Unsecured business loans can offer fast funding because they don't require physical collateral, but your business and personal assets may still be at risk. Compare options today by selecting your business entity.
Senior Writer & Content Strategist | Small business, business banking, business loans
Randa Kriss is a senior writer and NerdWallet authority on small business. She has nearly a decade of experience in digital content. Prior to joining NerdWallet in 2020, Randa worked as a writer at Fundera, covering a wide variety of small-business topics and specializing in the lending and banking spaces. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona University (formerly Iona College).
Sally Lauckner has over a decade of experience in print and online journalism. Before joining NerdWallet, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She has a master's in journalism from New York University and a bachelor's in English and history from Columbia University. Email: slauckner@nerdwallet.com.
Sally Lauckner has over a decade of experience in print and online journalism. Before joining NerdWallet, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She has a master's in journalism from New York University and a bachelor's in English and history from Columbia University. Email: slauckner@nerdwallet.com.
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NerdWallet's small-business loans content, including ratings, recommendations and reviews, is overseen by a team of writers and editors who specialize in business lending. Their work has appeared in The Associated Press, The Washington Post, MarketWatch, Nasdaq, Entrepreneur, ABC News, MSN and other national and local media outlets. Each writer and editor follows NerdWallet's strict guidelines for editorial integrity to ensure accuracy and fairness in our coverage.
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Senior Writer & Content Strategist | Small business, business banking, business loans
Randa Kriss is a senior writer and NerdWallet authority on small business. She has nearly a decade of experience in digital content. Prior to joining NerdWallet in 2020, Randa worked as a writer at Fundera, covering a wide variety of small-business topics and specializing in the lending and banking spaces. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona University (formerly Iona College).
Sally Lauckner has over a decade of experience in print and online journalism. Before joining NerdWallet, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She has a master's in journalism from New York University and a bachelor's in English and history from Columbia University. Email: slauckner@nerdwallet.com.
Sally Lauckner has over a decade of experience in print and online journalism. Before joining NerdWallet, Sally was the editorial director at Fundera, where she built and led a team focused on small-business content. Her prior experience includes two years as a senior editor at SmartAsset, where she edited a wide range of personal finance content, and five years at the AOL Huffington Post Media Group, where she held a variety of editorial roles. She has a master's in journalism from New York University and a bachelor's in English and history from Columbia University. Email: slauckner@nerdwallet.com.
NerdWallet's content is
fact-checked for accuracy, timeliness, and relevance by humans.
It undergoes a thorough review process involving writers and editors to ensure
the information is as clear and complete as possible. Learn more by checking
our
Editorial Guidelines.
Content was accurate at the time of publication.
Why trust NerdWallet
250+ small-business products reviewed and rated by our team of experts.
80+ years of combined experience covering small business and personal finance.
50+ categories of the best business loan selections.
NerdWallet's small-business loans content, including ratings, recommendations and reviews, is overseen by a team of writers and editors who specialize in business lending. Their work has appeared in The Associated Press, The Washington Post, MarketWatch, Nasdaq, Entrepreneur, ABC News, MSN and other national and local media outlets. Each writer and editor follows NerdWallet's strict guidelines for editorial integrity to ensure accuracy and fairness in our coverage.
Advertiser disclosure
You’re our first priority.
Every time.
We believe everyone should be able to make financial decisions with
confidence. And while our site doesn’t feature every company or
financial product available on the market, we’re proud that the guidance
we offer, the information we provide and the tools we create are
objective, independent, straightforward — and free.
So how do we make money? Our partners compensate us. This may influence
which products we review and write about (and where those products
appear on the site), but it in no way affects our recommendations or
advice, which are grounded in thousands of hours of research. Our
partners cannot pay us to guarantee favorable reviews of their products
or services. Here is a list of our partners .
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.
Charges an origination fee.
Fora Financial stands out as a fast funding option for borrowers who may fall short of qualifying for traditional bank financing. The lender can work with startups and borrowers with bad credit — as long as they have strong revenue. Fora offers large maximum loan amounts and can provide prepayment discounts for those who repay early.
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.
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.
Charges an origination fee.
Fora Financial stands out as a fast funding option for borrowers who may fall short of qualifying for traditional bank financing. The lender can work with startups and borrowers with bad credit — as long as they have strong revenue. Fora offers large maximum loan amounts and can provide prepayment discounts for those who repay early.
