Term loans for businesses are an incredibly versatile tool for enabling a business to accomplish a myriad of objectives. These can include paying VAT, paying staff, marketing, business expansion, working capital, general cash flow, CapEx and OpEx requirements, paying HMRC, etc.
There is an incredibly wide and diverse range of products within this space, provided by various tiers of lenders, designed to support any and all situations a business may find itself in. There are many factors impacting a business’s access to term debt; these can include, but are not limited to, the following:
- Personal and business credit
- Company sector
- Cash in the bank
- Previous trading history
- Use of funds
With such a wide pool of funding options in this space, the cost of funds can vary widely from 2% over base all the way up to 50% per annum. As no two businesses are the same, speaking to a broker and allowing them to go to market is the best way to obtain an accurate indication of pricing. The vast majority of products in this space are bespoke, as all lenders use different metrics to determine the loan amount, term, and pricing. Enness’ minimum requirements are that a business is A) trading and B) registered in the UK. Whilst these requirements are broad, our wide access to the market allows us to remain agile with the types of circumstances we can assist with.
For instance, businesses looking for significant funding for expansion and working capital can benefit from bespoke solutions. In one case, Enness successfully secured a £2,000,000 unsecured loan through the Growth Guarantee Scheme for a private company, demonstrating the ability to obtain substantial funding without security. Read more.
As a rule of thumb, a business can borrow up to the value of its net-equity position - i.e., borrowing will rarely exceed the total value of the business as it sits upon the balance sheet. This is caveated by the business proving its ability to service said debt whilst also maintaining its trading operations without serious strain. Lenders can typically lend over a period of anywhere between 1-72 months, with longer-term products available in special circumstances. There are options for capital repayment and interest-only, bullet repayment, and security packages, which are often a mix of the following: a debenture over the business, a personal guarantee, and a charge over a property (held personally or by the business).
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Securing large-scale funding can be particularly challenging, but with the right lender and structure, businesses can achieve their financing goals. A recent case saw Enness successfully raise significant funding for a company looking to scale its operations. By structuring the loan in a way that aligned with the company’s cash flow and strategic plans, Enness delivered a bespoke solution. Read more.
Whilst Enness can assist with the majority of sectors, there are a few exclusions, such as gambling, alcohol, and adult industries. Other sectors, such as construction or hospitality, can be challenging due to the macroeconomic factors impacting the industry more broadly, but Enness has had significant success in brokering loans in these sectors.
These case studies illustrate how businesses can access tailored financing solutions to meet their objectives, demonstrating Enness’ expertise in structuring and securing term loans across a range of industries.
In conclusion, the landscape of term loans offers vast potential for businesses seeking financial support to achieve their goals. By partnering with knowledgeable brokers like Enness, organisations can unlock bespoke financing solutions that not only align with their specific circumstances but also enhance their prospects for sustainable growth. As demonstrated through successful case studies, even businesses in challenging sectors can find the right pathways to secure the funding they need to flourish in today’s competitive environment.
FAQs – Unsecured Business Loans
1. What can unsecured business loans be used for?
Unsecured business loans can support a wide range of needs, including VAT payments, payroll, marketing, working capital, expansion, CapEx and OpEx requirements, and HMRC liabilities. These loans are flexible and can be tailored to almost any operational or strategic objective.
2. How much can my business borrow without security?
As a general rule, businesses can borrow up to the value of their net equity position. Lenders will assess affordability, cash flow, trading stability, and the business’s ability to service the debt without adversely affecting operations.
3. What affects the pricing and terms of an unsecured loan?
Loan pricing varies widely depending on credit quality, sector, trading history, cash on hand, and the intended use of funds. Rates can range from around 2% over base to as high as 50% per annum. Because lenders use different underwriting metrics, most facilities in this space are fully bespoke.
4. How long can unsecured business loans run for?
Loan terms typically range from 1 to 72 months, though longer terms can be available in particular cases. Repayment structures vary and may include capital-and-interest, interest-only, bullet repayments, or mixed security packages such as personal guarantees or debentures over the business.
5. Can all sectors access unsecured business lending?
Most sectors can be supported, although some, such as gambling, alcohol, and adult industries, are excluded. Others, such as construction or hospitality, may be more challenging due to broader market conditions, but Enness has a strong track record of securing funding in these areas.
