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Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Lead Editor, Mortgages & Loans
Reviewed
Updated: Apr 22, 2024, 2:13pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Unsecured business loans can help businesses access the funds they need without pledging collateral—something of value the lender can repossess if a borrower defaults. However, no collateral doesn’t mean borrowers are completely off the hook.
Because collateral is not required, lenders typically require borrowers to sign a personal guarantee. This is a legal agreement that requires the borrower to repay the debt with their personal funds if the business fails to do so. Once the loan is fully repaid, the personal guarantee is removed from the account.
Why you can trust Forbes Advisor: Our editors are committed to bringing you unbiased ratings and information. Our editorial content is not influenced by advertisers. We use data-driven methodologies to evaluate financial products and companies, so all are measured equally. You can read more about our editorial guidelines and the loans methodology for the ratings below.
18 lenders researched
16 data points evaluated
5 cateogires scored
FEATURED PARTNER OFFER
OnDeck
4.8
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
We picked OnDeck for its variety of business lending products and same-day funding. OnDeck offers a term loan from $5,000 to $250,000 with repayments terms of up to 24 months. You can also access a credit limit of $6,000 to $100,000 through its line of credit with a 12-month repayment term that resets after each withdrawal.
Pros & Cons
Term loans from $5,000 to $250,000
Lines of credit from $6,000 to $100,000
Same-day funding
Low minimum credit score requirement
$100,000 minimum annual revenue requirement
Must have been operating for at least one year
Does not lend to businesses in North Dakota
Details
Eligibility
Minimum credit score: 625
Time in business: One year
Minimum revenue: $100,000 per year
Turnaround time
You can apply and receive a decision from OnDeck on the same day.
Best Unsecured Business Loans of April 2024
BEST FOR SHORT-TERM LOANS
OnDeck
4.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
We picked OnDeck because it offers top-notch loans with short terms. You can apply for a line of credit with a 12-month repayment term that resets after each withdrawal with a credit limit of $6,000 up to $100,000. Or you can apply for a $5,000 to $250,000 term loan with a repayment schedule of up to 24 months.
Pros & Cons
Term loans from $5,000 to $250,000
Lines of credit from $6,000 to $100,000
Same-day funding
Low minimum credit score requirement
$100,000 minimum annual revenue requirement
Must have been operating for at least one year
Does not lend to businesses in North Dakota
Details
Eligibility
Minimum credit score: 625
Time in business: One year
Minimum revenue: $100,000 per year
Turnaround time
You can apply and receive a decision from OnDeck on the same day.
BEST FOR FLEXIBLE LINES OF CREDIT
Bluevine
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
We picked Bluevine for its flexible line of credit which ranges from $5,000 to $250,000 and offers a weekly or monthly repayment structure. Customers who repay weekly make payments each week over 26 weeks, while customers who repay monthly make payments each month over one year.
Pros & Cons
Receive a decision within five minutes and instant funding with a Bluevine business checking account, or receive funds within 24 hours
Lines of credit up to $250,000
Low credit score requirement
No mobile app for its line of credit
Monthly revenue requirement
Not available to businesses in Nevada, North Dakota, South Dakota, Puerto Rico and other U.S. territories
Details
Eligibility
Eligibility varies on the specific program a business owner chooses.
Weekly plan
Minimum credit score: 625
Time in business: Two years
Minimum revenue: $40,000 monthly or $480,000 annually
Business type: Corporation or LLC
Bankruptcies: No past bankruptcies
Monthly plan
Minimum credit score: 650
Time in business: Three years
Minimum revenue: $80,000 per month or $960,000 annually
Business type: Corporation or LLC
Turnaround time
After you submit your application, you can receive a decision in as quickly as five minutes and instant funding with a Bluevine business checking account. Borrowers who don’t have a Bluevine business checking account can receive funds within 24 hours.
BEST FOR SMALL AND MIDSIZED BUSINESSES
National Funding
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
We picked National Funding because it offers small to midsized businesses working capital loans from $5,000 to $500,000. These also include early payoff discounts and are available in terms of four months to two years, paid daily or weekly. National Funding also offers equipment financing up to $150,000.
Pros & Cons
Financing up to $500,000
Early payoff discounts
Most loans are funded within 24 hours of approval
Requires daily or weekly payments
Potentially high borrowing costs
Requires minimum gross annual sales of $250,000
Details
Eligibility
Minimum credit score: 600 (575 for equipment financing)
Time in business: Six months
Minimum sales: $250,000 per year
Turnaround time
Most loans are funded within 24 hours of approval, subject to receipt of required documentation, underwriting guidelines and processing time by your bank.
