What Is an Unsecured Business Loan and Do I Qualify?

Find out what an unsecured business loan is and which solution would best suit your needs.

What Is an Unsecured Business Loan?

An unsecured business loan is a type of financing that does not require collateral, like your home or car, to secure the borrowed funds. That makes them an appealing choice for businesses that don't have valuable assets, or don't want to risk losing their assets if they become unable to repay their debt.

When assessing a small business' creditworthiness for an unsecured business loan, lenders will consider its cash flow and financial health. Lenders then determine the ideal terms of the loan - the fees and charges, duration of the loan, and frequency of loan repayments - based on the individual needs and financial capabilities of your business.

While the advantage of an unsecured business loan is that they don't require assets as collateral, the disadvantage is that they come with higher interest rates and shorter repayment terms than secured business loans. This is because the lack of collateral presents a higher risk for lenders. Nevertheless, unsecured business loans remain a popular choice for businesses seeking quick access to funds without tying up their assets.

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What Can You Use Unsecured Business Loans For?

Unsecured business loans are a financing option for businesses that require funds without having to provide collateral. Some of the common uses of unsecured business loans include:

Expansions,
Renovations
and Repairs

Businesses can use unsecured loans to purchase inventory, new equipment or expand into new locations. This allows your business to become more competitive and better meet the needs of its customers.

Marketing

Unsecured business loans can finance advertising, digital marketing or trade shows. The goal is to raise brand awareness and gain new customers.

Hiring
Employees

You can also use the funds to hire more staff, which allows your business to take on new projects or expand its services.

Business
Expenses

Businesses can use unsecured loans to cover costs like rent, utilities, and insurance. This ensures your business runs smoothly without interruptions.

Cash Flow

Unsecured business loans can help businesses keep a steady cash flow when their income or expenses change unexpectedly.

Typical Use Cases by Industry

Unsecured business loans are versatile and commonly used across various industries, including:

Retail

Covering inventory purchases, seasonal stock, or expansions.

Manufacturing

Updating equipment, managing operational costs, or investing in technology.

Hospitality

Renovations, staffing, and marketing initiatives.

Professional Services

Financing growth projects, new employee hires, or training programmes.

What is the Average Approval Time for Unsecured Business Loans?

The average approval time for unsecured business loans varies among lenders. While some online lenders offer quick approvals within a few days, traditional banks may take weeks. Factors influencing approval time include the completeness of your application, the lender's review process, and the overall efficiency of their loan approval system.

At Bizcap, we have a quick approval process. Applications can be approved and funds may be granted in just 24 hours versus much longer waiting periods through other lenders and traditional banks.

How Can I Get the Best Terms on an Unsecured Business Loan?

Here are three things you can work towards to improve your chances of obtaining an unsecured business loan:

Maintain a good credit history.
Demonstrate consistent revenue growth.
Have a well-developed and solid business plan.

Additionally, building a relationship with a trusted financial partner can enhance your chances of obtaining favorable loan terms.

What Are the Repayment Terms for an Unsecured Business Loan?

Repayment terms for unsecured loans vary based on the loan amount, lender policies, and business profile. They can range from days to weeks to a few months, with fixed or flexible monthly payments. While interest rates may be slightly higher than secured loans due to the “no collateral” structure, the shorter approval times and flexible terms offer a valuable solution for businesses needing quick funding.Bizcap loan terms range from 3 to 12 months, and repayments can be made daily or weekly, providing borrowers flexibility and convenience.

Does Bizcap Offer Unsecured Business Loans?

When assessing an application for a Fast Business Loan or Small Business Loan, Bizcap generally does not take into account whether a prospective borrower has specific assets to provide as security.

Depending on the size of the loan and the nature of the business, Bizcap may require you to sign a debenture. The debenture is a document which gives Bizcap a security interest in the company’s assets. This may include a fixed charge over assets such as vehicles and equipment and/or a floating charge over assets such as inventory. If the loan goes into default, Bizcap will be able to recover the debt by selling these assets. Bizcap will usually file the debenture with Companies House within 21 days.

In certain instances, Bizcap may require specific security to be granted over assets. Examples of security (based on loan size and the customer’s individual circumstances) include a mortgage over land.

Security and assets are not required for an application regardless of the loan amount.

Bizcap's other products, such as Secured Business Loans and Bridging Finance, require security.

Bizcap requires a personal guarantee from the director, shareholder or other people involved in the business for all loans.

How Much Can I Borrow From Bizcap?

At Bizcap, we offer a range of loans to accommodate the diverse financial needs of businesses. Our small business loans range from £5,000 to £750,000 and can be approved in as little as 3 hours.

The amount Bizcap lends will depend on the specific circumstances of your business. We carefully consider a variety of factors to determine its health and creditworthiness before lending accordingly. Various factors influence the amount of money you should borrow, including your business's cash flow, the duration of its operations, its assets and the reason for needing the loan.

Bizcap loan terms range from 3 to 12 months, and repayments can be made daily or weekly, providing borrowers flexibility and convenience.

Our goal is to provide tailored loans for businesses to address their specific financial needs. By doing so, we aim to minimize risk for both the lender and the borrower. We can assess your business's financial health to find the right loan amount and terms for its growth and success.

To find out what kind of loan Bizcap can tailor to your business' needs, enquire now.

How Do I Qualify for a Bizcap Business Loan?

You may qualify for most Bizcap loans if your business meets the following criteria:

Active Company Registration Number

Your business should be registered with an active company registration number (CRN). This demonstrates that your business is operating legally in the United Kingdom.

Business Growth Potential

Your business has been trading for at least 4 months. We need to check if your business is stable and has potential for growth before issuing a loan.

Minimum Monthly Revenue

Have at least £12,000 in monthly revenue. This criterion helps us determine your business’ ability to manage and repay the loan.

When reviewing your application, we will examine your financial history, cash flow and business performance. Unlike other lenders, we don’t check your credit score at the point of application. That happens later, once we’ve made you a conditional offer that you’d like to accept. The more robust your business’s finances are and the greater your business' potential for success, the higher your chances of qualifying for a Bizcap loan.

How long does approval take for an unsecured business loan?

At Bizcap, we strive to offer quick approval on our loans. Approval for an unsecured business loan can typically be approved and funded within 3 hours of your application. Other solutions may be approved and funded within 24 hours.

What are the pros of unsecured business loans?

Unsecured business loans offer several advantages, including no collateral requirement, faster approval times, and more flexibility in how funds can be used. This makes them an excellent choice for businesses that need quick access to capital without risking assets.

What are the eligibility requirements for an unsecured business loan?

At Bizcap our eligibility is quite simple. Your business should be registered with an active company registration number (CRN), have been trading for at least 4 months and have at least £12,000 in monthly revenue. It’s that simple.

Are interest rates higher for unsecured business loans?

Yes, interest rates for unsecured business loans are generally higher than for secured loans. This is because, without collateral, lenders take on a higher risk. However, many business owners find the speed and flexibility worth the slightly higher cost.

What can I use an unsecured business loan for?

Unsecured business loans are highly versatile and can be used for a range of purposes, including inventory purchases, equipment upgrades, marketing campaigns, hiring, and covering operational costs. They are popular across industries like retail, healthcare, hospitality, and professional services.

What documentation do I need to apply for an unsecured business loan?

At Bizcap, we only require identification documentation and your business bank statements to process your application. After your application, we assess your file without running a credit check and make a conditional offer.

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Contact Us

Need help? Got questions? Contact us on 808 304 8690 for assistance with your Bizcap loan application or to gain more knowledge about the solutions we can offer your business to help it grow.