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Post-tax-year cash flow check-up: smart ways to use an unsecured loan in May

7 May 2025

Cash flow shortages are one of the most popular reasons businesses seek extra funding, with 7 out of 10 businesses pursuing funding due to cash flow needs. After wrapping up your tax year, May could be a good time to check in with your cash flow health, and if you do spot potential gaps or opportunities, an unsecured business loan could be the answer to helping you cover those gaps, even if you don’t have assets to use as collateral.

Unsecured loans

What is an unsecured business loan?

An unsecured business loan is a lump sum which a lender extends to you in exchange for regular monthly repayments with the addition of interest and sometimes fees. Unlike a secured business loan, this type of finance does not require assets to be used as collateral for the loan. This can make unsecured business loans more accessible for younger businesses, many of which have not gained access to significant assets yet. 

Instead of using assets to determine whether or not they want to extend funding to you, lenders offering unsecured business loans may check your business or personal credit scores, your history with finance, your company revenue, or your business plan to help them decide whether or not they want to lend you money. 

Benefits of unsecured business loans 

There are several reasons businesses turn to unsecured business loans, including some of the following.  

No need for collateral 

One of the biggest benefits of an unsecured business loan is that you don’t need to offer any assets as security for the loan. This can be particularly helpful if you don’t want to tie up valuable resources or if you’re at an earlier stage in your business growth.  

Flexible use 

Unlike asset finance, which can usually only be used to buy or lease an asset, unsecured business loans can be used for a range of purposes, including purchasing inventory, launching a marketing campaign, or onboarding new staff. 

Cash flow support 

An unsecured business loan can help you bridge cash flow gaps, ensuring you’re able to continue paying your suppliers and staff without disruption. 

Risks and drawbacks of unsecured business loans 

All forms of funding come with risks and drawbacks. Unsecured business loans come with the following risks, but do be aware this list is not exhaustive. You should consider speaking to an independent financial advisor before taking out business finance. 

High interest rates 

Since unsecured loans are not supported with collateral, lenders can perceive them as carrying more risk, so they often charge higher interest rates and include stricter terms. Over time, this increased hit to your profit margins can have an impact on your ability to operate and grow. 

Personal guarantee 

Unsecured business loans often require a personal guarantee from the business owner. This means if the business can’t repay the loan, the person who signed the personal guarantee is still responsible for the debt. This could have an impact on your personal assets and credit score. Consider carefully whether you could continue meeting the repayment obligations on an individual basis, if the responsibility does end up falling to you. 

Debt cycle 

Taking out a loan to cover short-term cash flow issues can sometimes lead businesses into something called a debt cycle, which is where they continuously rely on borrowing to pay off the previous debt in an ongoing cycle. This can have a huge impact on not only your finances, but also your mental health. Ensure you enter into any agreement with a clear plan for repayment and be realistic about what you can afford to borrow. 

Smart ways to use an unsecured loan in May 

If you’ve completed a cash flow check-up and feel you could use some extra funding to help with operations or to help you grow your business, here are some possible ways you could use an unsecured business loan in May.  

Emergency fund 

You could use the loan to create a financial safety net which could be drawn on during slower months or to cover unexpected costs. Having an emergency fund could also give you the confidence you need to make decisions with a clearer head. Bear in mind, of course, that unsecured business loans often come with higher interest rates, which would add to your overall costs and should be factored into your financial plan. 

Invest in growth 

The start of a new financial year can be an exciting time to draw up and enact growth plans. You could choose to use an unsecured business loan to fund a marketing campaign, refresh your website, publish new content, or onboard a new business development team. 

Upgrade operational technology and equipment 

Outdated equipment and technology could be slowing down your operations. Some business owners choose to use unsecured business loans to invest in new technology and equipment. 

Onboard staff 

If you work in retail and other client facing industries, summer can mean an uptick in operational demand. If you need to hire additional staff members to meet this additional demand, an unsecured business loan might be able to help you manage the workload. 

Launch a new line 

May could be a nice time to launch a new product line or service. An unsecured business loan could fund the additional inventory, the development of the new product or service, or the marketing campaign to launch the new offering. 

Give your premises a refresh 

If you have a physical location, May could be a good time to make improvements ahead of the busy summer months. You could use an unsecured business loan to get some new lighting, update the property with a fresh coat of paint, or invest in some new decorations. 

Find an unsecured business loan with Funding Options by Tide

Whether you’re looking for an unsecured business loan, a bridging loan, a commercial mortgage, or even something more niche like mezzanine finance, we could be able to help. 

We have helped thousands of businesses secure over £950 million in funding. Our network of over 120 lenders offers between £1,000 and £20 million and we are able to let you know if you are eligible without impacting your credit score. Submit your information below to find out if you could be eligible for an unsecured business loan. 

Find an unsecured business loan.

 

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.

Joe Morley
Joe Morley

Head of Unsecured Lending

Joe has worked in the alternative lending space since 2015. During this time he has helped hundreds of SMEs access millions in essential funding ranging from long-term asset-backed lending to short-term unsecured revolving credit lines and beyond. In his role, Joe manages and supports a large team of Credit Finance specialists.

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Disclaimer:

Funding Options helps UK firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. We are also able to make insurance introductions. Funding Options will receive a commission or finder’s fee for effecting such finance and insurance introductions.

*Eligibility criteria apply - see Tide website for full details.

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