Unsecured business loans for sole traders

• Cash flow challenge: Sole traders can experience cash flow pressure when income fluctuates or unexpected costs arise, making asset-backed lending impractical.

• Perfect for: Sole traders and self-employed professionals who need quick access to funding without using property, vehicles, or equipment as security.

Novuna helps sole traders access unsecured business loans with clarity and confidence, offering transparent funding options designed around your trading history, affordability, and business goals.

Boost your cash flow Speak to an expert

How unsecured business loans work for sole traders

An unsecured business loan provides a lump sum of funding that does not require assets as collateral. Instead, applications are assessed on affordability, trading performance, and credit profile.

Here’s how it typically works:

1. You apply for a loan amount that suits your business needs.
   
   

2. Novuna reviews your income, expenses, and trading history.
   
   

3. Once approved, funds are paid directly into your business account.
   
   

4. You repay the loan through fixed monthly instalments over an agreed term.
   
   

Why sole traders choose unsecured business loans

Many sole traders prefer unsecured loans because they offer flexibility and speed without long-term commitments tied to assets.

Common reasons include:

• Managing cash flow gaps between invoices or contracts.

• Covering tax bills or VAT payments.

• Investing in tools, equipment, or technology.

• Funding marketing or growth initiatives.

• Handling unexpected business expenses.

For sole traders, the simplicity of unsecured borrowing can be just as important as access to funding itself.

Benefits of unsecured business loans for sole traders

• No asset security required: Your property or equipment is not used as collateral.

• Fast access to funds: Decisions and funding are often available within days.

• Predictable repayments: Fixed monthly payments make budgeting easier.

• Flexible loan sizes: Borrow amounts aligned to your income and affordability.

• Supports independence: Maintain full ownership and control of your business.

Boost your cash flow Speak to an expert

Understanding personal guarantees

While unsecured business loans don’t require asset security, sole traders should be aware that a personal guarantee is often involved.

This reflects the fact that a sole trader and their business are legally the same entity. The guarantee ensures the lender has reassurance if repayments cannot be met. Novuna is transparent about this process and helps you understand what it means before you commit to any funding.

When an unsecured loan may not be the right fit

An unsecured business loan may not always be the most suitable option if:

• Your business has high-value unpaid invoices that could support invoice finance.
• You need short-term flexibility rather than fixed monthly repayments.
• Your funding requirement is linked to a specific asset purchase.

In these cases, alternatives such as invoice finance, working capital loans, or asset finance may be more appropriate.

Alternative funding options for sole traders

Depending on how your business operates, you may also consider:

• Invoice finance:  Release cash from unpaid invoices if you bill clients on credit terms.
• Working capital loans: Support day-to-day operating costs.
• Asset finance: Spread the cost of vehicles, tools, or equipment.
• Alternative overdraft facilities: Provide flexible access to funds for short gaps.

How Novuna Business Cash Flow can help

At Novuna, we understand the realities of being self-employed where business and personal finances often overlap. Our approach focuses on responsible lending that supports sustainable business growth.

Speak to our experts today and find a great fit for your situation.