A small business may need an unsecured business loan to pay for operating expenses, open a second location, or pay for marketing costs. If you’re in need of extra capital, take a look at these best unsecured business loans to get started today.
Reviewed by: Sarah Brooks, Personal Finance Writer and Editor
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Unsecured business loans are small business loans that do not require any collateral. Instead, they are issued based on creditworthiness, length in business, and monthly revenue. A business may choose to get an unsecured business loan if they don’t qualify for a bank loan orneed access to funds quickly.
Unsecured business loans can be used to quickly expand, make repairs, or renovate their place of business. They are also used to meet payroll expenses, pay for marketing costs, and to cover emergency expenses that they can’t otherwise afford. Online lenders typically offer the best unsecured business loans, and our team of financial experts reviewed and ranked the top online lenders to help you get funded.
Top Picks for Best Unsecured Business Loans
Fundbox - Best Unsecured Business Loan for Startups
Credibly - Best Unsecured Business Loan for Low Credit
With so many unsecured business loans available, choosing the best one for your business can be tricky and time-consuming. Luckily, our team of experts did the work for you. They reviewed the best practices for choosing unsecured business loans, and used the following factors to rank the lenders that offer the best unsecured business loans.
Best Unsecured Business Loans for 2022 - Full Overview
1. Fundbox - Best Unsecured Business Loan for Startups
Fundbox offers two types of unsecured business loans: a line of credit and a term loan. The application process for both can be done entirely online and requires minimal documentation. There are no prepayment penalties, no origination fees, and flexible repayment terms. The qualification requirements are some of the lowest you’ll see out there, making them an excellent choice for both startup businesses and those that have less-than-ideal credit scores.
A term loan from Fundbox gives you one lump sum of cash that you repay over 24 or 52 weeks. Rates start at 8.33% for 24 week terms and you can borrow up to $150,000. A line of credit, on the other hand, is a revolving type of loan where you only use what you need. Repayment terms are 12 to 24 weeks from each draw, with rates starting at 4.66% for 12 week terms. Lines of credit range from $1,000 to $150,000.
To qualify for a term loan or line of credit from Fundbox, you’ll need to be in business for at least six months and have a minimum credit score of 600. You’ll also need to show $100,000 or more in annual business revenue.
The Bottom Line
If you need a relatively small amount of capital quickly or you’re a relatively new business, Fundbox is a good option. Their application is quick and easy, and you’ll receive a funding decision within minutes of applying.
2. Biz2Credit - Best for Multiple Lending Products
Biz2Credit offers term loans up to $500,000, in addition to a multitude of other lending products. The company is set up as a lending platform, so you’ll fill out an application and then be matched to the best lender for your specific small business. Different lenders and loan types have different borrower requirements and qualifications.
Biz2Credit offers term loans up to $500,000, working capital loans up to $2 million or more, and commercial real estate loans up to $6 million. Interest rates start at 7.99% and there are interest-only options available for 36 months for qualified buyers.
To qualify for an unsecured term loan from Biz2Credit, you’ll need to be in business for at least 18 months, have a minimum annual revenue of $250,000, and have a credit score of 660 or higher.
The Bottom Line
Biz2Credit is a good choice for those that need high loan amounts, fixed interest rates, and a fast turnaround time. However, you do need to be in business at least 18 months and have high annual revenues, so keep that in mind before filling out an application.
Bluevine offers one type of unsecured business loan: a line of credit up to $250,000. You can apply online and get an approval decision in as fast as five minutes. Instead of getting a lump sum, you get a revolving line of credit that acts similar to a credit card. Use what you need, pay interest only on what you use, and then use it again.
Bluevine offers unsecured lines of credit up to $250,000 with rates starting at just 4.8%. Payments are made weekly or monthly over six or 12 months with each draw. Once you pay back the line of credit, you can use it again, making it ideal for businesses who need continuous access to capital.
In order to qualify for a line of credit from Bluevine, you need a minimum credit score of 625, at least six months in business, and at least $10,000 in monthly revenue. There are no prepayment fees, origination fees, or maintenance fees associated with the loan.
