What are Short Term Unsecured Business Loans

What are Short Term Unsecured Business Loans

What does 'unsecured' business loan mean?

Put simply, an unsecured business loan is one that does not have a charge on any specific asset. This means if the loan is not repaid then the lender does not have any item to repossess.

The definition of an unsecured business loan does vary depending on who you talk to though and for some people it also means that no personal guarantees should be offered and the loan really does stand on its own. This is a fine theory but in reality all lenders, no matter what you are doing be it secured or unsecured, will look for a personal guarantee from a Director or business principal. Their argument is that if the Director(s) and/or business principal are not prepared to back the business with a guarantee, this does speak well about their confidence in the venture they are asking the lender to support - a difficult point to argue against, to be fair. 

In any case, even when a PG is taken we still call this an unsecured business loan as long as there is no specific asset offered as security for the loan. 

Unsecured business loans are therefore great when you want to expand, hire people, pay bills, do marketing, buy stock or use the funds for anything that does not involve financing a specific asset. 

At Choice Loans we can help you determine what are the short term unsecured business loan options available to you so please call for independent advice.