An investment that is not secured against an asset (a building or equipment). An investor provides your organisation with a loan and you repay it on an agreed basis, usually with an agreed amount of interest on top.
When might I use it?
Unsecured loans can be used for a range of purposes including getting started, ‘working capital’ to manage gaps in your income and ‘scaling up’ to grow and expand your business.
Where can I get it from?
Specialist social investors, angel investors and some and some grant-making trusts. Some mainstream business lenders may also lend to charities and social enterprises.
Browse our investors and advisers page to view organisations offering unsecured loans.
Pros
- You don’t need to own a building or offer an asset to get one
- They are relatively simple, easy-to-understand investment products
Cons
- If you don’t repay the loan, the investor can take you to court to recover the debt
- Interest rates are likely to be higher than a secured loan as it is riskier