We'll help you find the right unsecured business loans

Unsecured business loans can typically be used for a variety of purposes, such as starting or expanding a business, upgrading equipment, refurbishing a property, or improving cash flow.

However, before committing to an unsecured loan, it’s important to understand how they work and consider other available options that might be a better fit for your needs. 

For instance, if you're looking to purchase new equipment, asset finance may be a more suitable choice. Or, if your credit rating isn't ideal, a secured business loan could offer a higher chance of approval.

Get in touch with the team at Vortex Financial to explore financing options tailored to your specific needs and situation.

 An unsecured business loan works similarly to a personal loan.

 If your application is approved, you'll receive a lump sum from the lender, which you must repay in monthly installments over an agreed period:

• Short-term business loans typically last from three months to a year.
• Medium-term loans range from 12 months to three years.
• Long-term loans extend beyond three years, with specialist loans like commercial mortgages sometimes taking up to 25 years to repay.

As with other loans, interest is added to the amount borrowed. The interest rate depends on factors such as the loan amount, repayment period, and your financial situation and credit score.

If your business is new, the lender may use your personal credit file to help determine your eligibility. Even though the loan is unsecured, you may still need to provide a personal guarantee, making you personally liable for repayment if the business cannot pay.

Established businesses typically have the opportunity to borrow more than startups. 

The amount you can borrow is determined by the size and circumstances of your business. Lenders consider factors such as your credit score and trading history to assess how much they’re willing to lend and under what terms. They may also offer a loan amount based on a multiple of your business's monthly turnover.

• No collateral required – Since there’s no need to provide personal or business assets as security, unsecured loans are often a great option for smaller businesses that may not have high-value assets to secure a loan.
• Faster decision-making – Unsecured loans typically offer quicker and more straightforward approval, making them ideal for businesses that need funding urgently.
• Flexibility of use – Unlike some other types of commercial loans, unsecured loans can be used for any business-related expense, from improving cash flow to financing refurbishments.

•  Higher interest rates – Due to the increased risk for lenders, unsecured loans typically come with higher interest rates.
• Affordability is crucial – Approval for unsecured business loans is based on your business's ability to make repayments, with factors like monthly or annual turnover playing a significant role in the decision.
• Lower borrowing limits – Lenders often impose a cap on the amount they’re willing to lend. If a larger sum is needed, a secured loan might be a more suitable option

 The main difference between unsecured and secured loans lies in the security required for approval.

Unsecured business loans don’t require any collateral, while secured business loans require you to offer assets as security in case you’re unable to repay the loan. 

Assets like commercial property, vehicles, and machinery can be used, and if you fail to meet your repayment obligations, you risk losing them.

Secured loans are less risky for lenders, as they can sell the assets you’ve provided to recover the loan amount if you can’t repay. As a result, secured loans often allow you to borrow larger amounts or secure better terms than unsecured loans.

To find out if an unsecured or secured loan is more suitable for your business, give the Vortex Financial team a call on 07749 874 185, or email hello@vortexfinancial.co.uk