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Here are 9 of the best unsecured business loans
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
Bank of America Business Advantage Unsecured Term Loan | 4.8/5 Best for Long-term unsecured business loans | Undisclosed | 700 | Read Review |
OnDeck - Online term loan with Fundera by NerdWallet | 4.7/5 Best for Short-term unsecured business loans | $250,000 | 625 | with Fundera by NerdWallet |
Bluevine - Line of credit with Fundera by NerdWallet | 5.0/5 Best for Fast unsecured business loans | $250,000 | 625 | with Fundera by NerdWallet |
Wells Fargo Small Business Advantage® Line of Credit | 4.7/5 Best for Unsecured business lines of credit | $50,000 | 680 | Read Review |
Headway Capital - Line of credit with Fundera by NerdWallet | 4.7/5 Best for Easy unsecured business loans | $100,000 | 625 | with Fundera by NerdWallet |
Fundbox - Line of credit | 4.9/5 Best for Unsecured business loans for startups | $150,000 | 600 | Read Review |
Fora Financial - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Unsecured business loans for borrowers with bad credit | $1,500,000 | 570 | with Fundera by NerdWallet |
Accion Opportunity Fund - Small Business Working Capital Loan | 4.6/5 Best for Unsecured business loans for women and minority groups | $250,000 | 570 | Read Review |
Credibly Merchant Cash Advance | Best for Unsecured business loans with no personal guarantee | $600,000 | 500 | |
Here are 9 of the best unsecured business loans
Best for Long-term unsecured business loans
Best for Short-term unsecured business loans
Best for Fast unsecured business loans
Best for Unsecured business lines of credit
Best for Easy unsecured business loans
Best for Unsecured business loans for startups
Best for Unsecured business loans for borrowers with bad credit
Best for Unsecured business loans for women and minority groups
Best for Unsecured business loans with no personal guarantee
Credibly
Max Amount
$600,000
Min. Credit Score
500
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Our pick for
Long-term unsecured business loans
Bank of America’s unsecured business loan offers competitive interest rates and repayment terms ranging from 12 to 60 months.
Bank of America Business Advantage Unsecured Term Loan
Max loan amount
Undisclosed
Min. credit score
700
Pros
- Bank loan with competitive interest rates.
- No collateral required.
- Bank of America’s Preferred Rewards program can offer interest rate discounts and other perks.
Cons
- Can be slow to fund.
- Prepayment fees may apply to early repayments.
- Must be an existing Bank of America customer to apply online.
Bank of America Business Advantage Unsecured Term Loan
Max loan amount
Undisclosed
Min. credit score
700
Bank of America’s unsecured business loan offers competitive interest rates and repayment terms ranging from 12 to 60 months.
Bank of America’s term loan offers competitive interest rates and flexible repayment terms — with no collateral required.
Pros
- Bank loan with competitive interest rates.
- No collateral required.
- Bank of America’s Preferred Rewards program can offer interest rate discounts and other perks.
Cons
- Can be slow to fund.
- Prepayment fees may apply to early repayments.
- Must be an existing Bank of America customer to apply online.
Qualifications:
- Minimum credit score: 700.
- Minimum time in business: Two years.
- Minimum annual revenue: $100,000.
Our pick for
Short-term unsecured business loans
You can use upfront cash from OnDeck's term loans to make large purchases, then pay the loan back over up to two years.
OnDeck - Online term loan
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
Pros
- Cash can be available within the same business day.
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Not available in Nevada, North Dakota or South Dakota.
- Requires frequent (daily or weekly) repayments.
- Interest rates can be high compared with traditional lenders.
- Requires business lien and personal guarantee.
May fund quickly
OnDeck - Online term loan
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
You can use upfront cash from OnDeck's term loans to make large purchases, then pay the loan back over up to two years.
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
Pros
- Cash can be available within the same business day.
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Not available in Nevada, North Dakota or South Dakota.
- Requires frequent (daily or weekly) repayments.
- Interest rates can be high compared with traditional lenders.
- Requires business lien and personal guarantee.
Qualifications:
- Minimum credit score: 625.
- Minimum time in business: One year.
- Minimum annual revenue: $100,000.
- Business bank account.
