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"No security required" is one of the most-used phrases in UK business lending, and one of the least precise. Plenty of loans advertised as unsecured still put a director's house on the line through a personal guarantee. This article unpicks the terms properly: what security is, what a personal guarantee is, what it means when a loan genuinely has neither, and what liability remains even then.
Two different things lenders can take
When lenders protect themselves beyond the company's promise to repay, they reach for one or both of:
- Security over assets — a legal charge over something the company owns: a fixed charge over specific property or equipment, or a debenture with a floating charge sweeping up stock, debtors and the rest. If the company defaults, the lender can enforce against the charged assets.
- A personal guarantee — a separate promise from a director to repay personally if the company cannot. Rather than taking a charge over anything, the lender gains a second person to pursue. We explain this fully in what is a personal guarantee.
Here is the nuance that catches directors out: "unsecured" only rules out the first. A lender can truthfully advertise "no security — no charge over your assets" while requiring a personal guarantee, so the loan is unsecured against the company while the risk has quietly moved to you personally. Our comparison of secured vs unsecured business loans covers the pricing side of this trade.
What "neither" looks like
Our lending takes neither. There is no charge over the company's assets, no debenture, and no personal guarantee from any director or member. The company is the borrower, carries the liability and is the thing we assess — its trading, its bank-account behaviour and its business credit file, as set out in what we look at when we decide. If the company cannot demonstrate affordability on its own, we do not paper over that with your signature — we decline.
What it does not mean
No security and no guarantee is not the same as no consequences. Three things remain fully true:
- The company owes every penny. The debt is real and enforceable against the company, its cash and its assets through the normal legal routes open to any creditor.
- Default marks the company's credit file. Missed payments and defaults are visible to every other lender and many suppliers who check the company's record, and they make future borrowing harder and dearer.
- Directors' general duties still apply. Nothing about the loan creates personal liability, but company law can — wrongful trading being the sharpest example. That comes with being a director rather than with this loan, and can a director be personally liable works through it.
Questions to ask any lender
Before signing anywhere, get plain answers to three questions: Is there a charge or debenture over any company asset? Is a personal guarantee required from any director, now or as a condition of a top-up later? And is any guarantee "joint and several"? The answers belong in the loan documents, not the advert. With us the answers are no, no, and not applicable — and the figures you will repay are set out in full on the Key Information Sheet before you sign. Current amounts, terms and costs are on our business loans page.
Because this is lending to a company for business purposes, it sits outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001 and is not covered by the Financial Ombudsman Service or the FSCS.