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Published: Jul 21, 2023 20 min read

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Loans best for small to mid sized businesses who need capital, FAST

  • Loan Amounts: $10,000 to $500,000
  • Average Yearly Revenue requirements: $250,000
  • Minimum Credit Score: 600 FICO
  • Minimum Time in Business to apply: 6 months
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Applying won’t affect credit score

  • Loan Amounts: $5,000 to $250,000
  • Average Yearly Revenue requirements:$100,000
  • Minimum Credit Score: 625 FICO
  • Minimum Time in Business to apply: 1 year
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Merchant cash advances, invoice factoring, equity financing, and debt financing option

  • Loan Amounts: Up to $5 million
  • Average Yearly Revenue requirements: $120,000
  • Minimum Credit Score: 620 FICO
  • Minimum Time in Business to apply: 1 year
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No cost and no credit check application that can be filled out in minutes

  • Loan Amounts: Up to $3 million
  • Average Yearly Revenue requirements: $200,000
  • Minimum Credit Score: 620 FICO
  • Minimum Time in Business to apply: 1 year
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Named "Best Small Business Loan with a Low APR" by Money.com in January 2020

  • Loan amounts: $25K - $500K
  • Average Yearly Revenue requirements: $50,000
  • Min. Credit Score: 620 FICO
  • Min. Time in Business to apply: 2 years

Unlike secured loans, unsecured business loans don't require collateral (though they often require personal guarantees). These loans are an option for startups or established businesses that need access to capital in order to grow but may need help to secure business financing from traditional banks or other financial institutions. They may also be a solution for small business owners who want to avoid risking their personal or business assets by pledging them as collateral.

Unsecured loans generally come in two forms: business loans or business lines of credit. Business loans offer borrowers a lump sum of money, while business lines of credit (LOC) act like credit cards, allowing borrowers to access funding as needed. Compared to other lending products, unsecured business loans often come at the cost of higher rates and shorter repayment terms.

To help you find the best unsecured business loan, we've reviewed some well-known online lenders offering quick access to capital, minimal fees and lenient eligibility requirements. Read on to find out more.

Our Top Picks for the Best Unsecured Business Loans

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Best Unsecured Business Loan Reviews

Pros
  • Apply in 10 minutes, and receive a decision the same day
  • Dedicated, U.S-based advisor available six days a week
  • Transparent pricing with SMART Box Capital Comparison tool
  • Helps build business credit by reporting to credit bureaus
  • Offers loyalty benefits
Cons
  • Requires one year in business and annual revenue of $100K
  • Borrowing costs can be high
  • Not available in South Dakota, North Dakota or Nevada
HIGHLIGHTS
LOC Limit
$6,000 to $100,000
Term Loan Amounts
$5,000 to $250,000
Minimum Credit Score
625
Fees
0.00% to 4.00% one-time loan origination fee, $20 monthly maintenance fee LOC
Term Lengths
3 to 24 months

Why we chose this company: OnDeck offers loans with business loan terms starting at three months, which is much shorter than many other companies we evaluated.

For businesses looking to avoid long-term debt, OnDeck might be a great fit. Terms length are on the shorter side: For loans, repayment terms are three to 24 months, and lines of credit have 12-month terms.

Unlike most competitors, OnDeck only uses soft credit pulls that don't affect personal credit scores, and reports payments to business credit bureaus so borrowers can grow their business credit scores. Its SMART Box Capital Comparison Tool is another unique feature, which allows customers to see the terms of their loan upfront, including the loan’s total cost of capital, APR, disbursement amounts, and monthly repayments.

Another way OnDeck differentiates itself from competitors is through its loyalty program. Repeat borrowers can have the interest on their previous loans waived upon qualifying for additional loans. They are also more likely to pay lower interest and origination fees on future loans, depending on their credit and business income.

One major drawback of working with OnDeck, however, is that its short loan terms and weekly repayment schedule can make payments high.

Pros
  • Approval decisions in as little as five minutes
  • Funds may be available as soon as 24 hours
  • Available to businesses operating for only 6+ months
  • Credit line replenishes as you make repayments
  • Only pay interest on funds used
Cons
  • High costs due to high rates and frequent payments
  • Monthly revenue requirement of $10K or more
HIGHLIGHTS
LOC Limit
$5,000 to $250,000
Minimum Credit Score
625
Fees
No monthly fees
Term Lengths
6 or 12 months

Why we chose this company: Bluevine’s funding process is among the fastest on our list. The company can verify a borrower's eligibility in as little as five minutes and deliver funds on the same day.

