Unsecured business loans for the construction industry

Unsecured business loans represent a fairly straightforward route to finance, provided your business’ application is accepted.

This form of construction finance is targeted toward SMEs and smaller businesses, who typically aren’t going to require huge sums and are less exposed to the volatilities of global economics, the commodities and labour markets.

Companies looking for funding in the region of £25,000 to £100,000 can access unsecured debt products far easier than larger firms looking to fund a larger scale project in the millions.

The main challenge facing construction firms looking for unsecured business loans is in achieving acceptance. Lenders aren’t able to secure the debt against an asset, so need to exercise caution when agreeing to lend.

To that end, unsecured business loans for construction require an unblemished business credit history and the business needs to demonstrate its ability to repay the loan comfortably. Failure on any of these two criteria is quite likely to see the application declined.

Benefits and drawbacks of unsecured business loans for the construction industry

As with unsecured personal loans, the benefits and drawbacks of unsecured business loans are fairly simple to deduce.

On the one hand, the loan is unsecured, so the lender is not able to repossess your assets if you default on the debt. But you’re going to pay for the privilege in the form of higher interest rates and fees.

One other characteristic of unsecured business loans is that they are relatively easy to apply for and decisions are fairly quick. This can either be a benefit or a drawback, depending on your situation. Quick applications and approvals are great if you’ve got a good credit history and can demonstrate your ability to repay, but if you can’t – and would like to discuss extenuating circumstances – the rigid approval algorithm that ensures the application and approval process is quick will most probably prevent this. The speed and ease of the application process may work against any firm who doesn’t have a straightforward application to make.

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