Unsecured business lending in the UK: no collateral needed
By Helm, Funding Specialist
- Unsecured lending does not require pledging assets
- Merchant cash advances are the most accessible unsecured option
- Costs are typically higher than secured lending
- Unsecured does not always mean guarantee-free
- Revenue performance is the key factor in approval
Many UK businesses, particularly service businesses, startups, and those operating from rented premises, do not have significant physical assets. Traditional secured lending is not an option for them.
Unsecured business lending fills this gap, providing capital based on your business performance rather than the value of your assets.
How unsecured lending works
With unsecured lending, the lender assesses your ability to repay based on your revenue, trading history, and financial health rather than the value of assets you can pledge.
Because there is no collateral for the lender to seize if you default, unsecured lending typically costs more than secured options. However, it is also faster to arrange and more accessible.
Unsecured lending options for UK businesses
The main unsecured lending products available in the UK include:
| Product | Typical Amount | Security | Personal Guarantee |
|---|---|---|---|
| Merchant cash advance | £10,000 to £300,000 | None | Not required |
| Revenue-based finance | £10,000 to £300,000 | None | Not required |
| Unsecured term loan | £1,000 to £500,000 | None | Often required |
| Business credit card | £1,000 to £25,000 | None | Not required |
| Overdraft | £1,000 to £50,000 | None | Sometimes required |
Eligibility for unsecured lending
Since lenders cannot rely on collateral, they focus more on your revenue data and business performance.
- Consistent monthly revenue (card or total)
- At least 3 to 12 months trading history
- A UK-registered business
- Evidence of stable or growing business performance
- Acceptable credit history (requirements vary by lender)
The personal guarantee question
A critical distinction that many business owners miss: unsecured does not mean guarantee-free. Many unsecured loans still include a personal guarantee in the terms.
A personal guarantee means you are personally liable for the debt if the business cannot repay. Merchant cash advances and revenue-based finance providers typically do not require one. Always ask before signing.
Unsecured vs secured lending
The choice comes down to what you have available and your priorities.
| Factor | Unsecured | Secured |
|---|---|---|
| Collateral needed | No | Yes |
| Typical cost | Higher | Lower |
| Speed to arrange | Faster | Slower |
| Amounts available | Lower ceiling | Higher ceiling |
| Risk to assets | No asset risk | Asset at risk |
| Approval basis | Revenue, credit | Asset value, credit |
Frequently asked questions
Is a merchant cash advance unsecured lending?
Yes. MCAs do not require any collateral and do not include personal guarantees. They are one of the purest forms of unsecured business finance.
What is the maximum I can borrow unsecured?
This varies by lender. Merchant cash advances offer up to £300,000. Some unsecured term loan providers offer up to £500,000 for strong applicants.
Is unsecured lending riskier for me?
Generally no. With no collateral at stake, your assets are protected. The main risk is taking on repayments that are too high for your business to manage comfortably.
Can I get unsecured lending with bad credit?
Yes. Merchant cash advances and some alternative lenders approve businesses based on revenue rather than credit scores.