For a $15 fee, Bluevine also offers quicker transfers, ensuring funds are available within hours. And unlike similar online lenders, which require more than a year of business operations, Bluevine accepts businesses operating for as little as six months but not more than a year.

Borrowers can draw from Bluevine’s lines of credit as needed and only pay for the amount they use. However, borrowers must repay the credit lines in 26 weekly or 12 monthly payments, which lacks the flexibility provided by competitors. Additionally, these repayment terms can result in higher payments.

Lastly, while Bluevine accepts businesses that have been in operation for a relatively short time, these must demonstrate a steady revenue stream or a higher bank account balance to qualify.

Pros
  • Accepts applicants with six months or less in business
  • Discounts for early repayment
  • Funds may be available within 24 hours
  • Equipment financing options
Cons
  • Requires $250K in annual revenue
  • High interest rates and daily or weekly repayment terms
  • Loans only; doesn't offer lines of credit
HIGHLIGHTS
Term Loan Amounts
$10,000 to $400,000
Minimum Credit Score
600 for unsecured business loans, 650 for equipment loans
Fees
No monthly or origination fees, 1% equipment cost fee for equipment loans
Term Lengths
4 to 24 months for business loans, 36 to 54 months for equipment loans

Why we chose this company: National Funding offers unsecured small business loans (up to $400,000) and equipment financing (up to $150,000). The lender requires only six months in operation to qualify.

Unlike many competitors, National Funding offers larger unsecured small business loans for businesses that have been in operation for as little as six months. However, the company does require an annual sales minimum of $250,000.

National Funding’s equipment loans — which can be especially helpful for brick-and-mortar businesses looking to purchase equipment or expand — don't come with any upfront costs or require down payments. Funds can be used for both used and new equipment purchases or rentals.

This lender also differentiates itself from competitors by offering incentives for early repayment. While other lenders may lack early payment penalties, National Funding goes further by offering discounts for early loan payoff. Borrowers can get 6% off their remaining balance on equipment loans paid early, and 7% off small business loan balances paid in full within 100 days of borrowing.

National Funding's loans may cost more than those of other competitors due to high rates and daily or weekly repayment terms. Its loans may work best for established small businesses with consistent revenue or high bank balances that allow them to make more frequent payments.

Pros
  • Low credit score (600) and annual income requirement ($100K)
  • Accepts applicants with six months or less in business
  • Transparent about line of credit fees
  • Option to adjust repayment plan each time you draw funds
  • Applying does not affect your credit score
Cons
  • Offers a relatively low maximum credit limit
  • Only offers weekly payments unless you enroll in Fundbox Flex Pay for $99 per month
  • Repayment terms may be too short for some business owners
HIGHLIGHTS
LOC Limit
$1,000 to $150,000
Minimum Credit Score
600
Fees
No monthly or origination fees
Term Lengths
3 or 6 months

Why we chose this company: Startups seeking smaller amounts of capital quickly will find Fundbox to be an ideal option. Additionally, with Fundbox Flex Pay ($99 per month), business owners benefit from lower fees and the convenience of monthly payments instead of weekly ones.

Fundbox solely offers lines of credit. However, unlike competitors, it allows borrowers to apply for and withdraw funding directly from the Fundbox mobile app. The mobile app also shows fees upfront. Fundbox’s line of credit calculator also helps make Fundbox one of the most transparent and easy-to-use online lenders.

Besides providing a simple online application requiring minimal documentation, Fundbox uses artificial intelligence to expedite approval. This allows the company to offer three-minute loan approvals and next-day funding.

Fundbox offers an add-on with helpful features with its Flex Pay Account, which is essentially a deposit account that can be used in lieu of a business checking account. Users get a 3-day grace period with no fees on late payments. After three days, any overdue payments will be deducted from your available credit limit.

