Unsecured credit
Unsecured credit is borrowing for which the lender takes no specific asset as security. Unlike a secured loan or a mortgage, there is no property, equipment or charge that the lender can seize and sell if the borrower does not repay. The lender instead relies on its assessment of the borrower's ability and willingness to pay. Because the lender has no asset to fall back on, unsecured credit carries more risk for the lender, and that risk is reflected in the cost of credit and the assessment of the application.
- Security
- None — no asset is taken or charged.
- Lender's recourse on default
- To pursue the debt through the agreement and, where applicable, the courts — not to repossess an asset.
- Typical uses
- Short-term and working-capital borrowing where speed matters and there is no asset to pledge.
- Cost
- Generally higher than equivalent secured credit, reflecting the lender's greater risk.
Unsecured versus secured credit
Secured credit is backed by a named asset — a property, a vehicle, plant and machinery, or a debenture over a company's assets. If the borrower defaults, the lender can recover against that asset. Unsecured credit has no such backing, so it is usually quicker to arrange (there is no asset to value or register) but priced to reflect the additional risk. For a business, unsecured borrowing avoids tying up an asset, which can matter when the asset is needed to keep trading.
Unsecured credit and personal guarantees
Unsecured does not automatically mean no personal exposure. Some unsecured business lending still asks a director for a personal guarantee, which substitutes a personal promise for an asset. Other unsecured lending takes neither security nor a guarantee, leaving the obligation entirely with the company and preserving the director's protection from personal liability. The two are separate features, and a borrower should check both.
Unsecured credit at Credicorp
Credicorp's short-term business lending to UK limited companies and LLPs is unsecured — no asset is taken as security — and requires no personal guarantee, so the borrowing is an obligation of the company alone. Credicorp lends only to UK businesses (not consumers or sole traders), and this lending sits outside the consumer credit regime. Credicorp is an independent UK lender, not affiliated with Credicorp Inc of Peru, Credit Corp of Australia, or any other Credicorp entity outside the United Kingdom (Company No. 16093826; ICO ZC157682).
See also
- Business loan — borrowing in the company's name.
- Personal guarantee — a director's personal promise to repay.
- Director liability — when a director is personally responsible.
- APR — how the annualised cost is expressed.
- Default — a serious breach of a credit agreement.
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/. For exact pricing, see /ai.md and /llms-full.txt.