May fund quickly
Our pick for
Fast unsecured business loans
Bluevine can approve and fund line of credit applications in as little as 12 hours.
Bluevine - Line of credit
Max loan amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%
Pros
- Cash can be available within 12 to 24 hours.
- Can be used to build business credit.
- Low minimum credit score requirement.
Cons
- Requires weekly payments.
- Requires personal guarantee.
- Not available in North Dakota, South Dakota or Nevada.
- Rates can be high compared to traditional lenders.
May fund quickly
Bluevine - Line of credit
Max loan amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%
Bluevine can approve and fund line of credit applications in as little as 12 hours.
Bluevine's 26-week line of credit provides fast working capital for short-term borrowing needs.
Pros
- Cash can be available within 12 to 24 hours.
- Can be used to build business credit.
- Low minimum credit score requirement.
Cons
- Requires weekly payments.
- Requires personal guarantee.
- Not available in North Dakota, South Dakota or Nevada.
- Rates can be high compared to traditional lenders.
Qualifications:
- Minimum credit score: 625.
- Minimum time in business: 12 months.
- Minimum annual revenue: $120,000.
- No bankruptcies in the past year.
May fund quickly
Our pick for
Unsecured business lines of credit
Wells Fargo’s business line of credit offers competitive interest rates and may be available to companies with less than two years in business.
Wells Fargo Small Business Advantage® Line of Credit
Max loan amount
$50,000
Min. credit score
680
Est. APR
12.50-13.50%
Pros
- Bank line of credit (backed by the SBA) with competitive interest rates.
- No annual fee or prepayment penalties.
- Available to borrowers with less than two years in business.
Cons
- May take longer to fund than online lenders.
- Credit lines only available up to $50,000.
- Need a Wells Fargo checking account to access online bill pay.
Wells Fargo Small Business Advantage® Line of Credit
Max loan amount
$50,000
Min. credit score
680
Est. APR
12.50-13.50%
Wells Fargo’s business line of credit offers competitive interest rates and may be available to companies with less than two years in business.
Wells Fargo offers an unsecured line of credit that’s designed for borrowers with less than two years in business.
Pros
- Bank line of credit (backed by the SBA) with competitive interest rates.
- No annual fee or prepayment penalties.
- Available to borrowers with less than two years in business.
Cons
- May take longer to fund than online lenders.
- Credit lines only available up to $50,000.
- Need a Wells Fargo checking account to access online bill pay.
Qualifications:
- Minimum credit score: 680.
- Available to borrowers with less than two years in business.
- Household personal liquid assets must be less than $500,000.
- Must meet standard SBA loan requirements.
Our pick for
Easy unsecured business loans
You may be able to qualify for Headway’s unsecured line of credit with six months in business, a minimum annual revenue of $50,000 and a credit score of 625 or higher.
Headway Capital - Line of credit
Max loan amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
Pros
- Flexible qualification requirements.
- No prepayment penalties.
- Funds available by next business day after approval.
Cons
- Most borrowers are subject to a 2% draw fee.
- Not available in all U.S. states.
Headway Capital - Line of credit
Max loan amount
$100,000
Min. credit score
625
Est. APR
35.00-80.00%
You may be able to qualify for Headway’s unsecured line of credit with six months in business, a minimum annual revenue of $50,000 and a credit score of 625 or higher.
Headway Capital offers a fast and flexible line of credit for borrowers who may not qualify for more traditional options.
Pros
- Flexible qualification requirements.
- No prepayment penalties.
- Funds available by next business day after approval.
Cons
- Most borrowers are subject to a 2% draw fee.
- Not available in all U.S. states.
Qualifications:
- Minimum credit score: 625.
- Minimum time in business: Six months.
- Minimum annual revenue: $50,000.
Our pick for
Unsecured business loans for startups
Fundbox makes loans to companies with just six months in business.
Fundbox - Line of credit
Max loan amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
Pros
- Financing available within one business day after approval.
- Simple application with minimal documentation required.
- Startup-friendly — accepts borrowers with a minimum of six months in business.
- Low minimum credit score requirement.
- No prepayment penalties, account maintenance fees or inactivity fees.
Cons
- Rates are high compared with traditional banks.