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.
Accion: Best for women- and minority-owned businesses
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
Slower processing speed compared with online lenders.
Charges an origination fee.
Not available in all U.S. states.
Accion Opportunity Fund (AOF) stands out as an affordable option for business owners who can’t qualify for traditional financing. AOF offers competitive interest rates, long repayment terms and flexible qualification requirements. Startups and borrowers with bad credit may qualify. This lender also targets its funding efforts toward minority-, women- and low-to-moderate-income entrepreneurs.
Minimum credit score: 600.
Minimum time in business: 12 months.
Minimum annual revenue: $50,000.
Pros
Loan amounts from $5,000 to $250,000.
Customized loan terms.
No prepayment penalty.
Cons
Slower processing speed compared with online lenders.
Charges an origination fee.
Not available in all U.S. states.
Accion Opportunity Fund (AOF) stands out as an affordable option for business owners who can’t qualify for traditional financing. AOF offers competitive interest rates, long repayment terms and flexible qualification requirements. Startups and borrowers with bad credit may qualify. This lender also targets its funding efforts toward minority-, women- and low-to-moderate-income entrepreneurs.
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.
Charges an origination fee.
BlueVine offers an unsecured line of credit that maxes out at $250,000, which can be useful for larger purchases. Borrowers are required to sign a personal guarantee for a BlueVine line of credit.
Minimum credit score: 700.
Minimum time in business: 24 months.
Minimum annual revenue: $100,000.
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.
Charges an origination fee.
BlueVine offers an unsecured line of credit that maxes out at $250,000, which can be useful for larger purchases. Borrowers are required to sign a personal guarantee for a BlueVine line of credit.
Cash can be available within the same business day (does not apply in California or Vermont).
Accepts borrowers with a minimum credit score of 625.
Streamlined application process with minimal documentation required.
Can be used to build business credit.
Cons
Cannot fund North Dakota-based businesses.
Requires frequent (daily or weekly) repayments.
Interest rates can be high compared with traditional lenders.
Charges origination fee.
OnDeck’s short-term loan is a good option for making one-time investments in your business, such as opening a new location or renovating your space. This loan offers fast funding (sometimes as quickly as the same day) for borrowers who may not qualify for more traditional financing options. OnDeck’s short-term loan can also be used to establish and build business credit — as the lender reports your payment history to the three commercial credit bureaus.
Minimum credit score: 625.
Minimum time in business: 12 months.
Minimum annual revenue: $100,000.
Must have business bank account.
Pros
Cash can be available within the same business day (does not apply in California or Vermont).
Accepts borrowers with a minimum credit score of 625.
Streamlined application process with minimal documentation required.
Can be used to build business credit.
Cons
Cannot fund North Dakota-based businesses.
Requires frequent (daily or weekly) repayments.
Interest rates can be high compared with traditional lenders.
Charges origination fee.
OnDeck’s short-term loan is a good option for making one-time investments in your business, such as opening a new location or renovating your space. This loan offers fast funding (sometimes as quickly as the same day) for borrowers who may not qualify for more traditional financing options. OnDeck’s short-term loan can also be used to establish and build business credit — as the lender reports your payment history to the three commercial credit bureaus.
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.
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 offers a fast and flexible business line of credit that’s a good option for those who can’t qualify for traditional financing. The lender can work with startups and businesses with low revenue. Headway can fund applications as fast as the next day after approval. Unlike some online lines of credit, however, you’ll likely have to pay a draw fee to access your funds from Headway.
Minimum credit score: 625.
Minimum time in business: Six months.
Minimum annual revenue: $50,000.
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 offers a fast and flexible business line of credit that’s a good option for those who can’t qualify for traditional financing. The lender can work with startups and businesses with low revenue. Headway can fund applications as fast as the next day after approval. Unlike some online lines of credit, however, you’ll likely have to pay a draw fee to access your funds from Headway.
Financing available within one business day after approval.
Simple application with minimal documentation required.
Low minimum credit score, time in business and annual revenue requirements.
No prepayment penalties, account maintenance fees or inactivity fees.
Cons
Rates are high compared with traditional banks.
Weekly repayments required over a short term (maximum of 24 weeks).