BEST FOR FAST CLOSING
Fundbox
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
We picked Fundbox because it offers business loan decisions within three minutes and next-day funding, making it a great choice for business owners in a hurry. Through its AI-powered business lending platform that speeds up the application, you can apply for revolving business lines of credit up to $150,000 with repayment terms of 12 or 24 weeks.
Pros & Cons
No prepayment penalty
Low minimum annual revenue requirement
Next-business-day funding
Only short-term repayment terms are available
Does not disclose APRs
Details
Eligibility
Minimum credit score: 600
Time in business: Six months
Minimum revenue: $100,000 per year
Turnaround time
With a business line of credit from Fundbox, you can receive your funds as soon as the next business day.
BEST FOR HEALTHCARE PROFESSIONALS
TD Bank
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
From participating partners via businessloans.com’s website.
$10,000 to $1 million
up to $5 million for small business loans
Not disclosed
660
Editor’s Take
We picked TD Bank because they stand out with their offers for healthcare professionals. TD Bank offers unique financing options of up to $12 million for dentists, veterinarians, physicians and eye care professionals. Plus, healthcare professionals have access to business lending solutions such as 100% practice financing plus working capital, partnership buy-ins and buy-outs, equipment purchases, and practice mergers and acquisitions.
Pros & Cons
Offers term loans, lines of credit and SBA loans
Online application and mobile banking
Customized financing options for healthcare professionals
Must apply in person for loans over $100,000
Branches located in only 16 states
Details
Eligibility
Minimum credit score: 660
Time in business: One year
Minimum annual revenue: Does not disclose
Turnaround time
Although TD Bank offers same-day approval for its business loans and lines of credit, it may take up to two business days to receive your funds. SBA loans, on the other hand, may take several weeks to fund.
BEST FOR FUNDING OPTIONS
Biz2Credit
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Loan amounts
Up to $1M+
Revenue-based financing. Varies depending on product and qualifications
Revenue-based financing. Varies depending on product and qualifications
Does not disclose
575 or 650*
*See website for details
Editor’s Take
We picked Biz2Credit for its selection of funding options, including revenue-based financing and term loans. Biz2Credit’s revenue-based financing ranges from $25,000 to $2 million or more. Biz2Credit’s term loans range from $25,000 to $500,000 and are repaid through weekly, bimonthly or monthly payments over 12 to 36 months.
Pros & Cons
Revenue-based financing has flexible qualification requirements
Can pre-qualify for submitting an application
Offers term loans with weekly or biweekly payments
Does not disclose financing costs
Does not disclose turnaround time
High annual revenue requirement
Details
Eligibility
Eligibility varies based on the financing option you choose.
Term loan
Minimum credit score: 650
Time in business: 18 months
Minimum revenue: $250,000 per year
Revenue-based financing
Minimum credit score: 575
Time in business: 6 months
Minimum revenue: $10,000 per year
Turnaround time
Biz2Credit does not disclose the turnaround time for its financing options.
BEST FOR PRODUCT AVAILABILITY
Rapid Finance
3.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
From participating partners via businessloans.com’s website.
$5,000 to $1 million
Not disclosed
550
Editor’s Take
We picked Rapid Finance because it offers business owners a range of unsecured loans. These include term loans, lines of credit, MCAs and invoice factoring. Rapid Finance’s unsecured loans range from $5,000 to $1 million with terms from three to 60 months, depending on the specific type of loan. Borrowers are required to meet daily or weekly repayment schedules.
Pros & Cons
Loans up to $1 million
Less stringent minimum qualification requirements
Fast closing and funding
Doesn’t disclose APRs or monthly fees
Maximum terms of five years
Smallest loan amount is $5,000
Details
Eligibility
Minimum credit score: 550
Time in business: At least six months
Minimum monthly revenue: $5,000
Turnaround time
Rapid Financing says it funds 90% of its loans within 24 hours, but it can take up to two days in some cases.
From participating partners via businessloans.com's website.
Tips for Comparing Unsecured Business Loans
It’s crucial to find the best source of financing for a business’ unique needs. To do so, evaluate why the business needs a loan, how much it needs to borrow and the applicant’s creditworthiness. Then, consider these factors when comparing unsecured business loans:
Eligibility requirements. Lenders impose a range of eligibility requirements when vetting potential borrowers but generally require applicants to have a personal credit score of at least 680. Financial institutions also look at the business’ financial records to evaluate the prospective borrower’s ability to repay the loan.
Loan types. There also are a number of business loan types—some of which are better suited for more specific financing needs. Evaluate whether you need money in a lump sum or prefer to access it on an as-needed basis. Likewise, consider whether a nontraditional financing method—like invoice factoring—might be a better fit than a term loan.
Available amounts. In general, unsecured business loan amounts range from as little as $1,000 to $500,000. Choose a lender with borrowing limits that match your business’ borrowing needs so you don’t have to borrow more or less than necessary.
