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Unsecured business loans don’t require collateral. These loans are a great option for startups or other businesses that need capital but don’t have significant physical assets to use as collateral.
Even for business owners who do have capital, unsecured business loans are a great option for those who want to avoid risking personal or business assets by pledging them as collateral. However, having no collateral can make you a greater risk to lenders. That’s why unsecured loans usually have higher rates and have more stringent qualification requirements.
To help you find the best unsecured business loan, we’ve reviewed some well-known online lenders offering quick access to capital, minimal fees and lenient eligibility requirements. Read on to find out more.
Our Top Picks for the Best Unsecured Business Loans
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Best Unsecured Business Loan Reviews
- Large loan amounts
- Approval in as little as 24 hours
- Low minimum credit score for working capital loans
- Discount on loans for eligible borrowers
- Requires $100k in annual revenue for working capital loans
- Must have 18 months in business and $250K in revenue for unsecured term loans
- High credit minimum for term loans
- More stringent requirements for larger loan amounts
HIGHLIGHTS
Term Loan Amounts$25,000 to $1,000,000Starting interest rateNot specifiedMinimum time in business18 monthsMinimum Credit Score575 for working capital loans, 650 for term loansFeesOrigination fee, but no monthly feesTerm Lengths12 to 36 months
Why we chose this company: Biz2Credit offers several types of loans, including working capital, term loans and commercial real estate loans. While many online lenders cap at $100,000-$250,000, Biz2Credit offers unsecured term loans up to $1,000,000 to qualified borrowers.
Biz2Credit’s eligibility requirements are stricter for more sizable funding options. The tiered approach allows businesses to start with working capital loans at lower thresholds (575 credit score, $100K revenue) and graduate to larger term loans as they grow. For businesses with commercial real estate, Biz2Credit can leverage that property as collateral for loans up to $6 million.
Repayment for term plans is weekly or biweekly. For CRE loans, repayment is monthly, with interest-only payment options available. The combination of 24-hour approvals and 72-hour funding puts Biz2Credit in the sweet spot between traditional banks (lower rates but slower) and merchant cash advances (faster but more expensive).
- Approval decisions in as little as five minutes
- Funds may be available as soon as 24 hours
- Available to businesses operating for only 6+ months
- Credit line replenishes as you make repayments
- Only pay interest on funds used
- High costs due to high rates and frequent payments
- Monthly revenue requirement of $10K or more
- Credit limits max out at $250,000
- Short term lengths (6 or 12 months)
HIGHLIGHTS
Line of Credit Limit$5,000 to $250,000Starting interest rateNot specifiedMinimum time in business12 monthsMinimum Credit Score625FeesNo monthly feesTerm Lengths6 or 12 months
Why we chose this company: Bluevine’s funding process is among the fastest on our list. The company can verify a borrower’s eligibility in as little as five minutes and deliver same-day funding. For a $15 fee, Bluevine also offers quicker transfers, ensuring funds are available in your bank account within hours. Bluevine accepts businesses that have been operating for at least 12 months.
This accessibility, combined with a relatively low 625 credit score requirement, makes it an excellent option for newer businesses or those still building credit. A revolving line of credit provides ongoing flexibility.
As you repay, your credit line replenishes, allowing you to continue accessing capital. You only pay interest on what you actually draw, keeping costs controlled. For businesses prioritizing speed and accessibility over the absolute lowest rates, Bluevine delivers exceptional value.
- 0% interest rate
- Zero fees of any kind
- No minimum credit score requirement
- No minimum annual revenue or time in business required
- Requires crowdfunding from friends, family and community (5-35 initial lenders)
- Process takes at least one month (15-day private fundraising + 30-day public fundraising)
- Low maximum loan amount ($15,000)
- Not available in Nevada or North Dakota
HIGHLIGHTS
Loan Amounts$1,000 to $15,000Interest Rate0% APRMinimum Time in BusinessNone (startups welcome)Minimum Credit ScoreNoneFees$0Term Lengths6 to 36 months (monthly repayments)Funding Time45+ days (crowdfunding period)
Why we chose this company: Kiva stands alone as the only completely free business lending option in America. Through a unique crowdfunding model, small businesses can access up to $15,000 with zero interest and zero fees – something unheard of in traditional lending. Kiva uses “social underwriting” rather than credit scores to evaluate borrowers. You first gather support from 5-35 people in your immediate community during a 15-day private fundraising period.
