guide, you'll learn how unsecured business loans work, the potential benefits and risks, and how to decide whether one could be right for your business.

What are unsecured business loans?

Unsecured business loans provide capital without requiring you to put up specific assets as collateral. Because the lender takes on more risk, interest rates are typically higher than secured loans, and loan amounts may be smaller — usually up to £250,000.

They're offered by high-street banks, challenger banks, and specialist online lenders. Many can arrange funding quickly — sometimes within 24–48 hours — making them attractive for businesses that need fast access to capital without tying up assets.

How do unsecured business loans work?

Once approved, you receive a lump sum in your business bank account and repay it — usually monthly — over a set term, typically between 1 and 5 years. Interest rates may be fixed or variable, and some lenders charge arrangement fees.

The amount you can borrow and the rate you're offered will depend on your trading history, annual turnover, profitability, and credit profile. Because there's no asset security, lenders place greater emphasis on your business's financial performance and your personal credit history.

What are the benefits?

• No asset security required — your property, equipment, and stock aren't at risk if you can't repay.
• Quick to arrange — many lenders can release funds within 24–48 hours.
• Flexibility — funds can be used for any legitimate business purpose.
• Shorter-term commitment — terms are typically 1–5 years, so you're not locked into long-term borrowing.
• Simpler application — without the need for property valuations, the process is often faster and less complex.

What are the risks?

• Higher interest rates — unsecured loans typically cost more than secured loans due to the increased lender risk.
• Personal guarantees — many lenders require a personal guarantee, meaning your personal assets could be at risk if the business can't repay.
• Lower borrowing limits — loan amounts are usually capped at £250,000, compared to £500,000+ for secured loans.
• Stricter eligibility — lenders may require a stronger trading history and credit profile.
• Impact on cash flow — regular repayments reduce the cash available for day-to-day operations.

Is my business eligible?

Eligibility criteria vary between lenders, but most will look for:

• A minimum of 1–2 years of trading history.
• A minimum annual turnover (often £50,000–£100,000+).
• A satisfactory personal and/or business credit history.
• Evidence that your business can afford the repayments.

Newer businesses may struggle to access unsecured loans but could explore startup business loans or government-backed schemes.

Unsecured vs secured business loans

A secured business loan requires an asset — such as property or equipment — as security. Because the lender has collateral, secured loans typically offer lower interest rates and higher borrowing limits.

An unsecured loan doesn't require asset security but usually carries higher rates and lower limits. The right choice depends on whether you have assets to offer as security, how much you need to borrow, and how quickly you need the funds.

Estimate your repayments

Use our business loan calculator below to estimate what an unsecured loan might cost. Adjust the amount, term, and interest rate to see how your monthly repayment changes — then speak to Jamie for a personalised comparison across the market.

How do I choose a lender?

• Compare the total cost of borrowing, not just the headline interest rate.
• Check whether the lender is authorised and regulated by the FCA.
• Understand whether a personal guarantee is required and what it means for your personal liability.
• Consider how quickly you need the funds and whether the lender can deliver within your timeframe.
• Read reviews from other businesses and consider seeking independent advice.

How can I learn more?

The GOV.UK business finance finder and the British Business Bank both provide free, impartial resources.

You may also find our guides on business loans, small business loans, and startup business loans helpful.