- May require personal guarantee.
- Weekly repayments required over a short term (maximum of 24 weeks).
May fund quickly
Fundbox - Line of credit
Max loan amount
$150,000
Min. credit score
600
Est. APR
36.00-99.00%
Fundbox makes loans to companies with just six months in business.
Fundbox offers a business line of credit to fill a cash flow gap, and qualifying is easier than with other lenders.
Pros
- Financing available within one business day after approval.
- Simple application with minimal documentation required.
- Startup-friendly — accepts borrowers with a minimum of six months in business.
- Low minimum credit score requirement.
- No prepayment penalties, account maintenance fees or inactivity fees.
Cons
- Rates are high compared with traditional banks.
- May require personal guarantee.
- Weekly repayments required over a short term (maximum of 24 weeks).
Qualifications:
- Minimum credit score: 600.
- Minimum time in business: Six months.
- Minimum annual revenue: $100,000.
May fund quickly
Our pick for
Unsecured business loans for borrowers with bad credit
Fora Financial has a minimum credit score requirement of 570 and you can qualify with as little as six months in business.
Fora Financial - Online term loan
Max loan amount
$1,500,000
Min. credit score
570
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
Fora Financial - Online term loan
Max loan amount
$1,500,000
Min. credit score
570
Fora Financial has a minimum credit score requirement of 570 and you can qualify with as little as six months in business.
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
Qualifications:
- In business for at least six months.
- At least $20,000 per month in revenue.
- No open bankruptcies or dismissed bankruptcies within the past year.
Our pick for
Unsecured business loans for women and minority groups
Accion Opportunity Fund offers unsecured business loans of up to $250,000. The lender says 90% of its borrowers are women, people of color and/or low-to-moderate income.
Accion Opportunity Fund - Small Business Working Capital Loan
Max loan amount
$250,000
Min. credit score
570
Est. APR
8.49-24.99%
Pros
- Loan amounts from $5,000 to $250,000.
- Customized loan terms.
- No prepayment penalty.
Cons
- Slower processing speed compared to online lenders.
- Not available in all U.S. states.
Accion Opportunity Fund - Small Business Working Capital Loan
Max loan amount
$250,000
Min. credit score
570
Est. APR
8.49-24.99%
Accion Opportunity Fund offers unsecured business loans of up to $250,000. The lender says 90% of its borrowers are women, people of color and/or low-to-moderate income.
Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.
Pros
- Loan amounts from $5,000 to $250,000.
- Customized loan terms.
- No prepayment penalty.
Cons
- Slower processing speed compared to online lenders.
- Not available in all U.S. states.
Qualifications:
- Minimum credit score: 570.
- Minimum time in business: 12 months.
- Minimum annual revenue: $50,000.
Our pick for
Unsecured business loans with no personal guarantee
Credibly doesn’t require you to sign a personal guarantee to get a merchant cash advance. Like all MCAs, however, this product may be expensive.
Credibly Merchant Cash Advance
Max loan amount
$600,000
Min. credit score
500
Pros
- Prepayment discounts available.
- No personal guarantee required.
- Can be used to build business credit.
Cons
- Daily repayments required.
- Charges one-time underwriting fee and monthly admin fee.
Credibly Merchant Cash Advance
Max loan amount
$600,000
Min. credit score
500
Credibly doesn’t require you to sign a personal guarantee to get a merchant cash advance. Like all MCAs, however, this product may be expensive.
Credibly offers fast, flexible funding with low starting factor rates.
Pros
- Prepayment discounts available.
- No personal guarantee required.
- Can be used to build business credit.
Cons
- Daily repayments required.
- Charges one-time underwriting fee and monthly admin fee.
Qualifications:
- Minimum credit score: 500.
- Minimum time in business: Six months.
- Minimum annual revenue: $180,000 ($15,000 average monthly bank deposits).
- Factor rates start at 1.11.
A closer look at our picks for the best unsecured business loans
Bank of America
Best for long-term unsecured business loans
Bank of America’s unsecured business loan has competitive rates and loan terms that go up to 60 months, making it a good option for larger purchases that can be paid off over a long term.
