Key takeaways
- Unsecured business loans don’t require collateral, but most still involve a personal guarantee or UCC lien.
- These loans tend to fund quickly, though interest rates and repayment terms are often less favorable than secured options.
- Startups and borrowers with bad credit may qualify, but businesses with strong credit will get the best rates.
An unsecured business loan prioritizes speed over cost. You don’t have to pledge equipment, inventory or real estate — and you can often get funded within a few days. But, you’ll usually pay more for that convenience.
Below, compare our picks for the best unsecured business loans or scroll down for more information on how to get one.
Best unsecured business loan options
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| Product | Max loan amount | Min. credit score | |
|---|---|---|---|
 Fora Financial - Online term loan Nerdwallet Rating 4.7 with NerdWallet Small Business | $1,500,000 | 570 | with NerdWallet Small Business |
 Accion Opportunity Fund Small Business Working Capital Loan Nerdwallet Rating 4.8 with NerdWallet Small Business | $250,000 | 620 | with NerdWallet Small Business |
 Bluevine - Line of credit Nerdwallet Rating 5.0 with NerdWallet Small Business | $200,000 | 625 | with NerdWallet Small Business |
 Fundbox - Line of credit Nerdwallet Rating 4.7 with NerdWallet Small Business | $250,000 | 600 | with NerdWallet Small Business |
 Headway Capital - Line of credit Nerdwallet Rating 4.8 with NerdWallet Small Business | $100,000 | 625 | with NerdWallet Small Business |
 Bank of America Business Advantage Unsecured Term Loan Nerdwallet Rating 5.0 with NerdWallet Small Business | $100,000 | 700 | with NerdWallet Small Business |
 OnDeck - Online term loan Nerdwallet Rating 4.9 with NerdWallet Small Business | $400,000 | 625 | with NerdWallet Small Business |
What is an unsecured business loan?
An unsecured business loan doesn't require physical collateral. Collateral is a specific business asset — like equipment, inventory or real estate — that the lender can seize if you don’t repay. But even though physical collateral isn’t required, that doesn’t mean there’s no risk to you. Most unsecured loans are still backed by either a personal guarantee or Uniform Commercial Code lien.
Personal guarantee vs. UCC lien
A personal guarantee makes you personally responsible for the debt if your business can’t repay. If you default, the lender can seize your personal assets to cover what you owe.
A UCC lien gives a lender the right to seize your business assets if the loan isn’t repaid. The lien may apply to specific assets or be a blanket lien, which covers all business assets needed to recover the debt.
❗Personal guarantees tend to be the rule, not the exception, for business financing. In fact, 59% of small businesses with outstanding debt say they've secured it with a personal guarantee — more than any other form of collateral, according to the Federal Reserve's Small Business Credit Survey. Only 10% of debtholders reported using no collateral or guarantee at all.
How do unsecured business loans work?
Unsecured business loans typically work like other types of small-business loans — you apply for a loan, receive funds and repay 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 verify collateral value. But that lack of collateral makes them riskier for lenders — which is why unsecured loans typically have higher interest rates.
Types of unsecured business loans
There are several types of unsecured business funding. In most cases, the choice comes down to how predictable your expense is:
- If you have a one-time, known cost ➡️ choose a term loan.
- If you have ongoing or unpredictable cash flow gaps ➡️ choose a business line of credit.
- If you have cash tied up in unpaid invoices ➡️ choose invoice factoring.
- If you can’t qualify for anything else ➡️ choose a merchant cash advance (but treat it as a last resort).
Business term loans
Best for: Specific investment or purchase for your business.
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 fixed period of time.
- Typical cost: 6.37% to 10.98% for bank loans; 14% to 99% for online loans.
- Speed: Same day to 30 days.
Business lines of credit
Best for: Working capital, short-term expenses and emergency funds.
Unsecured business lines of credit are a flexible form of financing that allow you to borrow up to an approved limit and pay interest only on the amount you use. As you repay the balance, the funds become available to borrow again.
- Typical cost: 10% to 99%.
- Speed: Same day to 30 days.
Invoice factoring
Best for: Business-to-business companies with cash tied up in outstanding invoices.
Invoice factoring lets you sell your unpaid invoices to a factoring company in exchange for cash advances. The company takes control of the invoices and collects payment directly from your customers.
Factoring companies may want to see established invoicing practices and some time in business. But, because you’re selling the asset directly, a personal guarantee often isn’t required.
- Typical cost: 10% to 79%.
- Speed: Same day to three days.
Merchant cash advance
Best for: Businesses with strong credit and debit card sales; last-resort option.