Loan terms. A loan’s repayment term impacts the size of monthly payments and, therefore, whether a business can afford the financing. Be sure to select a lender that offers loan terms in line with your business’ budget and overall financial plans.
Cost. The overall cost of a business loan can include interest as well as origination fees, late fees and prepayment penalties. Compare how much you’re likely to pay up front and over the life of each loan you consider.
Customer support and reputation. Visit each lender’s website to learn about customer support tools and availability. Also, read online reviews to see what experiences real borrowers have had with customer support representatives and the borrowing process as a whole. Talk to other members of your community or industry to see if anyone has had a positive—or negative—experience with the lender before committing to a loan.
What Is an Unsecured Business Loan?
Unsecured business loans are a type of business financing that does not require the borrower to provide collateral in exchange for a loan. Just as there are several types of business loans, unsecured business loans come in many forms, each with its own characteristics and use. Common unsecured business loans include:
Term loans
Term loans are what borrowers typically think of when they consider business loans—a bank lends a specific sum of money, with interest accruing over time and regular payments made over a set loan term. This type of financing is typically best for business owners who need to access a lump sum of cash rather than smaller amounts disbursed over several months or years.
Business lines of credit
Unlike term loans, business lines of credit let borrowers access funds up to a certain limit on an as-needed basis. Interest only accrues on the outstanding balance—not the entire loan amount—and borrowers can access funds again once they’re paid off. This feature makes lines of credit an excellent option for business owners who need revolving access to funds to cover ongoing costs.
A merchant cash advance (MCA) occurs when a business borrows money from a credit card processor or other merchant services provider at a set factor rate (often 1.2 to 1.5) and in exchange for a portion of future transactions. Payments are made through automatic clearing house (ACH) payments daily or weekly until the balance is repaid. MCAs are usually best suited to businesses that need to access cash quickly and have a high volume of sales to cover payments.
Invoice factoring
Invoice factoring is the process of selling outstanding invoices to a factoring company at a discount and receiving a portion of the invoice balance as an upfront payment. The factoring company then becomes responsible for collecting payment for the invoices.
Pros and Cons of Unsecured Business Loans
As with other forms of business financing, unsecured business loans come with advantages and disadvantages—though these may vary by borrower and lender.
Pros of Unsecured Business Loans
Collateral not required. Unsecured business loans don’t require borrowers to pledge any valuable collateral in exchange for funds. This makes unsecured loans an excellent financing option for newer businesses that don’t yet own real estate, equipment or other major assets.
No risk of losing collateral. Because unsecured business loans don’t require borrowers to pledge collateral, there is a lower risk of a company losing its assets if it defaults on a loan. That said, lenders can still file a lawsuit to recover the unpaid balance, garnish revenue from the business or seize valuable assets like equipment and real estate.
Faster application and approval. Due to the lack of collateral, lenders do not require an appraisal as part of the unsecured loan application process. This can translate into faster application and approval processes than available for secured options.
Cons of Unsecured Business Loans
Smaller loan amounts. Unsecured loans pose more risk to lenders than secured alternatives. For that reason, lenders often offer lower borrowing limits on their unsecured financing options.
Higher interest rates. Lenders can’t repossess collateral in the case of default, so unsecured business loans typically come with higher interest rates than their secured counterparts. In general, rates on unsecured business loans range anywhere from around 5% to 80% or higher.
May be more difficult to qualify for. Because of the risk posed by unsecured loans, lenders may impose more demanding eligibility requirements than secured options. This means that it can be difficult to qualify for an unsecured loan if a business has bad credit, no credit or limited annual revenue.
Where To Get Unsecured Business Loans
Unsecured business loans may be available through traditional banks and credit unions. However, this type of business financing is more often offered through online lenders and alternative lenders. This may include financial technology companies—fintechs—that base lending decisions on a wider range of qualification requirements.
When To Choose an Unsecured or Secured Business Loan
If you’re trying to get a business loan, you may want to consider an unsecured business loan if you don’t own any valuable assets to pledge as collateral or you want faster funding times than available with secured options. That said, unsecured loans often come with higher annual percentage rates (APRs) and less flexible terms, so opt for a secured loan if you qualify for competitive interest rates and have the means to secure the loan.
How To Get an Unsecured Business Loan
Getting an unsecured business loan can be a straightforward process with the right planning and approach. Here’s a step-by-step guide to navigating the application process:
Evaluate your business needs. Understand why you need the loan and how much you need. This will help you determine the correct type of loan and how it fits into your business plan.
Check your credit score. Lenders often assess your creditworthiness based on your credit score. If your score is low, consider improving your score before applying for a loan.