Read the full review of Fundbox Small Business Loans here. >>>

Pros
  • Applying won't affect your credit score
  • Low minimum credit score requirement
  • No compounding interest
  • Doesn't require personal guarantees for loans under $50K
Cons
  • Requires one year in business and $50K in annual revenue
  • High rates
  • Relatively low maximum credit limit
  • Doesn't help you build business credit
HIGHLIGHTS
LOC Limit
$5,000 to $100,000
Minimum Credit Score
560
Fees
Origination fee, 2% fee on every draw
Term Lengths
12, 18 or 24 months

Why we chose this company: Headway Capital offers business lines of credit with some of the most lenient eligibility requirements, making it a good choice for borrowers with poor personal credit scores in the 560 range.

Headway Capital’s True Line of Credit offers more flexible terms than some competing online lenders, with longer-than-average weekly or monthly repayment terms. Borrowers are also encouraged to pay loans early, as there are no prepayment penalties. These features, coupled with Headway Capital’s fee transparency, can help first-time borrowers or new businesses stay in control of the funds they borrow.

Headway Capital is faster than traditional lenders but slower than other online competitors offering same-day funding. Its online application requires minimal documentation compared to traditional lenders, but approval can take up to a week.

Pros
  • Large loan amounts
  • Approval in as little as 24 hours
  • Low minimum credit score for working capital loans
  • Funding as fast as 72 hours
  • Discount on loans for eligible borrowers
Cons
  • Requires $100k in annual revenue for working capital loans
  • Must have 18 months in business and $250K in revenue for term loans
  • High credit minimum for term loans
  • Stricter eligibility requirements for term loans
HIGHLIGHTS
Term Loan Amounts
$25,000 to $6 million
Minimum Credit Score
575 for working capital loans, 660 for term loans
Fees
Origination fee, but no monthly fees
Term Lengths
12 to 36 months

Why we chose this company: Biz2Credit offers several types of loans, including working capital, term loans and commercial real estate loans. With the latter, borrowers leverage commercial real estate to receive up to $6 million in funding.

Biz2Credit is somewhat stricter with eligibility requirements for its more sizable funding options. However, if you meet the requirements, you can receive a term loan of up to $500,000 or a CRE loan (with commercial real estate used as collateral) of up to $6 million.

For term loans, businesses need a score of at least 660 and more than $250,000 in annual revenue. Commercial real estate (CRE) loans have the same requirements, but you must also already own commercial property, as equity in the property is used as collateral.

Repayment for term pans is weekly or biweekly. For CRE loans, repayment is on a monthly basis, with interest-only payment options available.

Biz2Credit also offers working capital loans, which carry less rigid eligibility requirements than its other two lending options. It accepts credit scores as low as 575 and businesses that have only been operating for six months. It also offers longer terms than most competitors on both of its unsecured business loan products: 12 and 36 months. Longer repayment terms can lower borrowing costs and make managing payments easier for businesses with variable revenue.

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Other Unsecured Business Loans We Considered

TD Bank

Pros
  • Long-term lengths
  • Larger loan amounts
  • Same-day approval
  • Funds available within two business days
Cons
  • Requires one year in business and $250K in annual revenue
  • Relatively high minimum credit limit
  • Must apply in person for loans over $100K
  • Operates physically in only 16 states
HIGHLIGHTS
Term Loan Amounts
$10,000 to $1,000,000
LOC Limit
$25,000 to $500,000
Minimum Credit Score
660
Fees
Origination fee but no monthly fees
Term Lengths
12 months for credit lines, 12 to 60 months for unsecured loans

TD Bank offers unsecured business loans, business lines of credit and SBA loans. It stands out for offering larger loan amounts and longer term lengths (up to five years) than other unsecured loan lenders. However, loans over $100,000 must be applied for at a physical location, which can be found in only 16 states.

Why it didn’t make the cut: To apply for a loan exceeding $100,000, you must visit a physical location, which is currently limited to only 16 states.

Rapid Finance

Pros
  • Wider variety of loan products than most online competitors
  • Funds available in as little as 24 hours
  • High customer satisfaction rates
Cons
  • Lacks transparency regarding APR and fees
  • Potentially high fees according to online sources
HIGHLIGHTS
Term Loan Amounts
$5,000 to $600,000
LOC Limit
$5,000 to $250,000
Minimum Credit Score
550
Fees
Undisclosed
Term Lengths
3 to 18 months for lines of credit, 6 to 24 months for term loans

Rapid Finance has many more products than competing online lenders while still offering the fast funding times, high loan amounts and lenient eligibility requirements that characterize alternative lenders. In addition to term loans and lines of credit, it offers merchant cash advances, SBA loans, bridge loans and invoice factoring.