The Bottom Line
Bluevine offers low interest rates on its unsecured business lines of credit. It has a fast application process and you only pay interest on the funds you use. Bluevine is an ideal choice for borrowers looking to pay for operating costs, fund an expansion project, or pay for marketing expenses.
National Funding takes a more custom approach to lending. It tailors its unsecured business loans to the individual business’ needs rather than offering general loans. It looks at more than just credit score and even has specific loans for certain industries. National Funding offers automatic payments and you work with a loan specialist to help with your application and any questions that may arise.
National Funding offers unsecured business loans from $5,000 to $500,000. Terms range from four months to two years and payments are made daily or weekly. Once approved, funding takes place in just 24 hours.
To qualify for a small business loan from National Funding, you will need a credit score of 600 or higher and be in business for at least six months. Minimum revenue requirements are $250,000 per year or more.
The Bottom Line
National Funding is a good option for unsecured loans because it customizes your loan to your business’ needs and doesn’t just offer cookie cutter loan products. They also offer an easy application and fast funding times, making them ideal for businesses in need of capital as soon as possible.
OnDeck offers two types of loans for businesses that want to get unsecured business loans: a term loan and a line of credit. The application process can be completed online or over the phone. U.S. based loan specialists are available to help borrowers six days per week. The company rewards its repeat borrowers by offering lower rates and waiving some of the fees when they pay off their first loan and get a second one.
OnDeck offers term loans from $5,000 to $250,000 and lines of credit from $6,000 to $100,000. Repayment terms are 24 months for term loans and 12 months for lines of credit. Because OnDeck reports to the three major credit bureaus, a loan or line of credit from them can help build your business credit.
To qualify for a loan of line of credit from OnDeck, you’ll need a minimum credit score of 600 and you must be in business for at least one year. You also need $100,000 in annual revenue and a business checking account. Funding is quick and can happen as fast as the same day the application is approved.
The Bottom Line
OnDeck is a good option if you need a fast unsecured business loan. It has a simple application process, funds quickly, and has dedicated loan specialists to help you throughout the process. And since they waive fees for repeat customers, OnDeck is ideal for businesses who predict future borrowing needs.
6. Credibly - Best Unsecured Business Loan for Low Credit
Credibly is both a direct lender and a loan marketplace, giving you a one-stop shopping experience to compare and contrast unsecured business loans. It offers a plethora of loan products, including SBA loans, term loans, and unsecured lines of credit. The company works with borrowers with a range of credit scores, and focuses more on the borrower’s overall credit profile and what they need the loan for rather than just their credit score.
Credibly offers working capital loans up to $400,000 with terms up to 18 months. Repayments are made daily or weekly, and factor rates start at 1.09. Credibly’s unsecured lines of credit are up to $250,000 with rates as low as 4.8%. The company also offers SBA loans, which are backed by the Small Business Administration. These loans typically come with better rates, but they do require additional paperwork and have a longer funding time.
Credibly doesn’t have any strict credit score requirements, but generally accepts borrowers with a minimum credit score of 500. Additional lending requirements include being in business for six months and having annual revenue of $180,000 or more. The company also offers discounts for paying your loan off early.
The Bottom Line
Credibly is a good option for unsecured business loans because of the variety of loan types and low minimum credit score requirement. Whether you need a small loan to cover operating expenses or a large loan to cover renovations, Credibly can find a loan to fit your needs.
Fora Financial offers flexible funding solutions up to $750,000 to borrowers who are looking for unsecured business loans. The online application is easy, and you can be approved in as little as 24 hours and funded within 72 hours. Credit score isn’t as important with Fora, and instead the company looks at your annual revenue and your length in business to make their lending decision.
Fora Financial loan amounts range from $5,000 to $750,000 with terms from four to 15 months. Payments are made monthly and rates will vary. To find out specific rates, we recommend reaching out to a Fora specialist before agreeing to the loan.
In order to qualify for a Fora Financial unsecured loan, you need to be in business for at least six months, have no open bankruptcies, and have at least $144,000 in annual revenue.There are no minimum credit score requirements disclosed and they consider your entire credit profile as opposed to just your score.
