Is an Unsecured Business Loan Right for You?

Unsecured business loans, otherwise known as signature loans or personal loans, can be a vital resource, especially to owners of new or young businesses who do not have enough collateral to secure a large enough loan. Cash flow really is the lifeblood of any business, especially for start-ups and small businesses; this guide to unsecured business loans will help business owners decide if this option will best suit their business and cash flow needs.


What is an Unsecured Business Loan?


The best way of understanding what an unsecured business loan does is to compare it to a secure business loan. With a secure business loan, the money a business can borrow depends directly upon the assets they can put up as collateral. These could be owned by the business owner themselves or could be the property of the business, taking the form of inventory, real estate, or equipment. The value of the assets put up for the loan will directly inform the amount of the available funding. In contrast, an unsecured business loan does not require assets as collateral.


This lack of assets does present an additional risk for the lender, as assets act as a way of securing a return on the loan. This means that even alternative lending companies, such as, will make an offer of a loan based on an individual’s creditworthiness.


Who Could Benefit from an Unsecured Business Loan?


Any business that needs cash in a hurry would benefit from this style of loan, but it is particularly suited for a few specific types of business, some of which are listed below:


  • Small Business, which might not have the funds available to, for example, purchase equipment which could help take their business to a new level.
  • Start-Upsthat are growing at a fast rate and need more funding to ensure the same level of progression.
  • Seasonal Businesses; unsecured loans can help provide working capital for businesses out of their peak season, which is simply paid back when business picks up again.


What Information is Needed to Get an Unsecured Business Loan?


The particular requirements necessary to gain an unsecured business loan will vary lender to lender, the list below includes some helpful resources to have at hand:


  • The business turnover figures
  • A breakdown of the business’s assets, expenses, the current capital, projections and forecasts
  • A personal guarantee, this should come in the form of a legal document which states personal responsibility for the loan and its repayments
  • A repayment plan should outline when and how the loan is to be repaid. This is not only a useful document to provide a lender but is always a prudent measure to ensure a realistic repayment for the business itself.


An unsecured business loan can offer a quick and vital injection of cash that is needed to keep a business running. Provided the business has an adequate business plan and credit score, the application process can be rapid and straightforward.    


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