Fundbox is one of the best online line of credit options for startups. Businesses with just three months in business may be able to qualify. Fundbox is also a good option for borrowers with bad credit and businesses with low revenue. The lender offers a flexible short-term line of credit that can fund within one business day after approval.
Minimum credit score: 600.
Minimum time in business: 3 months.
Minimum annual revenue: $30,000.
Pros
Financing available within one business day after approval.
Simple application with minimal documentation required.
Low minimum credit score, time in business and annual revenue requirements.
No prepayment penalties, account maintenance fees or inactivity fees.
Cons
Rates are high compared with traditional banks.
Weekly repayments required over a short term (maximum of 24 weeks).
Fundbox is one of the best online line of credit options for startups. Businesses with just three months in business may be able to qualify. Fundbox is also a good option for borrowers with bad credit and businesses with low revenue. The lender offers a flexible short-term line of credit that can fund within one business day after approval.
Not available in North Dakota, South Dakota or Nevada.
Rates can be high compared with traditional lenders.
Bluevine stands out for its fast funding speed and flexible qualification requirements. To get a line of credit, you can apply quickly online and receive funding in as little as 24 hours. Newer businesses and borrowers with bad credit may be able to qualify. Bluevine also offers a larger credit line maximum compared to some competitors and doesn’t charge draw or account maintenance fees.
Minimum credit score: 625.
Minimum time in business: 12 months.
Minimum annual revenue: $120,000.
No bankruptcies in the past year.
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.
Not available in North Dakota, South Dakota or Nevada.
Rates can be high compared with traditional lenders.
Bluevine stands out for its fast funding speed and flexible qualification requirements. To get a line of credit, you can apply quickly online and receive funding in as little as 24 hours. Newer businesses and borrowers with bad credit may be able to qualify. Bluevine also offers a larger credit line maximum compared to some competitors and doesn’t charge draw or account maintenance fees.
A closer look at our picks for the best unsecured business loans
Fora Financial: Best for borrowers with bad credit
Pros
Cash can be available quickly.
Get a discount for prepaying.
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.
Charges an origination fee.
Why we picked it
Fora Financial may be able to fund your business even if your credit score is below 600 and you’ve only been in business for 6 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 which can often cost much more when compared to other lenders. Additionally, the longest term is less than two years, meaning your payments will likely be high.
Can be a good option if:
You have bad personal credit.
You want a discount for prepaying your loan.
May not be a fit if:
Your annual revenue is less than $240000.
You want to build business credit.
How to qualify
To qualify for an unsecured loan from Fora Financial, you’ll need to meet the following minimum requirements:
Credit score: 570 or higher.
Time in business: 6 months
Annual revenue: $240000 (at least $20,000 per month) or more.
Accion Opportunity Fund: Best for women- and minority-owned businesses
Pros
Loan amounts from $5,000 to $250,000.
Customized loan terms.
No prepayment penalty.
Cons
UCC lien filed for loans greater than $50,000.
Slower processing speed compared with online lenders.
Not available in all U.S. states.
Why we picked it
Accion Opportunity Fund is a nonprofit community development financial institution (CDFI) with a mission of providing access to capital for traditionally underserved business communities, including women and minorities. Accion offers loans up to $250000 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.
Can be a good option if:
You have bad personal credit.
You’re a women-, minority- or veteran-owned business.
May not be a fit if:
You want funding in less than one week.
You have less than 12 months in operation.
How to qualify
To qualify for an unsecured loan from Accion Opportunity Fund, you’ll need to meet the following minimum requirements:
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.
Charges an origination fee.
Why we picked it
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.
Can be a good option if:
You have strong personal credit and at least 24 months in business.
You want to build business credit.
May not be a fit if:
You’re a startup or have a lower credit score.
You need fast access to funds.
How to qualify
To qualify for an unsecured loan from Bank of America, you’ll need to meet the following minimum requirements:
Cash can be available within the same business day (does not apply in California or Vermont).
Accepts borrowers with a minimum credit score of 625.
Streamlined application process with minimal documentation required.
Can be used to build business credit.
Cons
Cannot fund North Dakota-based businesses.
Requires frequent (daily or weekly) repayments.
Interest rates can be high compared with traditional lenders.
Charges origination fee.
Why we picked it
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.
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.