Once you hit that threshold, your campaign goes live on Kiva’s platform to their network of over 2 million lenders worldwide for 30 additional days. The process rewards entrepreneurs with strong community ties who can demonstrate character and business potential. Borrowers must be at least 18 years old, not in foreclosure or bankruptcy, and must accurately represent their credit history. The loan must be for business purposes only.
Repayments begin one month after receiving funds and are paid monthly over 6 to 36 months. Kiva then disburses these payments to all the lenders who supported your campaign. This creates accountability while providing truly interest-free capital.
- Low starting APR (5.25-7.99% depending on product)
- Several different loan products available
- Large loan amounts up to $10 million
- Accepts borrowers with credit scores as low as 600
- Not available to sole proprietors (must be a registered business entity)
- Not available in California
- Higher revenue requirements for some products ($100K-$500K)
- May charge origination fees (1-6% estimated)
HIGHLIGHTS
Loan Amounts$10,000 to $10,000,000Starting APR5.25% – 15.00% (varies by loan type)Minimum Time in Business6 months to 3 years (varies by product)Minimum Credit Score600-680 (varies by product)FeesVaries; origination fees estimated 1-6%Term Lengths6 months to 25 yearsFunding Time24-48 hours (most products); 5-7 days for term loans
Why we chose this company: SMB Compass offers several loan types that other lenders do not. At least nine different loan products range from traditional term loans to specialized purchase order financing, providing tailored funding solutions for each business’s specific needs.
The starting APRs are among the lowest in alternative lending, rivaling those of traditional banks. The lender’s equipment financing starts at just 5.99% APR, while business lines of credit start at 7.99% APR.
Even more specialized products, such as purchase order financing (15% APR), remain competitive. This variety allows businesses to match financing to actual use cases rather than settling for a one-size-fits-all loan.
- Low credit score (600) and annual income requirement ($100K)
- Accepts applicants with six months in business
- Transparent about line of credit fees
- Option to adjust repayment plan each time you draw funds
- Applying does not affect your credit score
- Relatively low maximum credit limit
- Only offers weekly payments unless you enroll in Fundbox Flex Pay for $99 per month
- Repayment terms may be too short for some business owners
HIGHLIGHTS
Line of Credit Limit$1,000 to $150,000Starting interest rateN/AMinimum time in business6 monthsMinimum Credit Score600 FeesWeekly fees starting at 4.66% (12-week terms) or 8.99% (longer terms).Term Lengths12 or 24 weeks
Why we chose this company: Startups seeking smaller amounts of capital quickly will find Fundbox to be an ideal option. With Fundbox Flex Pay ($99 per month), business owners benefit from lower fees and the convenience of monthly payments instead of weekly ones.
Its transparency and ease of use make Fundbox ideal for first-time borrowers or businesses without dedicated financial staff. Accessibility is another key strength. With just six months in business, a 600 credit score, and $100K in annual revenue, startups and newer businesses can qualify.
A soft credit pull lets you check your options without affecting your credit score. For businesses needing smaller amounts quickly with full cost transparency, Fundbox excels.
Read the full review of Fundbox Small Business Loans here. >>>
- Applying won’t affect your credit score
- Low minimum credit score requirement
- No compounding interest
- Doesn’t require personal guarantees for loans under $50K
- Requires one year in business and $50K in annual revenue
- Origination fee plus 2% fee on every draw
- Relatively low maximum credit limit
- Doesn’t help you build business credit
HIGHLIGHTS
Line of Credit Limit$5,000 to $100,000Starting interest rateNot specifiedMinimum time in business1 yearMinimum Credit Score560FeesOrigination fee, 2% fee on every drawTerm Lengths12, 18 or 24 months
Why we chose this company: Headway Capital’s unsecured business lines of credit have some of the most lenient eligibility requirements. While most lenders require credit scores of 600-680+, Headway approves scores as low as 560. Headway Capital’s True Line of Credit also offers more flexible terms than some competing online lenders, with longer-than-average weekly or monthly repayment options.
Borrowers are also encouraged to pay loans early, as there are no prepayment penalties. For loans under $50,000, Headway doesn’t require personal guarantees, which is unusual in the bad-credit space, where lenders typically demand maximum security.
The transparent 2% fee on each draw and soft credit pull application demonstrates borrower-friendly policies. While rates will be higher than prime credit options, Headway provides access to capital when other doors are closed.