It’s best for established businesses that have strong credit and want to avoid pledging high-value assets as collateral on a business loan. Certain benefits — such as the ability to apply online — are available to those who already hold accounts with Bank of America.
- You have strong credit and at least two years in business.
- You’d like to repay your loan over one year or more.
- You want an unsecured loan with low interest rates.
- You’re an existing Bank of America customer.
- You’re a startup or have a lower credit score.
- You need fast access to funds.
- You’re looking for a simple online application experience.
OnDeck
Best for short-term unsecured business loans
OnDeck’s online business loan offers terms up to 24 months, with lower credit score and time in business requirements than traditional lenders. Due to the high payment frequency though (daily or weekly), this short-term loan option is best for businesses that have steady cash flow but can’t qualify with traditional lenders for other reasons, like time in business or personal credit score.
- You want short-term funding for a specific business purpose.
- You need access to funds in just a few days.
- You’re a newer business (operating for at least one year) and/or have fair credit.
- You want to build business credit.
- You want a term loan with a monthly repayment schedule.
- You have less than one year in business.
Bluevine
Best for fast unsecured business loans
Bluevine is an online lender that offers unsecured lines of credit up to $250,000, with a minimum credit score requirement of only 625. If approved, funds can be available in as little as 24 hours, which can make a huge difference if you’re in need of cash to cover a payment, or you’re trying to capitalize on a time-sensitive opportunity.
- You have at least one year in business and good revenue.
- You want to build business credit.
- You’re looking for access to working capital within 24 hours of approval.
- You’re a brand-new business.
- You want to repay funds over a long period of time.
- You’d prefer access to a sum of capital upfront (i.e. a term loan).
Wells Fargo
Best for unsecured business lines of credit
Wells Fargo’s Small Business Advantage Line of Credit is available to borrowers who have been in business for less than two years, with credit scores of at least 680. The line of credit is backed by the SBA, so businesses must meet other SBA standard requirements; however, the competitive rates make it a top choice for startup businesses.
- You have less than two years in business.
- You want a low-interest business line of credit.
- You have an existing Wells Fargo business checking account.
- You want access to more than $50,000 in funding.
- You have fair or bad credit.
- You need quick financing.
Headway Capital
Best for easy unsecured business loans
Headway Capital’s line of credit requires only six months in business, a 625 minimum credit score and $4,200 in monthly revenue — making it an ideal option for startup businesses. The tradeoffs involve higher rates and draw fees; however, if approved, you can be funded as quickly as the following business day. Unlike other startup options, Headway will also work with you on repayment terms and payment options — terms can be up to 24 months and you can choose whether monthly or weekly payments work best for your business model.
- You have at least six months in business and a credit score of 625 or higher.
- You’re looking for a business line of credit.
- You want fast access to working capital.
- You need more than $100,000 in funding.
- You want to build business credit.
- You don’t want to pay a draw fee on your credit line.
Fundbox
Best for unsecured business loans for startups
Fundbox offers a startup-friendly unsecured line of credit to businesses that have only been in business for six months and have credit scores as low as 600. As with many online lenders, you can be funded very quickly after approval; however, you’ll also find higher rates, short terms and frequent payments, which can put your business at risk of default if you’re not careful.
- You have at least six months in business and a credit score of 600 or higher.
- You need funding within a few days.
- You want to build business credit.
- You don’t want to pay draw or account maintenance fees.
- You need more than $150,000 in business capital.
- You want to repay your funds on a monthly basis over a longer period of time.
Fora Financial
Best for unsecured business loans for borrowers with bad credit
Fora Financial will fund your business even if your credit score is below 600 and you’ve only been in business for six months. This is a great option for businesses that have strong cash flow and are making a large purchase. Although you’ll get a discount for prepaying your loan, Fora uses factor rates that can often turn out to cost much more when compared to other lenders, and the longest term is less than two years, which means your monthly payments will likely be high.
- You have a personal credit score of 570 or higher and at least six months in business.
- You need access to a large business loan.
- You want a discount for prepaying your loan.
- Your monthly revenue is less than $20,000.
- You want to build business credit.
- You prefer a longer repayment period (greater than 18 months).
