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Unsecured Business Loans — Collateral-Free Cash

When it comes to borrowing money for small business needs, most entrepreneurs have multiple options regarding the form of financial arrangement they use. For example, one business owner might whip out a credit card for a $5,000 expense, while another individual might use a car as collateral to secure a bank loan. But among the many options facing modern entrepreneurs, one form of small business loan stands out as the most popular.

Unsecured business loans are the most common way today’s entrepreneurs gain access to funds they temporarily need to make ends meet. These loans are often affordable and easy to apply for, and many business owners can qualify for them almost instantly. Yet if you’re unfamiliar with the no collateral business loans, you might not understand how they work. This guide will bring you up to speed regarding what you need to know.

What Are Unsecured Business Loans?

Unsecured loans are financial arrangements that aren’t backed by any kind of collateral. This type of loan gives a small business owner the ability to access funds based on their individual reputation as a borrower, rather than on the value of their personal property. In general, unsecured loans tend to be moderately more expensive than traditional secured loans, but the funds could arrive in your account as quickly as the same day.

What Is a Personal Guarantee?

While lenders of unsecured loans don’t ask for any up-front collateral in exchange for funds, they can require borrowers to agree to what’s known as a personal guarantee. But exactly what does that phrase mean in this context?

When a lender requires a personal guarantee, that means they reserve the right to seize your personal assets if your business defaults on the loan. It’s important to read the fine print on any agreement involving a personal guarantee because if your business enters bankruptcy, you could lose a lot more than you bargained for.

Pros and Cons of Unsecured Business Loans

Although fast, unsecured business loans can be the perfect solution for some entrepreneurs, there are potential downsides to this arrangement as well. To help you gain a more well-rounded perspective, here’s a quick look at some of the most significant pros and cons of unsecured loans.

  • Pros
    • Painless Process: Unsecured loans take only minutes to apply for.
    • Speedy Deposits: Business funding can be in your account as soon as the same day.
    • More Money: Unsecured loans can be for greater amounts than secured loans.
    • Fewer Spending Restrictions: Enjoy increased flexibility in terms of what you buy.
    • Possessions Aren’t at Risk: No collateral means you keep your stuff if you default.
  • Cons
    • Higher Interest: Unsecured loans are often more expensive than secured ones.
    • Personal Guarantees: Loans that require these can spell bad news if you default.
    • Shorter Terms: Secured loans and lines of credit usually have longer repayment terms.
    • Challenging for Bad Credit: A very low credit score could prevent you from qualifying.
    • More Frequent Payments: Some lenders may require weekly or biweekly payments.

Unsecured Business Loans with No Personal Guarantee

Here’s a look at three popular lenders that issue unsecured business loans without asking for personal guarantees.

LenderLoan Amounts:Interest Rates:Repayment Terms:
  
Loan Amounts:
$2,000 - $250,000
Interest Rates:
24% - 99%
Repayment Terms::
6, 12, or 18 months
  
Loan Amounts:
$1,000 - $100,000
Interest Rates:
10.1% - 79.8%
Repayment Terms:
12 - 24 weeks
  
Loan Amounts:
$2,000 - $250,000
Interest Rates:
9% - 40%
Repayment Terms:
3 - 36 months

Click to compare estimated rates on PrimeRates.

  • Kabbage: This lender is on the more expensive end of the spectrum, but their unsecured loans could save you in a pinch.
    • Loan Amounts: $2,000 - $250,000
    • Interest Rates: 24% - 99%
    • Repayment Terms: 6, 12, or 18 months
    • Time to Funding: As quickly as a few minutes
    • Minimum Credit Score: 560
    • Minimum Time in Business: 1 year
    • Minimum Annual Revenue: $50,000
  • Fundbox: Instead of offering traditional unsecured loans, Fundbox provides lines of credit and unsecured cash advances for instances when customers fail to pay their bills on time.
    • Loan Amounts: $1,000 to $100,000
    • Interest Rates: 10.1% to 79.8%
    • Repayment Terms: 12-24 weeks
    • Time to Funding: 1 business day
    • Minimum Credit Score: None
    • Minimum Time in Business: 3 Months
    • Minimum Annual Revenue: $25,000
  • StreetShares: With reasonable terms and high loans amounts, StreetShares is a solid choice for small businesses still getting off the ground.
    • Loan Amounts: $2,000 - $250,000
    • Interest Rates: 9% to 40%
    • Repayment Terms: 3-36 months
    • Time to Funding: 1-5 days
    • Minimum Credit Score: 600
    • Minimum Time in Business: 1 year
    • Minimum Annual Revenue: $75,000

Unsecured Business Loans with a Personal Guarantee

If you’re prepared to face the consequences that come along with agreeing to a personal guarantee, here are three lenders that may approve you for an unsecured business loan.

LenderLoan Amounts:Interest Rates:Repayment Terms:
  
Loan Amounts:
Up to $100,000
Interest Rates:
11% - 60.8%
Repayment Terms::
Weekly for 6 months
  
Loan Amounts:
$5,000 - $300,000
Interest Rates:
9.8% - 35.7%
Repayment Terms:
1 - 5 years
  
Loan Amounts:
$6,000 - $150,000
Interest Rates:
16% - 62%
Repayment Terms:
6 or - 12 months

Click to compare estimated rates on PrimeRates.

  • OnDeck: Issuing lines of credit rather than loans, OnDeck is a solid choice for applicants with good credit, but recent personal bankruptcies could disqualify you.
    • Loan Amounts: Up to $100,000
    • Interest Rates: 11% to 60.8%
    • Repayment Terms: Weekly for 6 months
    • Time to Funding: Typically 1-3 business days
    • Minimum Credit Score: 600
    • Minimum Annual Revenue: $100,000
  • Lending Club: Specializing in unsecured loans, Lending Club requires a lien on business assets in case a company defaults.
    • Loan Amounts: $5,000-$300,000
    • Interest Rates: 9.8%-35.7%
    • Repayment Terms: 1-5 years
    • Time to Funding: 2-14 days
    • Minimum Credit Score: 600
    • Minimum Annual Revenue $50,000
    • Minimum Time in Business: 1 year
    • Ownership Stake: At least 20%
  • BlueVine: In addition to unsecured loans, BlueVine offers lines of credit up to $250,000 with interest rates ranging from 15% to 78%.
    • Loan Amounts: $6,000 to $150,000
    • Interest Rates: 16%-62%
    • Repayment Terms: 6 or 12 months
    • Time to Funding: As soon as 24 hours
    • Minimum Credit Score: 600
    • Minimum Time in Business: 6 months
    • Minimum Annual Revenue: $120,000

How to Get a Business Loan Without Collateral

Applying for a business loan without any collateral is usually a relatively painless process. Simply visit the website of the lender that appeals to you most, and fill out the form with all of the requested information. (It usually helps if you gather your business’s financial data ahead of time.) Depending on the lender and your individual credit history, you could receive a decision in as soon as a few minutes.

Conclusion

Among the many types of small business loans, unsecured arrangements are the best way to go for most entrepreneurs. There are even many unsecured business loans for bad credit applicants, so even if you don’t have great credit, you could still get approved by at least one lender. Ready to begin evaluating your options? Start by exploring the aforementioned lenders now.

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