Unsecured finance

Unsecured finance is the workhorse of UK SME lending — typically used for working capital, growth investment, marketing, hiring, and bridging short-term cash-flow gaps. The lender does not register a fixed charge over a specific asset, which means decisions rely heavily on financial accounts, bank statements, credit profile, and the strength of any director personal guarantees.

Although there is no asset security, most unsecured business loans to UK limited companies are still backed by one or more director PGs, plus sometimes a debenture creating a floating charge over the company's assets. Calling these facilities truly unsecured is a slight simplification — they are unsecured against any specific named asset, but not necessarily unsecured against the directors or the wider company.

Pricing on unsecured finance is materially higher than on secured business loans of similar size. APRs typically run from around 8 per cent for prime SMEs up to 25 per cent or more for higher-risk profiles. Term lengths are usually shorter — 1 to 5 years is standard — and amounts available are smaller than for secured products.