With a merchant cash advance (MCA), you get a cash advance based on your sales, which you’ll then repay with a portion of your future sales. MCAs are usually easier to qualify for than other types of business financing. They’re also among the most expensive.
Factor rates can translate to APRs well into the triple digits and repayment is often required daily or weekly from your sales — which can strain cash flow quickly. Use an MCA only after you’ve been unable to qualify elsewhere.
- Typical cost: 40% to 350%.
- Speed: Same day to two days.
How much do you need?
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.
Pros and cons of unsecured business loans
Pros
Fast access to funds.
No physical collateral required.
Startups and borrowers with bad credit may qualify.
Cons
Typically higher APRs than secured business loans (unsecured online term loans can start at around 14%, but reach up to 99%).
Personal guarantee or UCC lien likely required.
Less favorable terms (e.g., lower loan amounts, shorter repayment terms).
How to get an unsecured business loan
Follow these steps to get an unsecured business loan:
1. Determine your financing needs
Decide how much funding you need and how much debt your business can afford. NerdWallet’s business loan calculator can help you estimate your monthly payments and total interest costs.
2. Evaluate your business’s qualifications
Without collateral, lenders place greater emphasis on traditional business loan requirements, such as your personal credit score, annual revenue and time in business.
Although online lenders often accept startups and borrowers with bad credit, these businesses receive higher interest rates. Established businesses with good credit and strong finances get the best rates and terms.
3. Compare lenders
Research multiple small-business lenders to find the best choice for your business. Compare factors such as:
- Maximum loan amounts.
- Interest rates.
- Repayment terms.
- Fees.
- Application process.
- Funding speed.
- Customer service.
- Lender reputation.
🤓Nerdy Tip
Want to compare several offers at once? Try a business lending marketplace, like NerdWallet Small Business. You can submit one application and get matched with the best financing options based on your needs.4. Submit an application
Application requirements vary by lender, but 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 may speed up 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
Compare offers from a few lenders to 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 full amount you need. In fact, on average, small-business owners receive 75% of the amount they request — according to data from NerdWallet’s 2026 Small Business Loan Study. 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. Compare each loan’s APR, which includes both the interest rate and any upfront fees.
- 🗓️ Repayment terms. The length of your loan and payment frequency vary by lender. Make sure your business has sufficient cash flow before committing to frequent payment terms or shorter loan terms. Ask about prepayment penalties, which some lenders charge if you repay early.
- ✍️ Guarantee requirements. While unsecured loans don’t require specific business assets as collateral, you’ll likely have to agree to a personal guarantee and/or UCC lien. Make sure you understand the risks before signing.
Alternatives to unsecured business loans
Here are a few other financing options to consider (that don’t require collateral):
- If you have good credentials and need $50,000 or less. An SBA 7(a) Small loan, SBA Express loan or SBA Export Express loan may not require collateral for amounts of $50,000 or less. But if you need more than that, SBA lenders may require it. Read more about SBA loan collateral requirements.
- If you have strong personal credit. If you’re a newer business with strong personal credit and need a smaller amount of financing, an unsecured personal loan may help you get funds for your business without putting up collateral.
- If you need to cover daily expenses. If your business is new and lacks collateral, steady revenue or a long track record, a business credit card can cover small daily expenses. However, interest charges can add up quickly if you carry a balance.
- If you want to avoid debt. Grants are competitive and rarely cover everything, but they’re free money for eligible businesses. NerdWallet offers a comprehensive list of small-business grants to help you get started.
Frequently asked questions
Do banks give unsecured business loans?
Yes — banks can offer unsecured business loans, but they’re often harder to qualify for than loans from online lenders. National banks like Bank of America, Wells Fargo and PNC Bank 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 find it more difficult to qualify.
What happens if you default on an unsecured business loan?
If you default on an unsecured business loan, the lender may send the debt to a collections agency. Your lender can also enforce a UCC lien or personal guarantee to claim your business or personal assets to recoup their losses.
Do unsecured business loans improve business credit?
Yes — an unsecured business loan can help build your business credit if the lender reports payment activity to the commercial credit bureaus and you make payments on time. Late payments, however, can harm your credit score.
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.
Article sources
NerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer-reviewed studies, government websites, academic research and interviews with industry experts. All content is fact-checked for accuracy, timeliness and relevance. You can learn more about NerdWallet's high standards for journalism by reading our editorial guidelines.
- 1.Federal Reserve Banks. 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey.
- 2.NerdWallet. 2026 NerdWallet Business Loan Study.