- Apply in 10 minutes, and receive a decision the same day
- Dedicated, U.S-based advisor available six days a week
- Transparent pricing with SMART Box Capital Comparison tool
- Helps build business credit by reporting to credit bureaus
- Offers loyalty benefits
- Requires one year in business and minimum annual revenue of $100K
- Up to 4.00% origination fee on term loans
- $20 monthly maintenance fee for lines of credit
- Not available in North Dakota
HIGHLIGHTS
Line of Credit Limit$6,000 to $100,000Term Loan Amounts$5,000 to $250,000Starting interest rateN/AMinimum time in business1 yearMinimum Credit Score625Fees0.00% to 4.00% one-time loan origination fee, $20 monthly maintenance fee LOCTerm Lengths3 to 24 months (term loans); 12 months (LOC)
Why we chose this company: OnDeck loans have terms as short as 3 months – much shorter than the terms other companies offer. This flexibility helps businesses fund specific projects or bridge temporary cash flow gaps without years of commitment. For businesses looking to avoid long-term debt, OnDeck might be a great fit due to its shorter terms.
For loans, repayment terms range from 3 to 24 months, and unsecured business lines of credit have 12-month terms. Unlike most competitors, OnDeck uses only soft credit pulls that don’t affect personal credit scores and reports payments to business credit bureaus, helping borrowers grow their business credit scores.
The dedicated U.S.-based advisors and loyalty program for repeat borrowers demonstrate OnDeck’s focus on relationships rather than one-time transactions.
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Unsecured Business Loans Guide
If you’re shopping for an unsecured business loan, make sure you understand how common loan products work, average costs, and how to improve your loan approval odds.
What is an unsecured business loan?
Unlike secured business loans, unsecured business loans do not require collateral such as real estate, inventory, or savings. However, because no collateral is required, unsecured business loans typically carry higher interest rates and stricter eligibility requirements.
Additionally, lenders often mandate a personal guarantee from you and other business stakeholders. This is a guarantee that will hold each signatory personally accountable for the business debt. If you can’t pay back the loan, lenders might pursue legal action to seize personal assets.
How do unsecured business loans work?
Unsecured business loans work much like other kinds of loans. Lenders set eligibility requirements, such as minimum credit scores, annual income thresholds and often require a set amount of time in business. Borrowers can apply online, by phone, or, in some cases, in person at a branch, then await an approval decision.
Once approved, funding can occur within 24 to 72 hours, depending on the business loan company. Funding could be a lump-sum payment or a line of credit that you draw from as needed. From there, you’ll have to conform to the agreed-upon repayment schedule. Until your loan is repaid, you will pay interest and possibly fees, such as an origination fee.
Requirements for unsecured business loans
Requirements for unsecured business loans vary by lender, but some of the most common are:
- Good personal or business credit scores (above 620)
- A low credit utilization ratio
- Stable annual revenue (many require $100,000)
- Sufficient time in business (at least 12 months)
- A personal guarantee (a promise to repay your business loan)
Types of unsecured business loans
There are several types of unsecured business loans. Keep in mind that all types can carry additional fees, such as origination fees, interest, processing fees on MCAs or fees every time you withdraw. Some examples of unsecured business loans:
- Term loans: Provide a lump-sum amount that must be repaid by the end of the loan term.
- Merchant cash advances (MCA): An MCA provides businesses with a lump sum that is repaid through a percentage of future credit card sales.
- Invoice factoring: An invoice factoring company takes over a business’s outstanding invoices, and customers pay the invoice factoring company directly. In return, business owners receive the total balance of invoices, minus any fees.
What is the average cost of unsecured business loans?
The average cost of unsecured business loans varies based on the loan product and the borrower’s creditworthiness and borrowing history. Generally, unsecured business term loans and business lines of credit offer low APRs to the most qualified borrowers.
Otherwise, APRs for unsecured business loans can be among the highest in the lending market. Additional costs and fees are also associated with many types of unsecured business loans and business lines of credit. These may include, but are not limited to, origination fees, interest, late payment fees, wire transfer fees, fast transfer fees, and fees per withdrawal on a line of credit.
How to choose the best unsecured business loans
Every business has unique financing needs. To find the right loan for your business, consider what you need capital for, how much you need to borrow, and your business’s eligibility. When you have a clear picture of your needs, compare loan products from different lenders to find the best unsecured business loan options offering competitive rates and low or no fees.
Eligibility requirements
Unsecured small business loan lenders typically consider personal credit scores and business records when determining eligibility. These can include bank statements, tax returns, business plans, revenue history and time in business. Requirements can vary widely by lender and may be a principal factor in determining which products are right for you.
Types of loans
The two most common unsecured business loans are term loans and lines of credit.
- Term loans provide borrowers with a lump-sum loan amount that must be repaid by the end of the loan term.
- Business lines of credit work similarly to credit cards in that borrowers may draw funds as needed and repay them to borrow again.