Accion Opportunity Fund
Best for unsecured business loans for women and minority groups
Accion Opportunity Fund is a nonprofit community development financial institution (CDFI) whose mission is to provide access to capital for traditionally underserved communities of business owners, including women and minorities. Accion offers loans up to $250,000 with competitive rates, and is a good option for business owners who can’t qualify for traditional funding, or are wary of working with traditional lenders.
- You have a personal credit score of 570 or higher and at least one year in business.
- You want an unsecured business loan with competitive interest rates.
- You’d prefer a longer repayment period (one year or more).
- You’re a women-, minority- or veteran-owned business.
- You want funding in less than one week.
- You have less than a year in operation.
Credibly
Best for unsecured business loans with no personal guarantee
Most unsecured loans still require a personal guarantee, which can put your personal assets at risk if things go awry with your business. If avoiding a personal guarantee is your main concern, you may opt for a merchant cash advance (MCA). Credibly has a minimum credit score requirement of 500 and only needs six months in business; however, daily repayments are required. Additionally, Credibly uses factor rates instead of traditional interest rates, which can make it difficult to compare loan rates to other lenders.
MCAs are very expensive compared to traditional small-business loans. For example, when converting factor rates to annual percentage yields, they can reach into the triple digits. That’s why it’s best to consider a merchant cash advance as a last resort and convert factor rates to APRs to evaluate costs.
- You have a personal credit score in the 500s.
- You have at least six months in business.
- You have strong revenue from debit and credit card sales.
- You don’t want to sign a personal guarantee.
- You can qualify for a merchant cash advance alternative.
- You want to repay funds over a long period of time.
- You can’t afford a daily repayment schedule.
- You don’t want to pay a monthly admin fee.
What is an unsecured business loan?
An unsecured business loan is a type of financing that doesn't require you to pledge physical collateral — like business equipment, inventory or real estate — to secure funding. But even though physical collateral is not required, that doesn’t mean you’ll necessarily be off the hook if you can’t repay an unsecured loan: Most are backed by either a personal guarantee or Uniform Commercial Code lien.
A personal guarantee holds you personally responsible for the debt if your business cannot pay, and the lender can seize your personal assets to recover their losses in the case of default. A UCC lien, based on the Uniform Commercial Code, gives a lender the right to seize your business assets if you’re unable to repay your loan. Lenders typically file UCC liens with your secretary of state’s office after you sign your loan agreement. Your lender may file a lien on specific assets, or they might file a blanket lien, which allows them to seize any business assets necessary to recover their losses.
Pros and cons of unsecured business loans
Pros
Fast access to funds.
Physical collateral not required.
Startups and borrowers with bad credit may qualify.
Cons
APRs typically higher than secured business loans.
Personal guarantee or UCC lien likely required.
Less desirable terms (e.g., lower loan amounts, shorter repayment terms).
Strong financials and credit often needed to get the most competitive unsecured loans.
- Banks and credit unions. Generally, bank loans will offer the most competitive interest rates. However, to qualify for an unsecured loan from a bank, you’ll likely need multiple years in business, strong personal credit and excellent annual revenue.
- Online lenders. In comparison, online lenders may have more flexible qualifications and can be faster to fund than traditional lenders. But like banks and credit unions, online lenders may also require a personal guarantee for a business loan without collateral.
How do unsecured business loans work?
Unsecured business funding typically works like other types of debt financing — you apply for a loan, receive funds and pay back what you’ve borrowed over time with interest.
Unsecured business loans usually fund faster than secured business loans because the lender doesn’t have to check the value of your collateral. The lack of collateral, however, also makes them riskier for lenders. That’s why unsecured loans usually come with higher interest rates and may require personal guarantees or UCC liens.
Average interest rates for unsecured business loans
Interest rates for unsecured loans for businesses can run anywhere from around 8.49% to 99.90%.
While interest rates for unsecured loans are typically higher than secured loans, there are lots of factors that influence the rate you’ll pay. These include:
- The lending company. Generally, the more stringent the lending company’s qualification criteria, the better the interest rate. For example, banks typically offer competitive loan rates, but also have the most hoops to jump through.
- Your credit score. Lenders use your personal credit score to gauge how likely you are to repay your loan. The higher your score, the greater your chances of securing a loan with a lower interest rate.