Why it didn’t make the cut: Rapid Finance is a high-cost option with undisclosed fees and high rates for those with fair credit scores. Loan details are unavailable until a borrower applies, making it hard to compare with other lenders. This application process may also harm credit scores.

Unsecured Business Loans Guide

The following guide covers things to keep in mind when shopping for an unsecured business loan, including common loan products, average costs, and how to improve your loan approval odds.

What is an unsecured business loan?

Unsecured business loans include term loans, business lines of credit, equipment financing, invoice factoring, and merchant cash advances.

Unlike a secured business loan, an unsecured business loan does not require collateral (e.g. assets, such as real estate, inventory and savings). However, because no collateral is required, unsecured business loans may have higher interest rates and stricter eligibility requirements.

How do unsecured business loans work?

Unsecured business loans work much like other kinds of loans. Lenders set requirements for eligibility, such as a minimum credit score and an annual income requirement. Companies typically also require a set amount of time in business.

You apply online, by phone, or, in some cases, in person at a branch, then await an approval decision. Once approved, funding could happen within 24 to 72 hours, depending on the business loan company in question. Funding could be a lump-sum payment or a line of credit from which you draw as needed.

From there, you’ll have to conform to the agreed-upon repayment schedule. Until your loan is repaid, you will pay interest and possibly fees, such as an origination fee.

Types of unsecured business loans

Types of business loans are vast, and small business owners can benefit from knowing the options available. Note that all types of unsecured business loans may carry additional fees, such as origination fees, interest, processing fees on MCAs or a fee on each withdrawal on a business line of credit.

Some examples of unsecured business loans:

  • Term loans: Term loans provide borrowers a lump sum of money they must repay by the end of the loan term.
  • Merchant cash advances (MCA): A financing option where businesses receive a lump sum and repay it through a percentage of their future credit card sales.
  • Invoice factoring: An invoice factoring company takes over a business’s outstanding invoices, and customers pay the invoicing factoring company directly. In return, business owners receive the total balance of invoices, minus any fees.
  • Equipment financing: This type of small business loan is used to purchase equipment for your business.

What is the average cost of unsecured business loans?

The average cost of unsecured business loans varies widely based on the loan product and the borrower's creditworthiness and borrowing history.

Generally, unsecured business term loans and business lines of credit offer low APRs to the most qualified borrowers. Otherwise, APRs for unsecured business loans can be among the highest in the lending market.

Additional costs and fees are also associated with many types of unsecured business loans and business lines of credit. These may include, but are not limited to, origination fees, interest, late payment fees, wire transfer fees, fast transfer fees, and fees per withdrawal on a line of credit.

How to choose the best unsecured business loans

Every business has unique financing needs. To find the right loan for your business, consider what you need capital for, how much you need to borrow, and your business's eligibility.

When you have a clear picture of your needs, compare loan products from different lenders to find the best unsecured business loan options offering competitive rates and low or no fees.

Eligibility requirements

Unsecured small business loan lenders typically consider personal credit scores and business records when determining eligibility. These can include bank statements, tax returns, business plans, revenue history and time in business. Requirements can vary widely by lender and may be a principal factor in determining which products are right for you.

Types of loans

The two most common unsecured business loans are term loans and lines of credit.

  • Term loans provide borrowers with a lump sum of money they must repay by the end of the loan term.
  • Business lines of credit work similarly to credit cards in that borrowers may draw funds as needed and repay them to borrow again.

Other types of financing, such as merchant cash advances and invoice financing, may work for your business too, but generally feature higher overall borrowing costs.

Loan amounts

Unsecured business loan amounts range from $1,000 to $1,000,000 or more. Amounts may vary by loan product and depend on the borrower's eligibility. Lenders that offer larger loan amounts generally have stricter eligibility requirements.

Repayment terms

Repayment terms for unsecured business loans range from a few months to a few years. Lenders may offer daily, weekly, biweekly or monthly payment schedules, but options may also depend on the loan product and the borrower's eligibility. More frequent payment schedules could mean higher repayment amounts, which may not be suitable for all businesses.

Fees

The total cost of a loan includes the principal loan amount and interest. Additional fees can include underwriting, origination, late payment, prepayment, credit draw, monthly maintenance and origination fees. You should always ask for fee details before committing to a loan.