The Bottom Line
Fora Financial is a good choice if you’re in search of an easy application for an unsecured business loan and perhaps don’t have the best of credit. Fora offers decent loan amounts, lenient time in business requirements, and funding within 72 hours of loan approval.
Fundera is your one-stop shop for all your small business financing needs. This company is an online loan marketplace with a stellar industry reputation and various loan products to choose from. The most common loan for borrowers who don’t have collateral is a business line of credit. The company uses an online application and matches borrowers with loans that best suit their needs.
Whether you’re a brand new business or have been in business for decades but have a low credit score, Fundera can find an unsecured business loan that will work for you. Rates, terms, and borrower requirements vary, due to the multitude of lenders and loan products to choose from. For term loans, though, you can expect to receive up to $600,000 with a 1-5 year repayment period. Rates vary by lender, but they do typically range from 7 - 30%.
Generally, you will need a credit score of at least 550 to qualify for an unsecured business loan. Lenders like to see an annual revenue of $50,000 and six months in business, but these numbers are not set in stone.
The Bottom Line
Fundera is a convenient option to check out multiple unsecured business loans side by side. It has an easy-to-use website and high loan limits, which are attractive if you need a larger loan than other companies offer.
Loan Features - Loan amounts and terms vary from lender to lender. We made sure to include a variety of options to make sure your small business gets the financing it needs.
Application process - We looked at how long the application process takes, along with whether a hard or soft pull is done on your credit.
Interest rates and fees - Unsecured business loans often have higher rates than secured loans due to their risk level. We looked at interest rates and origination fees, along with whether or not there was a penalty for paying off the loan early.
Qualification process - Different lenders have different qualification requirements, including minimum credit scores, monthly or annual revenue amounts, and total length in business.
Customer support - If you have a question, how will the lender answer it? What are their business hours and what kind of multi-channel support do they offer? We looked for lenders with excellent customer service support ratings that are easy to get ahold of.
Online user reviews - We spent some time reading independent review sites like Trustpilot to see what users have to say about the business overall. For example, does customer service offer helpful support and are the fees transparent?
Perks and Bonuses - What extras does the company offer for being a borrower? We considered specified service offerings like payment flexibility, advertising transparency, and advanced technology.
Best Unsecured Business Loans - Main Features
Min. Credit Score
Min. Time in Business
Min. Annual Revenue
Up to $150,000
4.66% for 12 week terms
Up to $500,000
$5,000 - $250,000
$6,000 - $250,000
$5,000 - $750,000
$5,000 - $500,000
$10,000 - $1 million
What Is an Unsecured Business Loan?
Unsecured business loans are a type of funding that requires no collateral to borrow. The provider will loan you a lump sum of money, usually at a fixed rate of interest, which you’ll typically pay back over a period of one to five years.
Lenders also offer unsecured lines of credit. Rather than receiving one lump sum like you would with a term loan, you receive access to a revolving line of credit. With this type of funding, you only pay interest on the amount you borrow.
Many online lenders provide simple applications and quick decisions, with funding for approved loans provided in as little as 24 hours. If you have a good credit score, you can find reasonable rates, but options do exist for those with poor credit, too.
Types of Unsecured Small Business Loans
There are many different types of unsecured business loans, including:
Term loans: These are the most well-known types of loans. You borrow a specified amount of money with the promise to pay it back over a set period of time, referred to as the term of the loan. You receive the money in one lump sum and payments are made regularly, usually monthly.
Business lines of credit: These are lines of credit specifically for a business instead of a house. They function similarly to credit cards. You qualify for a certain amount of money and can withdraw it as you need it throughout the set draw period. You only pay interest on the money you actually use.
Merchant cash advances: This is a type of unsecured business loan for businesses that have debit and/or credit card sales. The lender loans the business money as a lump sum and then gets repaid through future sales. Normally, the lender will automatically take their payments from your account either daily, weekly, or bi-weekly.
Invoice factoring: A business sells their outstanding invoices to a factoring company for a lump sum, which is a percentage of the invoices. The company gives you funds quickly so you don’t have to wait on your customers to pay their invoices.