- Your business finances. Lenders also look at your annual revenue and number of years (or months) you’ve been in business. Generally, the longer your business has been in operation and the stronger your revenue history, the better the rate.
- Loan amount and duration. The larger your loan amount and shorter your repayment period, the higher your loan rate will likely be. That’s because there’s a greater chance you’ll default on your loan than if you borrowed a smaller sum of money or had more time to pay it back.
- Economic conditions. Market conditions such as inflation, competition among lenders and cash lenders have on-hand also influence interest rates. Interest rates tend to be highest during times of high inflation.
🤓 Nerdy Tip
Business lenders typically quote interest as an annual percentage rate (APR). The APR represents how much you’ll pay to borrow money over one year, and includes both interest and fees (e.g. origination fees, underwriting fees, closing costs). Because it also accounts for fees, the APR is the best way to compare the cost of a business loan across lenders.Types of unsecured business loans
There are many different types of unsecured business funding options, including:
Business term loans
Term loans are likely what you imagine when you think of a business loan. These loans are lump sums of capital that you borrow from a lender and repay over a set period of time. Term loans can be a good option if you need to make a specific investment or purchase for your business.
Business lines of credit
Credit lines are a flexible form of financing that allow you to borrow up to a certain limit and only pay interest on the money you borrow. You then repay the funds and continue to draw on the line. Unsecured business lines of credit can be used for working capital, as well as other short-term expenses. These products are also commonly used as emergency funds.
» MORE: What is a working capital loan?
Invoice factoring
Invoice factoring lets you sell your unpaid invoices for cash advances. The factoring company takes control of your invoices and is responsible for collecting payments from your customers. Although factoring companies may want to see established invoicing practices and a certain amount of time in business, you may not have to provide a personal guarantee — since you’re selling an asset to them directly.
Merchant cash advance
With an MCA, a merchant cash advance company advances you cash based on your sales, and you repay them with a portion of your future sales. This type of financing is usually easier to qualify for than other business loans. Merchant cash advances are risky and expensive, however, and should be treated as an option of last resort.
How to get an unsecured business loan (6 steps)
Follow these six steps to get an unsecured business loan:
1. Determine your financing needs
You should consider how much funding you need and how much debt you can afford. NerdWallet’s business loan calculator can help you estimate payments and interest costs.
2. Evaluate your business’s qualifications
If you’re not securing your loan with collateral, your lender will rely more heavily on traditional business loan requirements, such as personal credit score, annual revenue and time in business.
Although online lenders often accept startups and borrowers with bad credit, these businesses may receive higher interest rates. Established businesses with good credit and strong finances will be able to access the most desirable rates and terms.
3. Compare lenders
Research different lenders to find the best choice for your business. As you compare your options, you should think about factors such as maximum loan amounts, interest rates, repayment terms and fees. You’ll also want to consider a lender’s application process, time to funding, customer service and reputation.
🤓 Nerdy Tip
Keep an eye out for predatory lenders who impose unfair or deceitful loan terms on a borrower, and target high-risk borrowers in particular. To avoid these lenders and scams, always look for transparent terms and rates, compare fees to reputable lenders and check to see if the lender reports to one of the three major credit bureaus.4. Submit an application
Although application requirements vary by lender, you’ll typically need to provide:
- Basic information about you and your business.
- Business and personal tax returns.
- Business and personal bank statements.
- Financial statements.
Online lenders often expedite the underwriting process by allowing you to connect your financial accounts directly to their platforms. You may be able to get a business loan from an online lender in as little as 24 hours. Banks and credit unions, on the other hand, may take several days, or even weeks.
5. Address lender questions
Sometimes during the review of your application, the lender will want to discuss information you’ve provided or ask for additional documents. Addressing lender questions and providing the information requested quickly can help expedite the review process.
Also, during this time, the lender may provide alternative loan options that you might more easily qualify for. For example, if the lender feels an unsecured loan is too risky, they may suggest you add a cosigner or that you consider a secured business loan.
6. Review loan terms
You’ll receive a business loan agreement after your application is approved. The document will contain the terms of your financing such as loan amount, interest rate, repayment period, payment amounts and schedule. It will also include the interest rate you’ll be charged and any fees that apply.