Support and incentives

Lenders differentiate themselves by offering various forms of customer support and incentives. Some lenders may offer real-time customer support or advice about loan options. Others may offer loyalty incentives for repeat borrowers.

Some online lenders also waive prepayment penalties or offer early payoff discounts, both of which can save borrowers money.

How to qualify for an unsecured business loan

Qualifying for an unsecured business loan will depend on each lender's eligibility requirements. Alternative lenders, usually online companies, often offer fast funding and have more lenient eligibility requirements than traditional institutions.

To qualify for an unsecured business loan with an online lender, you’ll generally need:

  • Good personal or business credit scores (above 620)
  • A low credit utilization ratio
  • Stable annual revenue (many require $100,000)
  • Sufficient time in business (at least 12 months)
  • A personal guarantee (a promise to repay your business loan)

Pros and cons of unsecured business loans

It’s important to understand the pros and cons of unsecured business loans, as taking on debt as a small business owner is a risk, no matter how well your business is doing.

Below you’ll find the upsides and downsides of committing to an unsecured business loan or business line of credit.

Pros
  • Fast application and quick funding
  • No collateral required
  • Variety of options, including term loans, lines of credit and invoice factoring
  • Borrowers with bad credit may find options
Cons
  • Eligibility requirements (e.g. credit score, annual income) may be higher than with secured loans
  • Personal guarantee may be required, which means you're personally liable for any unpaid funds
  • These options are usually available as secured loans, too; fees and interest rates are higher when the loan is unsecured
  • Interest rates for bad credit borrowers are significantly higher

Alternatives to unsecured business loans

Alternatives to unsecured business loans are abundant, which is helpful for business owners who feel an unsecured business loan isn’t ideal for their business needs.

Other funding options available to business owners include:

  • Business credit card: You can use a business credit card to pay for expenses. The best business credit cards will offer incentives (e.g. cash back) and low interest rates.
  • Secured business loan: Collateral is required, but the best small business loans offer more favorable terms (interest rates, repayment plans) than unsecured loans.
  • Crowdfunding: Platforms such as GoFundMe, Kickstarter and Indiegogo offer the opportunity to raise money from individuals who want to support your business. These platforms do take a percentage of funds raised.
  • Angel investors: Online platforms like Wefunder make it easier to find angel investors for your business.
  • Grants: You may be able to find a grant for your business through the Small Business Administration (SBA), a state-based grant program or through an organization that provides grants for specific industries and causes.

Unsecured Business Loans FAQs

What happens if you default on an unsecured business loan?

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Defaulting on an unsecured business loan, due to consistent late payments or lack of payments, can lead to legal action by the lender to recover losses, potentially resulting in wage garnishment or seizure of personal assets.

Is it safe to use unsecured business loans?

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Using unsecured business loans is generally safe. Though you don't have to offer collateral, most unsecured business loan lenders will require a personal guarantee. This means that you become personally liable if your business loan goes unpaid. In such cases, the lender can come after business as well as your personal assets.

What is the difference between unsecured and secured business loans?

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An unsecured loan is a loan that does not require the borrower to put up any collateral, so their assets aren't compromised if they fail to repay the loan. With secured loans, on the other hand, lenders have the right to seize the assets used as collateral if the borrower defaults.

While unsecured loans don't require collateral, they often require personal guarantees, and failure to pay unsecured loans will have negative credit impacts.

Do unsecured loans have a higher interest rate?

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Unsecured loans have higher interest rates than secured loans. This is because there's no collateral required for an unsecured term loan or unsecured business line of credit, so the lender is taking on more risk.

Additionally, repayment terms may be more rigid with unsecured loans. You may be required to make daily or weekly payments, rather than monthly payments.

How We Found the Best Unsecured Business Loans

When selecting the best unsecured business loan lenders, we took into account the following factors:

  • Types of loan products offered: We favored companies that provide both business lines of credit and term loans, various term length options and repayment schedules, flexible qualification requirements, unique products, incentives or benefits, and no hidden fees.
  • Customer experience: We prioritized companies that provide a streamlined online application process, fast approval and loan disbursement, and tailored customer support options.
  • Reputation and transparency: We evaluated companies' reputations based on their Better Business Bureau and Trustpilot scores. We favored companies that demonstrated transparency regarding essential loan factors such as starting APR, eligibility requirements and fees.

Summary of the Best Unsecured Business Loans of 2023