What is an unsecured business loan?
Unsecured business loans are a type of funding that doesn’t require the business to put up any personally owned and business-owned assets up as collateral. This differs from secured business loans, which require the finance to be backed by an asset of some type.
Because no assets are secured against an unsecured loan, it’s a requirement in the majority of cases that the person taking out the loan – the borrower – has an excellent credit rating. This positive credit rating should be in addition to a full, excellent financial history and a well-researched and planned forecast for cash flow. This helps the lender to identify the risk of lending to the business, as well as checking if the required payment would be possible and sustainable for the business.
What are unsecured business loans for?
Businesses choose to take out unsecured business loans for a range of different business-based reasons. These range from immediate needs to long-term plans, but some of the most common things unsecured business loans can be used for are the following:
Helping with cash flow
New equipment, renting new spaces and expansion plans
Hiring new staff
Paying off existing debts and owed money to contractors, suppliers or other partners
Who are unsecured business loans for?
Unsecured loans, especially business loans, are suitable for any type of business. They are especially useful for companies that have few tangible assets or have little of value to provide as security for a loan. These types of businesses are more and more common, with many digital companies, in particular, having few assets to place against a loan.
The new Government back Recovery Loan Scheme could be a perfect option. Learn more here.
By using our Free Calculators, you will be able to type in the loan amount and the term your want to pay the loan off over, and get an instant idea of the monthly repayments. Our How To Video will also show you how to do this here.
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