What is an unsecured business loan

An unsecured business loan is funding based on your business performance—no asset security required. It’s a fast, flexible way for UK SMEs to access working capital with predictable monthly repayments.

When it helps (examples)

- Working capital / cash injection to keep operations moving.

- Fund a project (e.g., launching a new service or opening a site).

- Diversify or scale—buy stock, ramp up marketing, or hire staff ahead of revenue.

Why choose an unsecured business loan

- Speedy decisions and quick access to funds.

- Keeps assets unencumbered (no charge over vehicles/property).

- Flexible terms to suit cashflow.

- Can sit alongside other facilities (invoice finance, revolving credit).

- GGS-backed options may be available, improving access and pricing (Growth Guarantee Scheme subject to eligibility).

What lenders look for in unsecured business loans

- Affordability and trading history

- Turnover and bank statement strength

- Credit profile of the business and directors

- Personal guarantee (often required, subject to status)

Barriers to securing an unsecured business loan

- Poor credit history (missed payments, CCJs)

- Weak end-of-day balances on bank statements

- Limited trading history or inconsistent revenue

- Weak personal guarantee or directors unwilling to support the loan

Real Business Example: A great example of this in action is DroneWorks. They secured an unsecured business loan through us to invest in advanced LiDAR drone technology, helping them win larger contracts and grow revenue.

What it is

A secured business loan is funding that’s backed by an asset such as property, equipment, or vehicles. By providing security, businesses can often access larger loan amounts, longer terms, and lower interest rates compared to unsecured borrowing.

Examples of when a secured business loan helps

- Large projects or expansion where higher funding levels are needed.

- Purchasing property, machinery, or equipment to scale operations.

- Debt consolidation into one manageable facility with lower costs.

- Stabilising cashflow with longer repayment terms.

Why choose a secured business loan

- Access to larger loan amounts — often £100k+ depending on security.

- Lower rates and longer terms than unsecured loans.

- Flexible structures including interest-only or staged drawdowns.

- Can unlock equity in existing assets without affecting day-to-day cashflow.

- Available through the Growth Guarantee Scheme (GGS) with government support (subject to eligibility).

What lenders look for in secured business loans

- Value and type of the asset offered as security.

- Loan-to-value (LTV) ratio — how much you want to borrow against the asset’s value.

- Business affordability (profitability and cashflow).

- Trading history and credit profile of directors.

What makes approval difficult

- Assets with limited resale value or low equity.

- Insufficient affordability based on business accounts.

- Poor credit history or unpaid debts.

- Directors unwilling to provide personal guarantees alongside security.

Real Business Example: One client in the forestry sector used a secured business loan to fund the purchase of three John Deere forwarders. By securing the loan against the equipment, they accessed competitive rates with flexible early settlement terms — enabling them to expand operations without overstretching cashflow.

What is invoice finance
Invoice finance lets you unlock cash tied up in unpaid invoices, giving you immediate access to a percentage (often up to 90%) of the invoice value. Instead of waiting 30, 60 or 90 days for customers to pay, your business can use that money right away to cover costs or invest in growth.

Industries that benefit from invoice finance
Invoice finance is most effective for B2B businesses that issue invoices on credit terms. It’s popular with:

- Commercial cleaning companies and service providers with rolling contracts.

- Recruitment agencies paying staff weekly but waiting for clients to settle.

- Manufacturers, wholesalers and logistics firms with long payment cycles.

Types of invoice finance

- Invoice factoring – The lender advances funds and manages your credit control, chasing payments directly.

- Invoice discounting – Funds are advanced, but you retain responsibility for chasing payments. Often confidential.

- Selective invoice finance – Choose specific invoices to fund rather than your whole ledger.

What to be aware of with invoice finance

- Reliance risk – Businesses can become dependent on invoice finance if margins are tight.

- Customer non-payment – Even with advances, if a customer doesn’t pay, you may still be liable. Bad debt protection can reduce this risk.

What is a flexible credit line
A revolving credit facility is a flexible line of funding that works much like a business overdraft. You draw down funds as needed, repay, and reuse the facility multiple times within the agreed limit and term.

When does a flexible credit facility help
Revolving credit is ideal for:

- Purchasing stock or materials.

- Managing lumpy cashflow when income is irregular.

- Seasonal businesses balancing busy and quiet periods.

- Covering short-term costs while waiting on customer payments.

Typical terms of a flexible credit facility

- Facility size: £10,000 – £100,000 (depending on lender).

- Term: 3 – 12 months.

- Cost: Between 2.5% and 3.9% per month on utilised funds, sometimes with an arrangement fee upfront (depending on lender).

- Structure: Interest charged only on funds drawn down, not the full facility.

Flexible credit line lender requirements

- Business turnover of at least £100k per year.

- Minimum 6 months trading history (with filed accounts preferred).

- Homeowners as personal guarantors are strongly preferred.

- Clean credit history (business and directors).

What to be aware of

- Can become expensive if heavily relied upon for long-term borrowing.

- Renewal fees may apply if extending beyond the original term.

- Lenders expect clear evidence of cashflow management.

Real Business Example: James Murray Finance arranged a revolving credit facility for a hire business in Peterborough. At the time, they were juggling VAT payments while restructuring their business model, which left cashflow inconsistent. The flexible facility allowed them to draw down funds when needed and stabilise operations during the transition.

What is a stocking loan

A stocking loan (or stocking facility) is a revolving form of business finance that works like an overdraft. You draw down funds as needed to purchase stock and have up to 120 days to repay each drawdown. Interest is serviced monthly, and the faster you repay, the less interest accrues.

When do you need a stocking loan
Stocking loans are designed for UK businesses that:

- Need to buy goods from suppliers in bulk.

- Want to raise finance against stock they already hold.

- Operate with a gross margin of at least 15%.

- Require facilities typically from £25,000 to £300,000.

Typical terms of a stocking loan

- Setup fee: around 2% of the funding line but varied between sector

- Repayment: up to 120 days to clear each drawdown.

- Facility type: revolving, allowing multiple drawdowns.

Why choose a stocking loan

- Helps increase stock profile without tying up working capital.

- Flexible repayment structure that adapts to sales cycles.

- Can grow turnover by supporting faster inventory turnover.

- Operates as an alternative to traditional overdrafts, and often allows you to draw down larger sums.

What to be aware of with stocking loans

- Lenders expect evidence of healthy margins (typically 15%+).

- Interest costs add up if stock takes longer than expected to sell.

- Facility may require detailed stock reporting to the lender.

Real Business Example: James Murray Finance arranged a stocking facility for a car dealership in Derbyshire. The facility allowed them to increase their stock profile, enabling more vehicle sales each month. The additional income generated comfortably covered the cost of the facility and supported further growth.