Other types of financing, such as merchant cash advances and invoice financing, may work for your business too, but generally feature higher overall borrowing costs.
Loan amounts
Unsecured business loan amounts range from $1,000 to $1,000,000 or more. Amounts may vary by loan product and depend on the borrower’s eligibility. Lenders that offer larger loan amounts generally have stricter eligibility requirements.
Repayment terms
Repayment terms for unsecured business loans range from a few months to a few years. Lenders may offer daily, weekly, biweekly or monthly payment schedules, but options may also depend on the loan product and the borrower’s eligibility. More frequent payment schedules could mean higher repayment amounts, which may not be suitable for all businesses.
Fees
The total cost of a loan includes the principal loan amount and interest. Additional fees can include underwriting, origination, late payment, prepayment, credit draw, monthly maintenance and origination fees. You should always ask for fee details before committing to a loan.
Support and incentives
Lenders differentiate themselves by offering various forms of customer support and incentives. Some lenders may offer real-time customer support or advice about loan options. Others may offer loyalty incentives for repeat borrowers. Some online lenders also waive prepayment penalties or offer early payoff discounts, both of which can save borrowers money.
How to qualify for an unsecured business loan
Qualifying for an unsecured business loan will depend on each lender’s eligibility requirements. Alternative lenders, usually online companies, often offer fast funding and have more lenient eligibility requirements than traditional institutions.
Pros and cons of unsecured business loans
- Fast application and quick funding
- No collateral required
- Variety of options, including term loans, lines of credit and invoice factoring
- Borrowers with bad credit may find options
- Eligibility requirements (e.g. FICO score, annual income) may be higher than with secured loans
- Personal guarantee may be required, which means you’re personally liable for any unpaid funds
- These options are usually available as secured loans, too; fees and interest rates are higher when the loan is unsecured
- Interest rates for bad credit borrowers are significantly higher
Alternatives to unsecured business loans
Alternatives to unsecured business loans are abundant, which is helpful for business owners who feel an unsecured business loan isn’t ideal for their business needs. Other funding options available to business owners include:
- Business credit card: You can use a business credit card to pay for expenses. The best business credit cards will offer incentives (e.g., cash back) and low interest rates.
- Secured business loan: Collateral is required, but the best small business loans offer more favorable terms (interest rates, repayment plans) than unsecured loans.
- Crowdfunding: Platforms such as GoFundMe, Kickstarter and Indiegogo offer the opportunity to raise money from individuals who want to support your business. These platforms do take a percentage of funds raised.
- Angel investors: Online platforms like Wefunder make it easier to find angel investors for your business.
- Grants: You may be able to find a grant for your business through the Small Business Administration (SBA), a state-based grant program or through an organization that provides grants for specific industries and causes.
How to compare unsecured business loans
When comparing unsecured loan lenders, these are the most important factors to keep in mind:
- Eligibility requirements
- Types of loans
- Loan amounts
- Repayment terms
- Loan fees
- Customer support and incentives
Unsecured Business Loans FAQs
What is the difference between secured and unsecured small business loans?
An unsecured small business loan does not require the borrower to put any physical assets up as collateral, but generally comes with higher interest rates and more stringent qualification requirements. Secured small business loans require collateral that the borrower can lose if the loan is not repaid.
What is a personal guarantee on a business loan?
A personal guarantee on an unsecured business loan is a legally binding agreement in which the business owner agrees to be personally responsible for repaying the loan if the business is unable to do so. Essentially, it means the individual guarantor(s) will be liable for the debt in the event of the business’s default.
What happens if you default on an unsecured business loan?
Defaulting on an unsecured business loan due to consistent late payments or nonpayments can lead to legal action by the lender to recover losses, potentially resulting in wage garnishment or the seizure of personal assets.
Can an LLC get a loan with bad or no credit?
Yes, an LLC can get a small business loan even if the business owner or the business has no credit or bad credit. Typically, these loans come with higher fees and APRs in exchange for the loan.
How We Found the Best Unsecured Business Loans
When selecting the best unsecured business loan lenders, we took into account the following factors:
- Types of loan products offered: We favored companies that provided business lines of credit and term loans, various term length options and repayment schedules, flexible qualification requirements, unique products, incentives or benefits and no hidden fees.
- Customer experience: We prioritized companies that provide a streamlined online application process, fast approval and loan disbursement and tailored customer support options.
- Reputation and transparency: We evaluated companies’ reputations based on their Better Business Bureau and Trustpilot scores. We favored companies that demonstrated transparency regarding essential loan factors such as starting APR, eligibility requirements and fees.
