Unsecured Business Loans are a low-risk way for start-up or established businesses to obtain finance for large capital intensive projects or to fund day-to-day expenditure.
Unsecured loans are so-called because they don’t involve posting any assets of the business, or business owners, as security against the loan. However, because the lender lacks this security, interest rates on unsecured loans are often higher than on secured loans of equivalent value.
Unsecured Business Loans work in a similar way to personal loans. A lump sum is advanced to the business and repaid in monthly or quarterly instalments over an agreed time period. Interest is charged on the outstanding amount of the loan at a fixed or variable rate as per the loan agreement. Sometimes the lender will also charge a fee to arrange the loan which will be incorporated into the repayments.
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