Business owners are regularly in need of funds in order to keep their business working profitably. Even for starting a business, capital is required. While there are quite a lot of loan options available today in UK, business owners tend to prefer unsecured business loans since the risk involved is lesser for them.
Quite a lot of borrowers don’t have a property which is one of the main reasons that they prefer an unsecured business loan. Usually, these loans are preferred by those who are just entering a business. However, quite a lot of people even apply for these loans for expanding their business. The funds can be used for purchasing equipment, office space, computers etc.
Features of unsecured business loan
Unsecured business loans do not require any type of collateral. The loan is absolutely risk free and is only provided to the borrower based on the past history as well as repayment capacity.
Borrowers with better credit scores get better deals and lenient terms and conditions. The amount that can be borrowed through an unsecured business loan can be anywhere between GBP 5000 to 100,000. However, the interest rates tend to be higher than the secured business loans. The repayment terms that are offered by the lenders are up to 25 years depending on the loan amount that is approved.
Since unsecured business loan would be costlier with their high interest rates, it is best to only consider one when there is a real emergency. Borrowers should ensure that the instalments must be paid on time without fail. These loans are offered mainly on the basis of the credit score of the applicant. A credit score of around 620 would be able to get you a good loan at convenient terms. However, unsecured loans are also available to borrowers with a bad credit history. These borrowers should ensure that they only pick a loan plan where they would be comfortable paying the instalments each year so that they do not cause any further damage to their credit scores.
For borrowers that apply for an unsecured business loan, the cost of the loan is the main factor that they are worry about. However, it is still possible to find a deal that would be affordable if you shop around and look for the best possible option. There are quite a lot of websites like Money Supermarket, Money Expert etc which help borrowers find various options according to their requirements. These websites would also be able to help you compare the loans better so that you would be able to find a loan product which would be best suited to your needs.
Unsecured business loan, when used the right way can provide business owners with the necessary funds which can be used in the business during emergencies.