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Best Unsecured Business Loans: Compare Your Options

By Randa Kriss, Edited by Ryan Lane | Last updated on February 17, 2023
Unsecured business loans offer fast funding because they don't require physical collateral, but your assets may still be at risk.

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Unsecured business loans don’t require collateral like equipment, inventory or property to get financing. Instead, you’ll probably have to sign a personal guarantee — which gives a lender the right to go after your personal assets (think a home, car or cash) if you fail to repay your unsecured debt. Some lenders might place a lien on your business assets, too.
Unsecured loans usually come with higher interest rates than secured ones do. But these small-business loans can be a good choice if your company lacks physical collateral or needs funding fast.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

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Here are 6 unsecured business loans

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Lender
NerdWallet Rating
Max loan amount
Min. credit score
Next steps

Bluevine - Line of credit

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5.0/5

Best for Fast unsecured business loans

$250,000625

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OnDeck - Line of credit

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5.0/5

Best for Unsecured business lines of credit

$100,000625

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Fora Financial - Online term loan

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4.5/5

Best for Unsecured business loans for bad credit borrowers

$1,400,000500

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Fundbox - Line of credit

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5.0/5

Best for Unsecured business loans for startups

$150,000600

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Credibility Capital - Online term loan

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4.5/5

Best for Long-term unsecured business loans

$500,000650

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OnDeck - Online term loan

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5.0/5

Best for Short-term unsecured business loans

$250,000625

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Here are 6 unsecured business loans

Best for Fast unsecured business loans

Bluevine

Max Amount

$250,000

Min. Credit Score

625

Best for Unsecured business lines of credit

OnDeck

Max Amount

$100,000

Min. Credit Score

625

Best for Unsecured business loans for bad credit borrowers

Fora Financial

Max Amount

$1,400,000

Min. Credit Score

500

Best for Unsecured business loans for startups

Fundbox

Max Amount

$150,000

Min. Credit Score

600

Best for Long-term unsecured business loans

Credibility Capital

Max Amount

$500,000

Min. Credit Score

650

Best for Short-term unsecured business loans

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Our pick for

Fast unsecured business loans

Bluevine’s line of credit can fund in as little as 12 hours.

Bluevine - Line of credit

5.0
NerdWallet rating 
Read Review

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%
Bluevine's line of credit provides fast working capital for short-term borrowing needs.
May fund quickly
5.0
NerdWallet rating 

Max loan

$250,000

Min. Credit score

625

Apr range

20.00-50.00%

Bluevine's line of credit provides fast working capital for short-term borrowing needs.
Read Review

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Our pick for

Unsecured business lines of credit

OnDeck is willing to work with borrowers who have credit scores as low as 625, though you may face high APRs.

OnDeck - Line of credit

5.0
NerdWallet rating 
Read Review

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Max Loan Amount
$100,000
Min. credit score
625
Est. APR
29.90-65.90%
OnDeck offers a fast line of credit for small-business owners with less-than-stellar credit who need to manage cash flow or buy inventory.
May fund quickly
5.0
NerdWallet rating 

Max loan

$100,000

Min. Credit score

625

Apr range

29.90-65.90%

OnDeck offers a fast line of credit for small-business owners with less-than-stellar credit who need to manage cash flow or buy inventory.
Read Review

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Our pick for

Unsecured business loans for bad credit borrowers

Fora Financial has a minimum credit score requirement of 500 and you can qualify with as little as six months in business.

Fora Financial - Online term loan

4.5
NerdWallet rating 
Read Review

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Max Loan Amount
$1,400,000
Min. credit score
500
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.
4.5
NerdWallet rating 

Max loan

$1,400,000

Min. Credit score

500

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.
Read Review

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Our pick for

Unsecured business loans for startups

Fundbox makes loans to companies with just six months in business.

Fundbox - Line of credit

5.0
NerdWallet rating 
Read Review

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Max Loan Amount
$150,000
Min. credit score
600
Est. APR
10.10-79.80%
Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly
5.0
NerdWallet rating 

Max loan

$150,000

Min. Credit score

600

Apr range

10.10-79.80%

Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
Read Review

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Our pick for

Long-term unsecured business loans

Credibility Capital offers loans with terms as long as five years.

Credibility Capital - Online term loan

4.5
NerdWallet rating 
Read Review

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Max Loan Amount
$500,000
Min. credit score
650
Est. APR
9.49-15.49%
Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.
4.5
NerdWallet rating 

Max loan

$500,000

Min. Credit score

650

Apr range

9.49-15.49%

Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.
Read Review

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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

5.0
NerdWallet rating 
Read Review

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
29.90-97.30%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
5.0
NerdWallet rating 

Max loan

$250,000

Min. Credit score

625

Apr range

29.90-97.30%

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
Read Review

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Minimum requirements for a loan

The Nerds are here to help you find the right loans for your business needs.

Credit Score

550 or higher

Annual Revenue

at least $50k

Time in Business

6 months or more

How Much Do You Need?

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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 UCC 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 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.
» MORE: Differences between secured and unsecured business loans

Types of unsecured business loans

There are many different types of unsecured business loans, including:
  • 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. Business lines of credit can be used for working capital, as well as other short-term expenses. These products are also used as emergency funds.
  • Invoice factoring. Invoice factoring lets you sell your unpaid invoices for cash advances. The factoring company then 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 lender 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. MCAs are risky and expensive, however, and should be treated as an option of last resort.

Pros and cons of unsecured business loans

The benefits of unsecured business loans include:
  • Speed. Applications can usually be processed quickly.
  • Collateral not required. You can get financing even if your business doesn’t have many physical assets.
The drawbacks of unsecured business loans include:
  • Can be expensive. These loans tend to have higher APRs than those secured by collateral.
  • Assets can still be at risk. You’ll probably have to provide a personal guarantee, which puts your personal assets on the line, or a business lien, which allows a lender to seize the assets your business does have.

How to get an unsecured business loan

You may be able to get an unsecured business loan from both traditional financial institutions, like banks and credit unions, and online lenders.
To qualify for an unsecured loan from a bank, you’ll likely need multiple years in business, strong personal credit and excellent annual revenue. In comparison, online lenders may have more flexible qualifications and can be faster to fund.
Government-backed SBA 7(a) loans offered by banks and other lenders may not need collateral if they're less than $25,000. But SBA loans do require an unlimited personal guarantee from anyone who owns more than 20% of a business.
Lenders will typically assess your personal creditworthiness when you apply for a business loan without collateral. They’ll also usually consider how many years you’ve been in business, as well as your annual revenue.
» MORE: How to qualify for a small-business loan

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:
If your time in business is too short to qualify for an online business loan:
Business credit cards for startups are typically available to businesses 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.
If you don’t meet other qualification requirements or want to avoid debt:
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.
Similarly, crowdfunding can 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.

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on February 17, 2023

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