Unsecured construction business loans: typical rates, terms and what to expect

Summary: Unsecured construction business loans in the UK typically carry higher interest than secured facilities because lenders take no asset as security. Indicative APR ranges are roughly 6%–12% for prime borrowers, 10%–20% for mainstream alternative lenders, and 20%–50%+ for fast or specialist short-term options. Typical unsecured amounts start at around £10,000 and usually sit under £250,000, with common terms from 6 months to 3 years. Eligibility depends on trading history, turnover, contract pipeline and director credit. If you want a free, no-obligation eligibility check and tailored lender matches, Get Quote Now.

We introduce you to lenders and brokers — we do not lend. Submitting an enquiry is free and won’t affect your credit score. Offers are subject to lender checks.

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Quick answer / TL;DR

Indicative unsecured construction loan pricing in the UK:

• Prime, low-risk contractors: ~6%–12% APR.
• Mainstream alternative/specialist lenders: ~10%–20% APR.
• Fast, short-term and merchant-style options: 20%–50%+ APR (or equivalent factor rates).

Typical unsecured sums start at ~£10,000 and commonly sit under £250,000. Terms usually run from 6 months to 3 years (some lenders offer up to 5 years for small unsecured amounts). Rates depend heavily on credit, contracts, turnover, security history and the lender type. Ready to check options? Free Eligibility Check.

Why unsecured construction loans differ

Construction businesses have distinctive cashflow patterns (retentions, stage payments, delayed certificates) and project risk. Lenders see these as heightened risk because payments can be unpredictable and costs concentrated in labour and materials.

Unsecured lending removes the lender’s ability to rely on property, plant or stock as collateral. That lack of security increases lender risk, which is reflected in higher pricing and stricter borrower assessments. Established limited companies with stable contract pipelines and healthy margins usually qualify for better unsecured rates than newer or heavily leveraged businesses.

Typical rates — realistic ranges and what affects them

Below are indicative ranges; actual pricing depends on lender appetite, size, term, your accounts and the nature of your contracts.

Prime / low-risk borrowers

Indicative APR: ~6%–12%.

Who: Established contractors or subcontractors with 2+ years trading, clear profitable accounts, low existing debt and long-term contracts with reputable clients. These businesses present lower default risk and may secure the lower end of unsecured pricing.

Mainstream alternative and specialist construction lenders

Indicative APR: ~10%–20%.

Who: SMEs with solid turnover but either shorter trading history, thinner margins or higher leverage. Many alternative finance providers and specialist construction brokers fall here — they balance sector knowledge with higher risk tolerance than high-street banks.

Specialist / fast / short-term lenders and merchant cash advance (MCA)

Indicative APR or equivalent cost: 20%–50%+ (factor rates for MCAs can make true APRs appear much higher).

Who: Businesses needing same-day or very quick cash, or with non-standard credit histories. These options are convenient but expensive; use only for short-term gaps or where alternatives aren’t available.

Short-term bridging, invoice-based unsecured options

Typical pricing: monthly fees or rates around 0.5%–2% per month on advanced sums (equivalent APR varies by term).

Who: Businesses using invoice finance, retention funding or short bridging to cover a gap between project costs and certification. Costs can be reasonable for short durations but compound quickly if rolled over.

Important: These ranges are indicative only. Lenders quote based on a full underwriting review — the profile of your business, directors’ records, bank statements and contract documentation matter most.

Typical loan sizes, terms & repayment schedules

• Loan sizes: from £10,000 upwards; most unsecured facilities are under £250,000. Larger sums are typically secured.
• Terms: commonly 6–36 months. Some lenders offer up to 60 months for small unsecured facilities; bridging products are usually under 12 months.
• Repayment types: monthly capital & interest; interest-only with a balloon payment; bullet repayments for short bridgings; drawdown facilities aligned to project milestones.

Illustration (example only): a contractor borrowing £50,000 unsecured over 12 months at 14% APR would expect monthly repayments covering principal and interest — actual figures depend on lender amortisation method. Always ask for an APR and an all-in cost schedule.

Eligibility checklist

Key items lenders typically require:

• Trading history: usually 12–24 months minimum (more is better).
• Turnover and profitability evidence (management accounts, year-end accounts).
• Bank statements (3–6 months), VAT returns where relevant.
• Contracts, purchase orders and pipeline evidence (valuations, certificates).
• Director personal credit checks and ID verification.
• Company registration documents and business address.

Preparing these documents speeds decisions and can improve terms.

Typical lender checks and underwriting process

Lenders may perform:

• Soft checks initially to assess eligibility, then hard credit checks once you progress.
• Affordability and cashflow stress tests (especially for longer terms).
• Verification of contract value and client creditworthiness.
• Requests for director guarantees or limited personal security in higher-risk cases.

Timeline: initial broker matches can be same day; indicative offers often within 24–72 hours; formal offers after underwriting typically 3–14 days depending on complexity.

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When to choose unsecured vs secured

Unsecured — choose if:

• You need speed and don’t want charges against property or major assets.
• You require a relatively small amount (commonly under £250k).
• Project duration is short and you can repay quickly.

Secured — choose if:

• You need a larger sum or a lower APR for long-term funding.
• You can offer property, plant or plant & machinery as security to reduce pricing.