How Unsecured Business Loans Work
An unsecured small business loan is one of the simplest and most flexible ways to raise capital. The absence of a collateral pledge simplifies the application process.
The way unsecured business loans work is straightforward. Once a business has determined how much they need to borrow, it’s a question of looking at the monthly payments that will be required.
There’s some flexibility here, especially with regard to the term. By structuring the loan over a longer term, the monthly payment can be reduced. However, the longer the term, the higher the total interest cost you’ll incur on the debt.
How to Get an Unsecured Business Loan
One of the best things about unsecured small business loans is how easy it is to apply for them. The first thing to do is to look around for the best small business loans available. Generally, these will be the ones with the lowest interest rates, but other criteria can apply.
Once you’ve assessed your options and applied, you’ll need to provide documentation. Documentation typically includes, but is not limited to:
Business tax returns
Bank statements from the previous few months
Personal financial information
After everything has been checked and approved, the money will be released within 24-72 hours of loan approval.
How to Prevent Mistakes when Applying for Unsecured Business Loans
Have a clear business plan - A business plan serves many critical purposes. Beyond facilitating financing arrangements, it serves to guide your business and inform your strategic and financial decisions.
Have a purpose for your funding - Don’t borrow for the sake of it. Make sure you have a specific reason to apply for a loan. This will help you get approved and ensure you’re spending cash in a sensible manner.
Always be honest in your application - Don’t try to inflate your financial performance in the hopes of securing more funding. Always be honest, and maintain a prudent debt load.
Don’t apply last-minute - Unless it’s an emergency, you should apply for funding well in advance of needing it. Some applications can take longer than expected; applying early means you won’t be left hanging.
Unsecured Business Loans Pros and Cons
Short application process - Since you’re not securing your loan against any assets, the application process is usually quite straightforward. Simply complete an online form and provide the relevant documentation. If you’ve been approved, you could receive funding that very same day.
Less risky than other types of lending - If you default on your payments, none of your business assets will be seized. Of course, you’re still obligated to repay the debt, but you won’t lose any vital business equipment.
Build credit history - Borrowers with poor credit can use low-dollar, short-term, unsecured lending to boost their credit scores.
Flexible borrowing values - Since unsecured loans aren’t constrained by the value of an asset, you can often find very flexible borrowing limits, assuming you satisfy key criteria.
Higher interest rates - Without any collateral to back the loan, the lender is taking greater risk. This usually translates into higher interest rates.
Can be hard to qualify - Lenders usually only approve applicants with good credit and a history of strong business performance. However, with a little shopping around, you can find some poor credit options.
Unsecured loans are a great way to take your business to the next level. If you need financing to pay wages, cover operating expenses, or expand your business, an unsecured small business loan can help. Online lenders, such as the ones mentioned above, provide easy applications and fast funding times, giving you the cash you need as quickly as possible.
Frequently Asked Questions(FAQ)
What are the minimum requirements to apply for an unsecured business loan?
Every lender will have slightly different requirements.
However, most lenders want to see you’ve been in business for at least six
months, have a minimum credit score of 600, and make $10,000 per month in
revenue. These are not hard numbers, so it’s best to apply for a few lenders
and compare your options.
What is the interest rate on an unsecured business loan?
Interest rates vary from lender to lender, but are mostly
determined by your credit score. Typically, the better your credit score, the
lower the rate you’ll receive.
The amount you can borrow depends on your profits, how well
established your business is, your credit scores, and more. You can borrow as
much as $500,000 if you have a history of good finances.
How long do I wait for funding after being approved?
Once approved, funds can be dispersed in as little as 24
hours. Some lenders may take up to 72 hours, but overall funding is quick once
Can I repay back early?
You might reduce your debt sooner and save on interest when
you repay your loan early. However, it means that the lender receives less
money. To make up for this, certain lenders implement early repayment fees.
Other lenders, though, offer discounts for paying your loan off early.
How long does it take to get a business loan approved?
Most online lenders will give you an approval decision in a
matter of hours. Lenders will typically want to see bank statements prior to
making a decision, so make sure you have those handy when applying.