Apply for an unsecured business loan

If you’d like to see your business thrive but don’t want to restrict your day-to-day operations, an unsecured business loan could be for you.

If you haven't been impacted by COVID-19 check out our Flexi-Loan

Apply for a CBILS loan


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No interest for a year: the government covers interest for the first 12 months.

Repay early with no fees: repay if CBILS is the only product in your account you can do it in account pages. If it’s the second product, the customer would need to call in to repay.

Borrow up to 5 years: all our CBILS loans last five years, although you can repay early.

What are unsecured business loans?

Apply for an unsecured business loan with iwoca. With iwoca's CBILS loan, you can borrow up to £350,000, and you won't pay any interest for the first 12 months.

9 September 2020

When it comes to business loans, there are two main variations that determine the way the money you borrow is guaranteed. They are secured loans, and unsecured loans.

With a secured business loan, an asset (such as a piece of equipment or property) can be used as collateral if the borrower fails to keep up with their repayments. This means that the lender can take possession of whatever asset is agreed in the terms of the loan, to settle the debt owed to them by the borrower.

On the other hand, an unsecured business loan does not require an asset. The lender takes on far more risk, and so is likely to lend a smaller amount over a shorter period of time.

What are the advantages of an unsecured loan?

  • Free control over your assets
    An unsecured business loan leaves you free to buy and sell assets with no restrictions. This means that you have greater flexibility in choosing how you develop and grow your business.
  • Fewer upfront fees
    Taking out a secured business loan means that you’re likely to have to pay for valuation fees, so that the lender can work out how much your assets are worth. An unsecured loan eliminates the need for this, meaning you can invest that money in your business instead.
  • Easier for new businesses
    New businesses won’t always have assets that provide enough value for a lender, which could limit their ability to get a secured business loan. An unsecured loan eliminates the need to do so, and could be a more viable option for those that have been established more recently.

How do they work?

A business owner takes out an unsecured business loan for £10,000. Because of the nature of the loan, they do not need to provide any assets as collateral against what they have borrowed. The lender may ask them to sign a personal guarantee instead, which means that the business owner would still be liable for repaying the loan even if the business folds. Once the loan documents are signed, the business owner will receive the money and start making agreed repayments to settle their debt.

Higher interest rates Without assets to secure a loan, the risk becomes far higher for the lender. To compensate for this, it’s likely that the rates they’ll charge will be higher than if you took a secured business loan.

Lower amounts and shorter terms Because unsecured loans are riskier, lenders will often offer them with shorter terms and lower amounts. If this isn’t enough to grow your business, you may want to consider a secured business loan instead.

Harder to get approved If your business doesn’t have a good trading history, or is just quite young, you may struggle to get an unsecured business loan.

Personal guarantee If your loan is unsecured, your lender may ask you for a personal guarantee which means that you would still be personally liable if your business can’t pay.

An unsecured business loan gives the borrowing business far more freedom and flexibility over how they run daily operations. Tying up assets in secured loans may make the business less agile, and limit the decisions you can make.

For example, if you wanted to free up extra cash flow to buy an in-demand product, you may be restricted from selling some of your company vehicles to do so (if they are being used as collateral for your loan).

Eligibility criteria will vary from lender to lender, but in order to get an unsecured loan it’s likely you’ll need to have a good trading history. Unsecured loans are riskier for the lender, so they may be more hesitant to offer them to businesses with poor track records.

Taking a secured or unsecured business loan won’t hurt your credit score, and could even improve it as long as you keep up with your repayments. However, if you repay late, fail to make a repayment or default on your loan, then your credit score could be impacted.

It’s important to make sure you carefully weigh up the pros and cons of taking a loan, whether unsecured or secured. If it’s not the right decision for your business and you can’t keep up with the repayments, then it may not be a safe option.

If your business is relatively young then you could struggle to get an unsecured loan with a bank. As part of the application process, you may be required to submit past years’ trading history – if you haven’t been trading for long enough then your bank may not approve your application.

Having said that, there are start up specific loans on offer from banks and alternative lenders. Form more details, check out our start up funding guide.

Typically, unsecured loans will have shorter terms, meaning you may be restricted in how long you have to repay it. Terms will also vary from lender to lender so it’s best to carefully check the details with whoever you’re applying with.

How our unsecured business loan works


See if you’re eligible in two minutes

Answer a few questions to see if a CBILS loan could be right for you.


Apply online with help at hand

Although our application process is all online, you’ll have your own account manager to help. Once we’ve approved you and done a few extra checks, we’ll ping the money straight to your account.


Repay over five years (or earlier)

These loans officially last five years, but you can also repay early without a fee - and you don’t pay anything for a year, anyway.

Apply for a CBILS loan

If you haven't been impacted by COVID-19 check out our Flexi-Loan

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Dan is part of the content team at iwoca. He writes articles explaining financial topics, as well as guides on the best support for small businesses during coronavirus.

Article updated on: 9 September 2020

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