Alternatives to consider: invoice finance, asset finance, retentions finance, overdrafts, or blended packages (eg. secured facility plus unsecured top-up).

For more on sector-specific solutions, see our construction sector overview on construction business loans.

construction business loans

How UK Business Loans can help

We match construction businesses to lenders and brokers who specialise in construction finance. Complete a short form and we’ll introduce you to partners likely to consider your case. Our service is free and no-obligation — we are an introducer, not a lender.

Start your enquiry — Get Quote Now

Submitting a form does not affect your credit score. We do not provide regulated financial advice; lenders make the final lending decision and will carry out checks.

Practical tips for getting better unsecured terms

• Keep management accounts and bank statements up-to-date and well organised.
• Demonstrate a steady pipeline: forward contracts, certificates and repeat clients.
• Reduce short-term overdrafts or high-cost debt before applying.
• Consider limited director guarantees or partial security to negotiate lower rates.
• Use a specialist broker through an introducer — they can package your application to the lenders most likely to give good terms.

Real-world example scenarios (illustrative)

Case 1 — Small contractor: An electrical contractor needed £40,000 for materials and labour. A specialist unsecured lender offered a 12‑month facility at ~14% APR after reviewing bank statements and two years of accounts.

Case 2 — Growing builder: A medium-sized builder needed £200,000. Unsecured offers were limited, so a broker arranged asset finance for new equipment plus an unsecured short-term top-up to bridge cashflow — achieving a lower blended cost than unsecured alone.

These are illustrative only; outcomes depend on your specific profile.

FAQs

What affects the rate I’ll actually be offered?

Factors include trading history, turnover and profitability, contract quality, director credit history, existing liabilities, the loan amount and term, and whether you can offer partial guarantees or security. Lender type also matters — high-street banks, specialist construction lenders and merchant lenders price differently.

Can I get unsecured funding with adverse credit?

Possibly — some specialist lenders consider cases with imperfect credit, but expect higher rates and stricter terms. A broker can often find a lender whose appetite matches your situation.

Will applying through UK Business Loans affect my credit score?

No — submitting an enquiry with us does not affect your credit score. Lenders or brokers may perform credit checks when you formally apply.

What hidden fees should I watch for?

Look for arrangement fees, early repayment charges, drawdown fees, and legal or admin costs. Always ask for a full cost schedule and an APR or representative example where possible.

Get a free, no-obligation quote — Free Eligibility Check

Next steps — Get a quote

If you need unsecured construction finance of £10,000 or more and want to understand real rates for your business, complete our short enquiry form and we’ll match you to specialist lenders and brokers. Most matches receive a response within hours.

Get Quote Now — Free Eligibility Check

We introduce you to lenders and brokers; we do not lend. Offers are indicative until confirmed by lenders. Submitting an enquiry is free and voluntary.

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About UK Business Loans
UK Business Loans connects UK construction and SME businesses with lenders and brokers to secure appropriate finance. We are an introducer and we do not provide regulated financial advice. Last updated: 28 October 2025.

1. What rates can I expect for unsecured construction business loans in the UK?
Indicative unsecured rates are roughly 6%–12% APR for prime borrowers, ~10%–20% APR for mainstream/specialist lenders, and 20%–50%+ APR (or equivalent factor rates) for fast or short-term options.

2. How much can I borrow with an unsecured construction loan?
Unsecured facilities typically start around £10,000 and commonly sit under £250,000, with larger sums usually requiring secured financing.

3. What are typical terms and repayment schedules for unsecured construction loans?
Common terms run 6–36 months (some lenders offer up to 60 months for small amounts) with repayment options including monthly capital & interest, interest-only with balloon payments, bullet bridging repayments, or milestone drawdowns.

4. What documents and eligibility criteria do lenders usually require?
Lenders generally expect 12–24 months’ trading history, management/year-end accounts, 3–6 months of bank statements, VAT returns where relevant, client contracts/pipeline evidence and director ID and credit checks.

5. Can I get unsecured construction funding with adverse credit?
Possibly — specialist lenders may consider imperfect credit histories but you should expect higher rates, stricter terms and a broker can help find a suitable match.

6. When should I choose unsecured finance over secured finance for construction projects?
Choose unsecured if you need speed, a smaller amount (commonly under £250k) and don’t want charges on property or major assets, whereas secured finance is better for larger sums or lower long-term APRs.

7. What hidden fees should I watch for when comparing unsecured loan offers?
Watch for arrangement fees, drawdown and legal/admin fees, early repayment charges and any monthly or rolling fees, and always request a full cost schedule or representative APR.

8. How quickly can I get matched to lenders and receive an offer via UK Business Loans?
Matches to suitable lenders often happen within hours, indicative offers commonly arrive within 24–72 hours and formal offers after underwriting typically take 3–14 days depending on complexity.

9. Will submitting an enquiry with UK Business Loans cost me money or affect my credit score?
No — UK Business Loans’ service is free, no-obligation and submitting an enquiry won’t affect your credit score (lenders may run checks later if you proceed).

10. What alternatives should I consider instead of unsecured construction loans?
Consider invoice finance, asset or equipment finance, retention funding, overdrafts, bridging finance or blended packages (eg. secured facility plus unsecured top-up) depending on your needs.