Unsecured Business Loans UK 2025: Complete Guide

What is an Unsecured Business Loan?

An unsecured business loan requires no property, equipment, or assets as security. You borrow based on:

• Business trading history and cash flow
• Personal credit score
• Business financial statements
• Personal guarantee from directors

£18.5 billion in unsecured UK business lending in 2024 (British Business Bank).

Unsecured vs Secured Loans

Top Unsecured Lenders UK (2025)

1. iwoca - Fastest Approval

• Amount: £1,000-£200,000
• APR: 6-20% (risk-based)
• Approval: 48-72 hours
• Term: 3-36 months
• Requirements: 6+ months trading, £10k+ monthly revenue

2. Funding Circle - Best Rates

• Amount: £10,000-£500,000
• APR: 6-18%
• Approval: 1-2 weeks
• Term: 12-60 months
• Requirements: 2+ years trading, profitable

3. Capitalise - Best for Bad Credit

• Amount: £3,000-£500,000
• APR: 8-30%
• Approval: 48 hours
• Requirements: 6+ months trading, considers poor credit

4. Fleximize - Best for SMEs

• Amount: £10,000-£500,000
• APR: 8-22%
• Approval: 3-7 days
• Requirements: 12+ months trading

Requirements & Eligibility

Typical requirements for £50,000 unsecured loan:

• 12-24 months trading history
• £15,000+ monthly revenue
• Credit score 600+ (some accept 550+)
• No CCJs in last 12 months
• Profitable or break-even
• UK registered business
• Director personal guarantee

Cost Example: £25,000 Over 2 Years

• Good credit (700+): 8% APR = £1,096/month, £1,304 interest
• Fair credit (600-699): 15% APR = £1,209/month, £3,996 interest
• Poor credit (550-599): 25% APR = £1,340/month, £7,160 interest

Credit score impact: Good vs poor credit = £5,856 difference on same loan.

Advantages of Unsecured Loans

• ✅ No property risk: Your home/premises aren't at stake
• ✅ Faster approval: No property valuation needed (saves 2-4 weeks)
• ✅ Flexible use: Any business purpose
• ✅ Smaller amounts accessible: Can borrow £1,000-£5,000 (secured loans typically £10k minimum)

Disadvantages

• ❌ Higher interest: 3-10% more than secured loans
• ❌ Lower amounts: Maximum usually £250k-£500k vs £5m+ secured
• ❌ Personal guarantee required: Directors personally liable
• ❌ Stricter criteria: Need good trading history and credit

When to Choose Unsecured

Best situations:

• You don't own property to secure against
• Need under £100,000
• Want fast approval (48 hours - 2 weeks vs 4-8 weeks secured)
• Don't want to risk personal assets
• Have strong business cash flow and credit score

Conclusion

Unsecured business loans offer £1k-£500k without property security. Rates are 3-10% higher than secured loans, but approval is faster and your assets aren't at risk.

Best for: Businesses with good credit, strong cash flow, and no property to secure against. Ideal for amounts under £100k where speed matters.