Unsecured business loans

What is an unsecured business loan?

It is a term loan or line of credit approved on the strength of your cash flow and credit, without a lien on a particular asset. The lender's protection is your personal guarantee, which makes you personally liable if the business cannot pay, and usually a blanket UCC lien, which gives the lender a claim on business assets in general if you default.

Because the lender has no specific asset to sell, it prices for the risk. The same business will pay more for an unsecured loan than for equipment financing or a real estate loan, and the lender will keep the amount smaller.

Who qualifies for an unsecured business loan?

Banks want two years in business, owner credit of 680 or higher, profitable returns and a DSCR above 1.25, and they usually cap unsecured amounts around $100,000 to $250,000. Online lenders accept one year, 650 credit and about $12,000 a month in deposits, in exchange for a higher rate and a shorter term.

• Declined most often: businesses with a loss on the last return, owners with recent late payments or collections, and bank statements with frequent overdrafts or existing daily payment debt.
• If you are being declined for lack of collateral, see financing with no collateral for the products that do not need it.

What does an unsecured business loan really cost?

A typical example: you borrow $100,000 over three years at 18% APR from an online lender with a 3% origination fee. You receive $97,000, pay about $3,615 a month, and pay roughly $30,000 in interest plus the $3,000 fee. The same loan from a bank at 10% would cost about $3,230 a month and roughly $16,000 in interest.

The spread between bank and online pricing is wider for unsecured loans than for any other product, because collateral is what normally narrows it. That makes it worth applying to banks first even if they are slower. Compare both in the business loan calculator.

How do you qualify, and what documents do you need?

Online lenders typically ask for three to six months of bank statements, formation documents and an ID, with a tax return for larger amounts. Banks want two years of business and personal tax returns, interim financials, a debt schedule and a personal financial statement. Both run your personal credit.

Pull the list from our document checklist, and check your business credit score first, since unsecured lenders rely on it more than secured lenders do. Paying down personal card balances a month before applying can lift your score enough to change the rate tier.

How long does an unsecured business loan take?

Online lenders typically decide in a day and fund in one to seven business days. Banks take two to four weeks. There is no appraisal, no title work and no equipment inspection, which is why unsecured loans are among the fastest products for an established business.

The thing that slows them down is verification: lenders confirm revenue by connecting to your bank account, and they may call to confirm ownership and purpose. Have the account login ready and answer the phone. See how long business loans take for more.

When should you choose something else?

Choose a secured option if you have the asset: equipment financing for a purchase or an SBA 7(a) loan for larger amounts, because both cost less and lend more. Choose a line of credit, which is often also unsecured, if the need is recurring rather than one time.

Be honest with yourself about the guarantee. An unsecured loan that fails is collected from you personally, including from your home in many states. Unsecured describes the lender's position, not yours.

How do you apply for an unsecured business loan?

Apply once on this site and your application reaches banks and online lenders that make unsecured loans at your revenue level, alongside secured options that might cost less if you have an asset to pledge. It is free for your business, and we are paid the same whichever lender you choose. You can also ask your AI assistant to apply through our MCP server; it reads your statements, fills the application and submits it.