Why we picked it
Headway Capital’s line of credit has flexible requirements. Borrowers may qualify if they meet following minimum requirements: 6 months in business, a 625 credit score and $50000 in annual revenue. If approved, you can be funded as quickly as the following business day. Unlike many other online lenders, 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 cash flow. The tradeoffs involve higher rates and potential for draw fees.
Can be a good option if:
You have at least 6 months in business.
You have bad personal credit.
You want fast access to working capital.
May not be a fit if:
You need more than $100000 in funding.
You want to build business credit.
You don’t want to pay a draw fee on your credit line.
How to qualify
To qualify for an unsecured line of credit from Headway Capital, you’ll need to meet the following minimum requirements:
Financing available within one business day after approval.
Simple application with minimal documentation required.
Low minimum credit score, time in business and annual revenue requirements.
No prepayment penalties, account maintenance fees or inactivity fees.
Cons
Rates are high compared with traditional banks.
Weekly repayments required over a short term (maximum of 24 weeks).
Why we picked it
Fundbox offers a startup-friendly unsecured line of credit to businesses that have only been in business for 3 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 interest rates, short terms and frequent payments, which can put your business at risk of default if you’re not careful.
Can be a good option if:
You need funding within a few days.
You want to build business credit.
May not be a fit if:
You need more than $250000 in business capital.
You don’t have the cash flow to support weekly payments.
How to qualify
To qualify for an unsecured line of credit from Fundbox, you’ll need to meet the following minimum requirements:
Not available in North Dakota, South Dakota or Nevada.
Rates can be high compared with traditional lenders.
Why we picked it
Bluevine is an online lender that offers unsecured lines of credit up to $250000, 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.
Can be a good option if:
You need fast access to working capital.
You want to build business credit.
May not be a fit if:
You’re a brand-new or pre-revenue business.
You want to repay funds over a long period of time.
How to qualify
To qualify for an unsecured line of credit from Bluevine, you’ll need to meet the following minimum requirements:
An unsecured business loan is a type of financing that doesn't require you to pledge physical collateral, which are assets like business equipment, inventory or real estate that the lender can take if you fail to repay your loan. But even though physical collateral isn’t required, that doesn’t mean you’ll necessarily be off the hook if you can’t repay an unsecured loan; most unsecured loans are backed by either a personal guarantee or Uniform Commercial Code lien.
You can get an unsecured business loan from banks, credit unions and online lenders. You’ll find the most competitive interest rates through banks and credit unions, while online lenders tend to have more flexible qualification requirements.
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.
Personal Guarantee vs. UCC Lien
A personal guarantee holds you personally responsible for the debt if your business cannot pay, meaning the lender can seize your personal assets to recover its losses in the case of default.
A UCC lien gives a lender the right to seize your business assets if you’re unable to repay your loan. Your lender may file a lien on specific assets, or it may file a blanket lien, which allows it to seize any business assets necessary to recover its losses.
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.
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
Follow these steps to get an unsecured business loan:
1. Determine your financing needs
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
Since 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 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 that take advantage of borrowers — particularly borrowers who have poor credit or urgent funding needs — with unfair or misleading loan terms. To avoid these lenders and scams, look for transparent terms and rates and avoid lenders that pressure you to act quickly or have terms that seem too good to be true.
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.
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 get 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.
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).
Alternatives to unsecured business loans
Here are a few other financing options to consider (that don’t require collateral):
SBA loans. If you only need $50,000 or less in financing, an SBA 7(a) small loan, SBA Express loan or SBA Export Express loan may not require collateral. But if you need more than that, an SBA lender may require collateral. Read more about SBA loan collateral requirements.
Personal loans. If you have strong personal credit and don’t need a lot of money, an unsecured personal loan may help you get funds for your business without putting up collateral.
Business credit cards. For newer businesses without collateral, steady revenue or an extensive track record, business credit cards can help manage small, daily expenses or unexpected costs. Just keep in mind that high interest costs can add up quickly if you carry a balance.
Small-business grants. Although they can be competitive and may not fully cover your funding needs, grants provide free money for those who qualify. NerdWallet includes a large list of small-business grants to help you get started.
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.
Is it hard to get an unsecured business loan?
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.
What happens if you default on an unsecured business loan?
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.
Do unsecured business loans improve business credit?
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 June 4, 2025
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4.5 Excellent
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.
