Business and Finance

Unsecured Business Loans & The Government SME Guarantee Scheme

If you’re looking to obtain funding for your business without having to offer an asset as security, an unsecured business loan might be the right option for you. Unsecured business loans are a great option for businesses that are in a growth stage or are in need of capital quickly.

The unsecured lending market has grown immensely in the last few years and as such there are a wide range of lenders in the market that can offer unsecured business loans up to the value of $400,000. This means that there are a number of options available for your business no matter what your situation is.

What Are Unsecured Business Loans?

An unsecured business loan is a financial solution that does not require the borrower to provide assets to be used as collateral. Unsecured business loans are assessed using detailed cash flow analysis of business bank statements. The financier evaluates bank account conduct, turnover, client credit history and time in business to determine eligibility and interest rate.

The loan period for an unsecured business facility is usually shorter than a secured loan with loan terms ranging from 12 months to 3 years.

What Can You Use Unsecured Business Loans For?

You can use an unsecured business loan for any business purpose from using the funds to break into new markets, fund new training opportunities for your staff, pay wages, expand your product range, or invest in new equipment. Many businesses use unsecured loans to give them the freedom to cover these large expenditures without having to worry about their cash flow position.

How Can Unsecured Business Loans Benefit Your Business?

If your business needs a short-term injection of capital, an unsecured loan could be the perfect option for you. Unsecured loans are a popular financial solution for businesses that need to take back control of their cash flow during periods where sales are slower or when they are looking to expand. Most unsecured business lenders allow you to make additional repayments or end the agreement early without any additional fees. They offer businesses flexibility with regards to repayment terms and offer the opportunity to redraw on the facility should the need arise.

The Government SME Guarantee Scheme

In order to help businesses around the country recover following the devastating economic impact of COVID-19, the government introduced the small and medium enterprises (SME) Guarantee Scheme to support lending to SMEs, not-for-profits and sole traders. Under the scheme, the government is guaranteeing 50 per cent of new loans supplied by eligible lenders to small and medium enterprises, in order to give lenders the incentive to support viable SMEs with access to the additional funding they need.

As the economy opens up gradually, the government has announced an extension to the SME guarantee scheme to help businesses get back on track. The first stage of the scheme remained available for new loans made by participating lenders until the 30th of September 2020. The second stage of the scheme will start on the 1st of October 2020 and will be available for loans made until the 30th of June 2021.

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