An unsecured business loan is lent on the strength of your trading and credit record, usually with a director's personal guarantee and no asset security. It can be quick to arrange, but the British Business Bank notes that unsecured loans typically carry higher interest rates than secured lending and generally need a good credit rating.
Asset refinance raises money against equipment, machinery or vehicles you already own, or are still paying for, so the amount is capped by what the asset is worth. Because the lender has security, it can be more accessible when credit is patchy or a bank has declined you, and may cost less, but it takes longer to arrange and the asset can be repossessed if repayments aren't kept up.
Side-by-side comparison
The table below reflects typical market practice. Individual lenders vary, and the right answer depends on your business.
| Asset refinance | Unsecured business loan | |
|---|---|---|
| What the lender relies on | The value of your equipment or vehicles, plus affordability | Your trading record, credit history and affordability |
| Security | The asset itself | No asset; a personal guarantee is usually required |
| What's at risk if you can't pay | The asset can be repossessed; any guarantor may also be pursued | Guarantors can be pursued personally for the debt |
| How much | Capped by a proportion of the asset's value, less any finance owed | Capped by affordability and the lender's unsecured limits |
| Typical size with us | £50,000 – £10m | £5,000 – £500,000 |
| Typical term with us | 1 – 8 years, tied to the asset's working life | 1 month – 7 years |
| Speed | Slower: valuation and checks on ownership and existing finance | Often faster: no asset to value |
| Credit profile | Some lenders accept weaker credit because of the security | Generally needs a stronger credit record |
| Best suited to | Asset-rich businesses needing a larger sum | Businesses with few assets, or needing smaller sums quickly |
When an unsecured loan is the better fit
If the business doesn't own much in the way of machinery or vehicles, an unsecured business loan may be the only practical route to a lump sum. The British Business Bank describes unsecured lending as a viable option for businesses that are light on assets or growing quickly.
It can also suit when you need a modest amount quickly and your credit record is in good shape, or when you simply don't want to tie up the equipment you rely on every day. The trade-off is the personal guarantee: the British Business Bank explains that it makes the guarantor personally liable if the business can't repay, and personal assets such as savings or a home could be used to settle the debt.
When asset refinance is the better fit
Refinance comes into its own when the business owns valuable kit but can't get, or doesn't want, an unsecured facility. Typical situations include a bank declining a loan because of a credit blip or short trading history, needing more than unsecured lenders will offer, or having equipment that's nearly paid off and holding its value.
Which product you'd use depends on the assets. Plant and machinery refinance covers construction, agricultural and production equipment. Vehicle refinance releases equity from vans, HGVs and trailers. Sale and leaseback involves selling the asset to the funder and leasing it back, and asset refinance can bring a mixed pool of equipment together.
If your assets still have finance on them, you may still be able to refinance. Our guide on refinancing an asset that's still on finance explains how equity is worked out.
Comparing the real cost
Headline rates don't tell the whole story, and business finance isn't always quoted with an APR. To compare like with like, ask each lender for the total amount repayable and a breakdown of fees.
The British Business Bank's guidance is that secured loans are generally cheaper than unsecured loans because of the lower risk to the lender, though applications can take longer. Refinance also has costs a loan may not, such as valuation fees and early settlement charges on any existing agreement. And extending the time you're paying for an asset means more interest overall, even if the monthly figure looks lower.
- Total repayable over the full term, including all fees.
- Arrangement, documentation, valuation and any broker fees.
- Early settlement charges on the new agreement and on anything being paid off.
- Whether a personal guarantee is required, and for how much.
- Any balloon or final payment at the end.
Can you use both?
Yes. Some businesses refinance equipment to raise a larger core sum, then use a smaller unsecured facility or revolving credit facility for day-to-day flexibility. Lenders will look at your total commitments when assessing affordability, so it's sensible to plan the structure as a whole rather than add facilities one at a time.
How we help you choose
We're a broker, not a lender, so we don't have a product to push. We'll look at what you need the money for, what the business owns, any existing finance and your credit position, then compare both routes across our panel of 100+ lenders and show you the total cost and obligations of each before you decide. Call our team on 01604 355800.
Key takeaways
- Unsecured loans rely on your trading and credit record and usually need a personal guarantee.
- Asset refinance is secured on equipment or vehicles, so the amount is capped by their value.
- Secured lending is generally cheaper but slower; unsecured lending is often quicker but typically costs more.
- Refinance can work when an unsecured loan has been declined, but the asset can be repossessed if you don't keep up repayments.
- Compare the total amount repayable, fees and guarantees, not just the monthly payment.
We are a credit broker, not a lender. Any finance is subject to status and the lender's assessment. This guide is general information, not personal financial, legal or tax advice.
Sources checked
Information checked on . General information only, not financial, legal or tax advice. Finance is subject to status and lender approval.
- British Business Bank – Business loans (secured and unsecured)
- British Business Bank – Making business finance work for you (2026)
- British Business Bank – A guide to personal guarantees for business borrowing
- British Business Bank – What is asset refinancing?
- British Business Bank – What are the different types of business loan?