An unsecured business loan doesn’t require collateral — such as business equipment, inventory or property — but you may still need to sign a personal guarantee to obtain this financing.
A personal guarantee gives a lender the right to go after your personal assets (think a home, car or cash) if you fail to repay unsecured debt. Similarly, some lenders may also file a Uniform Commercial Code lien on your business assets when you take out a loan, legally giving them the right to seize those assets if you can’t repay.
Unsecured business loans usually carry higher annual percentage rates than small-business loans that require collateral. But they can make sense if you don’t have collateral, and if you need fast funding since the application process requires less paperwork and fewer assessments. Here are our picks for the best unsecured business loans.
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.
Here are 4 options for you
Lender | Best for | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|
Kabbage - Line of credit on Kabbage's website | Best for Unsecured business loans for everyday purchases | $250,000 | 640 | on Kabbage's website |
OnDeck - Line of credit with Fundera by NerdWallet | Best for Unsecured business loans for bad credit | $100,000 | 600 | with Fundera by NerdWallet |
Fundbox - Line of credit with Fundera by NerdWallet | Best for Unsecured business loans for startups | $150,000 | 600 | with Fundera by NerdWallet |
Bluevine - Line of credit with Fundera by NerdWallet | Best for Unsecured business loans for larger purchases | $250,000 | 600 | with Fundera by NerdWallet |
Our pick for
Unsecured business loans for everyday purchases
Kabbage - Line of credit
Max Loan Amount
$250,000
Min. Credit Score
640
Est. APR
9.00-36.00%
Kabbage loans are a good option for business owners with fair credit who want quick access to working capital.
Our pick for
Unsecured business loans for bad credit
OnDeck - Line of credit
Max Loan Amount
$100,000
Min. Credit Score
600
Est. APR
11.00-61.90%
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
Our pick for
Unsecured business loans for startups
Fundbox - Line of credit
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
Our pick for
Unsecured business loans for larger purchases
Bluevine - Line of credit
Max Loan Amount
$250,000
Min. Credit Score
600
Est. APR
15.00-78.00%
Bluevine's line of credit provides fast working capital for short-term borrowing needs.
May fund quickly
How Much Do You Need?
Unsecured business loans are a type of financing that doesn't require that you pledge physical collateral — like business equipment, inventory or real estate — to secure funding. However, most unsecured loans are backed by either a personal guarantee or UCC lien, even if physical collateral is not required.
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.
Unsecured business loans work like other types of debt financing, and it can come in several forms, including term loans, lines of credit, invoice factoring, and even merchant cash advances. Regardless of the type of business loan, unsecured financing can often offer faster funding with simpler application processes compared to secured loans.
Although these loans may be fast — and may protect your business assets from risk — they typically have higher interest rates and can require that you put your personal assets on the line to access financing.
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.
Because obtaining an unsecured business loan doesn't require collateral, lenders will typically assess your personal creditworthiness when you apply for funding. They’ll also usually consider how many years you’ve been in business, as well as your annual revenue.
For a look beyond unsecured loans, check out NerdWallet’s list of the best small-business loans for business owners. Our recommendations are based on the market scope and track record of lenders, the needs of business owners, and an analysis of rates and other factors, so you can make the right financing decision.
Last updated on November 15, 2021
To recap our selections...
Best Unsecured Business Loans of June 2022
- Kabbage - Line of credit: Best for Unsecured business loans for everyday purchases
- OnDeck - Line of credit: Best for Unsecured business loans for bad credit
- Fundbox - Line of credit: Best for Unsecured business loans for startups
- Bluevine - Line of credit: Best for Unsecured business loans for larger purchases