The Benefits Of Unsecured Business Loans
Unsecured business loans offer SMEs the opportunity to borrow money when they need it, without having to put up any business or personal assets as a form of collateral. In these cases, lenders typically take a lot of the risk, helping up and coming businesses get the money they need without risking any of their personal belongings or the business premises. While the best business loans can be difficult to find if you are searching the market by yourself, we are able to connect you to lenders who can offer reliable, trustworthy unsecured business loans.
- Quick & Simple – Unsecured loans tend to not require as much legal legwork as a secured loan and as a result, are often found to be much faster and simpler to navigate. If you’re just stepping foot into the world of business loans, this can be beneficial as you won’t be putting any of your business assets at risk. For fast access to money without intense legal work that a business may not be able to afford, these unsecured loans are ideal.
- No Need For Collateral – For businesses that do not have any high-value assets, secured loans aren’t always an option. Small businesses that don’t operate from an office, medium-sized companies that can’t afford to lose their business premises – these are all companies unable to easily recover from a loss of assets and as a result, the lack of collateral involved can help maintain peace of mind for these business owners.
- The Risk Is Carried By The Lender – Even the best business loans come with a degree of risk, but when you take out unsecured business loans, most of that risk is carried by the lender. For businesses that are making good capital turnover every year but who may not feel comfortable risking their assets, Unsecured loans are often a beneficial option.
What’s The Difference Between Secured And Unsecured?
Secured and unsecured loans both have their benefits and risks, but to truly understand which is better for your business, you must first know the difference. Secured loans are a type of loan that is protected by an asset or another form of collateral. For companies seeking larger loan amounts, these may be the best business loans to choose to suit their requirements, but for those without assets to spare, an unsecured loan may be the better alternative.
Unsecured business loans are a type of loan which is not secured against collateral such as a personal asset. Most lenders will take your business turnover as an indication as to whether you are likely to be able to meet repayments and will assess the risk they’ll be taking on using this information.
Our comparison service makes the decision between secured and unsecured loans simple. We take your provided details and match you to the relevant loans and lenders for you. By using a comparison company, you can:
- Determine the interest rates you might be charged across a number of lenders
- Quickly compare loan features to determine which loan type you could borrow
- Gain fast results of your comparison to see any unsecured loans you may be eligible for
Did You Know…?
- Did You Know that unsecured loans rely on your income or the state of your business? Without security, lenders are forced to base their decisions on whether you have regular turnover and what it’s perceived value is.
- Did You Know that you could borrow up to £1,000,000? While these loans aren’t commonly found as unsecured, some businesses may be able to apply for larger sums, up to £1million, without any security assets.
- Did You Know that the risk to the lender brought by your unsecured business loans is often reflected in the interest rate that you’ll be charged? Higher risk loans are likely to have a higher interest rate, so bear this in mind when applying!
- Much faster - no valuations necessary
- Rates from as low as 4.9% APR - 1.1% (Flexible Facility)
- Personal Guarantees sometimes required
- Loans up to £1,000,000
- Less fees
- Overall Interest rate usually higher, because the lender has a higher risk
The Risks Involved In Unsecured Business Loans
Unsecured business loans are still a form of short term loan and as a result, there are risks involved when opting for this solution. If your business has a low turnover, you could be at risk of rejection, high-interest rates and more. We are dedicated to matching you with the best business loans suited to your situation, but the risks should always be taken into account:
- Lower Turnover Rates Could Mean Rejection – Unsecured loans are based entirely on your business’ likelihood of being able to pay back the loan and without collateral, this will come down to your turnover and strength as a business. If your monthly or yearly turnover is particularly low or there is no regular business activity, you may be rejected.
- High-Interest Rates – In the case of acceptance despite weaker trading positions, you may have to account for higher interest rates. Lenders need to be able to cover themselves and one way in which they can do this is through higher interest rates which, unfortunately, may make your loan more expensive. They may also request shorter repayment periods or lower loan amounts in some cases.
- Some Lenders Aren’t FCA Approved – There are lenders on the market offering unsecured loans that haven’t secured FCA approval. However, here at Think, our panel of lenders are all trusted businesses so you can enjoy peace of mind knowing that we will only match you with the safest lenders for your unsecured business loans.
Alternatives To An Unsecured Business Loan?
If you believe that unsecured loans may not be the best option for your business, there are alternative loans for you to choose from that may better suit your requirements. Commercial mortgages offer companies the chance to gain funds for business refurbishments, development or business property, buy-to-let options and more while working capital loans can offer quick, short-term cash injections for bridging the gap when you have a cash flow shortage to fund everyday activity. Card machine cash advances are another option for retail stores or hospitality facilities with PDQ card machines. You can get an advance within 24-72 hours for quick cash when you need it most.
We’ll utilise our innovative iFunds technology in order to match you to the right loan and lender for your business, taking out the legwork you need when searching for unsecured business loans, or any of the alternatives above.
To compare the unsecured loans on offer to you, just fill in the form right here on our website and let iFunds find the best business loans for you!