FUNDING OPTIONS

Development Finance

Unsecured Business Loans are not backed up by any asset. This means that risk is higher for the lender, as they have no guarantee of getting their money back. This generally means you will pay more interest with unsecured loans.

They also tend to be for smaller amounts and the time periods over which they are spread are shorter.

Unsecured business loans are normally backed up by a business’s trading position. The loan amount is quite often specified as a multiple of the business’s turnover — this means that they can make a fair estimate of your business’s future performance, based on how it has done in the recent past.

Unsecured loans normally require background checks and credit checks. This is where the lender looks at the company’s track record as well as that of the Directors. It’s also common for lenders to ask for personal guarantees from Directors of the company for larger unsecured loans.

Generally, large unsecured business loans are only an option for businesses whose cashflow position is strong.

The deciding factors between secured and unsecured funding are timeframe and cost — do you want the cheapest product possible, or are you willing to pay extra to have the cash fast? And if you want an unsecured loan, does your business have a track record the lender can trust?

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