Prepare your business plan. A comprehensive business plan gives lenders a clear picture of your business and its growth potential. Ensure it includes information about your market, competition and financial forecasts.
Compile financial statements. Lenders will want to see your balance sheet, cash flow statements and profit and loss statements to evaluate your business’s financial health.
Shop around for lenders. Different lenders offer different terms and rates. Compare multiple lenders and prequalify, if possible, to find the best deal for your business.
Prepare and submit your application. Once you narrow down your lender choices, prepare your loan application. Include all necessary documents and ensure all information is accurate to avoid delays.
Follow up. After submitting your application, follow up with the lender to be sure they received it and there are no issues.
Alternatives to Unsecured Business Loans
If an unsecured business loan doesn’t seem like the right fit for you, consider one of these alternatives.
SBA Loans
The U.S. Small Business Administration (SBA) offers a variety of government-guaranteed loans to small businesses through traditional lenders, such as banks and credit unions.
7(a) Loan Program.SBA 7(a) loans are the most common type of financing the agency offers. The maximum loan amount is $5 million and terms range from 10 to 25 years.
CDC/504 Loan Program. This program offers fixed-rate financing for major assets like real estate, equipment or machinery. These loans are available through Certified Development Companies (CDCs), nonprofit organizations that work with the SBA and traditional lenders to fund small businesses.
Small Business Grants
Unlike loans, small business grants don’t have to be repaid. Instead of lending money, grantors offer resources, tax credits or other incentives to help small businesses succeed. However, the application process is often highly competitive and may require significant time and effort.
Business Credit Cards
Business credit cards function much like personal credit cards; however, you use the card to pay for business expenses. While interest rates on business cards may be higher than business loan rates, they usually have more flexible qualification requirements.
If you don’t need to borrow a large amount of money, a business credit card may be a better fit. Some providers even offer an introductory 0% annual percentage rate (APR) for highly qualified applicants. If you repay your balance during the intro period, this is essentially an interest-free loan.
Crowdfunding
If you want to avoid borrowing money altogether, consider crowdfunding. By using sites like Kickstarter and Indiegogo, you can raise money for your business. These sites let you set a funding goal and create reward tiers for people who back your project. However, if you don’t reach your goal, you usually get nothing.
We reviewed 18 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the nine best lenders based on the weighting assigned to each category:
Loan cost. 35%
Loan details. 20%
Customer experience. 20%
Eligibility and accessibility. 10%
Application process. 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms and applicable fees. We also looked at minimum credit score and time in business requirements and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like online applications, prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
You can get an unsecured business loan through traditional financial institutions like banks and credit unions, or via online lenders and other fintech companies. If your business already works with a bank or credit union, inquire about its business loan offerings. Otherwise, there are online lenders who can help you qualify for financing quickly.
At the same time, research the best small business loans and compare available rates, terms, loan amounts and other relevant information. If you’re a member of your local chamber of commerce, other local businesses may be able to provide insight into the comparative advantages of their offerings—as can other members of your industry.
How hard is it to get an unsecured business loan?
With unsecured business loans, as with many other things, you can get funding quickly, cheaply or easily, but not always all three. If you need funding fast, there are providers who can help you. If you want more inexpensive financing, with a lower interest rate and other fees, that may also be achievable through a bank or local credit union but will typically take longer.
Can you get an unsecured business loan with bad credit?
Getting an unsecured business loan with bad credit is possible, but may be more difficult. If your credit isn’t good or you’re still building your business credit, you may still be able to get unsecured funding in the form of invoice financing or an MCA.
What can you do if you are denied an unsecured business loan?
If you’re denied an unsecured business loan, there are still ways you can get the financing you need. If you don’t need the funds immediately, improve your credit score before reapplying. For instance, paying down existing debt and making consistent on-time payments can boost your score over time.
However, if you need funds immediately, look toward other viable alternatives. For example, business credit cards are a handy source of financing that typically have more flexible qualification requirements compared to business loans. If you choose to go this route, note that business credit card limits may only extend up to $50,000, depending on your creditworthiness.
What documents are needed to apply for an unsecured business loan?
To apply for a business loan, you may need the following documents:
Personal and business tax returns
Business licenses
Articles of incorporation
Personal and business bank statements
Profit and loss statements
Financial statements
Business plan
Building lease
Contact the lender directly and ask them what specific documents they require. You may need to ask a bookkeeper or accountant to prepare documents for you, so give them plenty of notice.
What happens if you default on an unsecured business loan?
If you default on an unsecured business loan, the lender could take legal action to recover the debt. This could result in garnishment of business revenues, seizure of assets or a negative impact on the business’s credit score. There may also be legal fees involved, thereby increasing the debt amount.
Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.
Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
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