It’s important to review the agreement carefully to make sure the loan details you discussed with the lender match what’s spelled out in the agreement. If anything is unclear, speak with your lender before you commit to the loan.
How to compare unsecured business loans
Don't be afraid to shop around for a business loan. Comparing offers from a few lenders can help you be sure you're getting the best deal possible. Here are some things to look out for when sizing up unsecured loans for your business:
- Loan amount. Some lenders may not offer the amount you were hoping for. If you borrow less than what you need to fund your business goals, you may risk falling short of revenue targets, making it harder to pay off the loan.
- Interest rate and fees. These can vary widely across lenders. That’s why it’s best to compare each loan offer’s APR, which includes both the interest rate and any upfront fees. You can also use our business loan calculator to compare total costs across the life of each loan.
- Guarantee requirements. While you’re not required to put up a specific business asset as collateral for unsecured loans, you’ll likely be asked to guarantee the loan via a personal guarantee and/or Uniform Commercial Code lien instead. Make sure you know what you’re risking before putting pen to paper.
- Repayment terms. How long you have to repay your loan and how often you’re required to make payments all vary from lender to lender. Make sure your business has enough positive cash flow before committing to frequent payment terms or shorter-term loans. And don’t forget to ask about prepayment penalties — these are fees some lenders charge when you make additional payments.
🤓 Nerdy Tip
If your lender doesn’t provide an APR, you can calculate it by adding the total amount of fees to the original loan amount and calculating the interest on that amount. For example, if your loan amount is $100,000, with an interest rate of 5% and $4,000 in fees, you would first add the fees to the original loan amount to get a new loan amount of $104,000 ($100,000 + $4,000). Then, calculate the interest on this new loan amount to get the annualized payment of $5,200 ($104,000 x .05). Divide the payment by the original loan amount to get the APR of 5.2% ($5,200/$100,000).Alternatives to unsecured business loans
If you don’t think an unsecured business loan is a good option for your business, you might consider these alternatives:
- SBA loans. SBA loans are partially guaranteed by the U.S. Small Business Administration and issued by banks and credit unions. These loans offer long repayment terms and low interest rates. Although all SBA loans require a personal guarantee, you may not need to provide physical collateral for SBA 7(a) loans of $50,000 or less. You will, however, likely need good credit and strong finances to qualify.
- Business credit cards. If your time in business is too short to qualify for an online business loan, business credit cards for startups are typically available to companies of all ages. Business credit cards offer flexible, unsecured financing that you can use for everyday spending as well as larger purchases, depending on your credit limit. You’ll likely still need to provide a personal guarantee, though.
- Small-business grants. Small-business grants can be a good option if you want to avoid taking on debt — or can’t yet qualify for affordable financing. It can be time-consuming to find and apply for the right grant for your business — but if you can secure one, you have access to free funds you don’t need to repay.
- Crowdfunding. Crowdfunding can also be worth considering if your business doesn’t quite meet traditional loan requirements. You can create a business profile on a crowdfunding platform, like Kickstarter, and publish a funding goal to raise money from the public. Typically, you’ll offer some type of reward or equity in exchange for funds. Crowdfunding can be a particularly good choice for product-based businesses that have an internet following.
Frequently asked questions
Banks can give unsecured business loans, although they’ll likely be harder to qualify for than those from online lenders. National banks like Bank of America, Wells Fargo and PNC Bank all offer unsecured business funding.
It can be easy and fast to get an unsecured business loan, especially if you have good credit and strong finances. Startups and businesses with bad credit may have a more difficult time acquiring funding.
If you default on an unsecured business loan, your lender may turn the loan over to a collections agency in an attempt to recover payment. Your lender can also use the lien or personal guarantee they have in place to claim your business or personal assets to recoup their losses.
An unsecured loan for your business can help you build business credit if your lender reports payment activity to the commercial credit bureaus — and you make timely payments. If your lender reports to the commercial credit bureaus, and you don’t pay on time, however, your credit score can be negatively impacted.
Last updated on September 5, 2024
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms.
- Flexible payment options.
- Fast funding times.
- Accessible customer service.
- Reporting of payments to business credit bureaus.
- Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
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