Probably the most noticeable change in the commercial funding landscape over the last 2 years has been the rise in unsecured loans. In fact, unsecured loans account for just over half of transactions arranged by Start Point Finance in recent months.
Loans can be used for any feasible business purpose and do not have to be linked to asset purchases. Some examples of loan purposes include cashflow loans, tax bills or other one-off costs, funding growth – any situation where the business requires an injection of cash to take their next step.
As a guide, businesses can borrow between £1,000 and £500,000 from six months to five years. Most lenders do not charge an early repayment fee, so it is often advantageous to take the loan over a longer period than you expect to need as you can always settle early.
So what criteria does a business need to meet to be eligible for an unsecured loan?
Most lenders want to see two years of trading history before they will consider you for an unsecured loan, however some will consider businesses with at least four months’ trading.
Ideally your business will be profitable with a turnover of at least £15,000. If your business isn’t currently profitable you will have to demonstrate how you plan to turn it around.
Nearly all unsecured loans are offered with personal guarantees from the Directors/ Shareholders. Whilst there is no charge on property, this does mean that if the business fails to repay the loan, the guarantors will be personally liable. The guarantor however does not have to be a homeowner.
The process is very simple. Once you have sent over financial information (typically last accounts, 3 months bank statements, director’s details) we will put together an application and send it to the relevant lender. They will assess the application within 48 hours and send us your loan offer. If you are happy with the offer, we will arrange paperwork to be emailed to you. The whole process can be done within a couple of days, but we expect it to take a week in most cases.
If your business could benefit from an unsecured loan, please get in touch by calling Toby on 01548 854334 or emailing toby@startpointfinance.co.uk. From a brief discussion we will be able to assess whether you might be eligible.