The 5 Best Unsecured Business Loans

Many small-business loans require collateral. These loans don't.
Best overall for small business
Lendio
Lendio
  • Icon Pros  Dark
    Many options
  • Icon Pros  Dark
    Loan matchmaking
Best for startups
Fundbox
Fundbox
  • Icon Pros  Dark
    Low requirements
  • Icon Pros  Dark
    Instant approval
Most convenient
Kabbage
Kabbage
  • Icon Pros  Dark
    Multiple funding methods
  • Icon Pros  Dark
    Fast funding
Best for low APR
Street Shares
StreetShares
  • Icon Pros  Dark
    Low rates and fees
  • Icon Pros  Dark
    Great customer service
Best monthly payments
LendingClub
LendingClub
  • Icon Pros  Dark
    Industry-specific lending options
  • Icon Pros  Dark
    Strong customer service

Got collateral?

No, we don’t mean the 2004 Tom Cruise movie; we mean business assets like real estate, equipment, or inventory—all of which get used to secure loans so the lender doesn’t come out empty-handed if you default. The vast majority of small-business loans get secured by some kind of collateral.

But what if you don’t have sufficient collateral to get a secured loan? Or what if you simply don’t want to offer any?

That’s where unsecured loans come in. Technically speaking, there really is no such thing as an “unsecured loan.” It’s an industry term that refers to a type of business loan that isn’t secured with specifically identified collateral. For example, many credit cards and lines of credit are considered unsecured.

Most online small-business lenders use a general lien on business assets and a personal guarantee to secure the loan. That means that even a business without assets that could be used as collateral can borrow funds. Because these loans aren’t secured with specific collateral, they are sometimes referred to as unsecured business loans.

Unsecured loans tend to have higher fees and shorter terms than their secured loan siblings—they pose more risk to lenders, after all—but they do provide an option for businesses to borrow even if they don’t have traditional collateral.

In this article, we’ll review the best unsecured business loans and help you decide if one could be right for you. Let’s get to it.

What are the best unsecured small-business loans?

Compare the best unsecured business loans

Company
Lending type
Loan min./max.
Lowest listed rate
Get a loan

Lendio

Lending marketplace

$2,500/$500,000

8%

Fundbox

Direct

Up to $150,000

4.66 draw rate

Kabbage

Direct

$2,000/250,000

1.5 factor rate

StreetShares

Direct

$2,000/$250,000

7%

LendingClub

Direct

$5,000/$100,000

4.99%

Data effective 12/7/20. At publishing time, amounts, rates, and requirements are current but are subject to change. Offers may not be available in all areas.

Lendio: Best overall unsecured loans

Lendio
Lendio

Got time to compare options? Then go with Lendio, a lending platform that connects you with multiple potential lenders after you fill out a single application.

Lendio tops our rankings because it allows you to compare unsecured loans to find the best one for you. As a lending platform, Lendio won’t fund you itself; instead, it will connect you with lenders that match your financial needs and help you get approved for an appropriate loan. In fact, Lendio works with some of the other lenders on this list.

Lendio's funding managers will help match you with loans that you qualify for based on your credit rating and business profile. Then you can compare offers to find loans with the best APR or monthly payments—or whatever other criteria you care about. The result? You get the best possible unsecured loan for you.

That means that with one short application, Lendio can find you an unsecured loan that suits your needs.

The matchmaking process can take up to 72 hours before you even apply for a specific loan, so if you need funding in a hurry, you might skip Lendio. And remember, the fees and term of your loan will vary depending on your offers, so make sure you understand what you’re agreeing to before signing anything.

Strengths
Pro Bullet Many loan options
Pro Bullet Quality matchmaking service
Pro Bullet High loan maximums
Weaknesses
Con Bullet Long application wait time
Con Bullet Unclear fees and terms

Fundbox: Best for startups

Fundbox
Fundbox

Even if your startup only has a couple months of financial history, you can still get financing through Fundbox. Despite lower credit limits and higher fees, Fundbox is a fast solution for startups low on cash.

Fundbox works best for startups because it has low application requirements—in fact, you need just two to three months of financial history to qualify for an unsecured line of credit or invoice financing, making it perfect for brand-new businesses.

Fundbox uses a fancy application process that connects with your accounting software or bank account, so it doesn’t rely on the usual application materials to make a decision. That means you could qualify for a loan even with poor credit history or little time in business, so long as your transactions look good to Fundbox’s algorithm. Plus, the approval process takes mere minutes, so you can get funded in just a day or two.

Now, Fundbox does have one of the lowest credit limits on this list, so established businesses that need more financing will want to look elsewhere. Also, Fundbox has higher fees than some lenders in our ranking, so it might not give you the best possible deal. But for a brand-spanking-new startup, Fundbox offers easy-ish access to an unsecured loan.

Strengths
Pro Bullet Fast application
Pro Bullet Low application requirements
Pro Bullet Quick funding turnaround
Weaknesses
Con Bullet Low credit limits
Con Bullet High APR

Kabbage: Most convenient

Kabbage
Kabbage

Bad credit? You can still get financing through Kabbage, which offers financing to small-business owners through a quick, automated approval process.

When it comes to fast, convenient funding, it’s hard to beat Kabbage. Not only does it have an automated approval process (like Fundbox), but you can get funding through an unsecured line of credit in mere minutes. 

Just connect Kabbage to your bank account, and its automated process can approve you for business financing—no credit score or tax returns needed. Then, choose one of three ways to get funds. With PayPal, you get money within minutes. A bank account takes one to three days, and a Kabbage card funds instantly (but you have to have the card, which takes a few days to arrive in the mail).

Like Fundbox, Kabbage comes with a higher APR than other lenders. Plus, Kabbage has a confusing repayment schedule that front-loads fees. If you want the lowest fees, you might check out the next lender on our list. But when it comes to getting a convenient business loan—especially an unsecured loan—Kabbage delivers.

Strengths
Pro Bullet You require quick funding.
Pro Bullet You have an extremely low credit score.
Weaknesses
Con Bullet You need more than $100,000 in funding.
Con Bullet You don’t use a compatible accounting software, such as FreshBooks or QuickBooks.
Don't qualify for a business loan due to bad credit? Get a personal loan instead.
Grow your business today

Browse hundreds of loan options, custom-tailored to your business and budget needs, from a single, simple platform.

StreetShares: Best for low APR

StreetShares
Street Shares

Because it uses a peer-to-peer lending model, StreetShares offers extremely low fees. You can qualify for an APR as low as 7%, but prepare for tougher application requirements.

If you want low fees and therefore low APR, you want StreetShares’ unsecured short-term business loans or unsecured business lines of credit. Thanks to the magic of peer-to-peer lending, StreetShares offers a lower APR on unsecured loans than you’ll find from just about any other online lender.

StreetShares offers APRs as low as 7%, making it competitive with even traditional lenders. Of course, to get these rock-bottom APRs, you’ll need to have a good credit history. Even without that, you can get relatively good rates from StreetShares. Its application requirements are stricter than Fundbox or Kabbage, but it still requires only a fair credit score and just one year in business.

Note that you might struggle to find all that information on StreetShares’ website. Compared to other lenders, StreetShares has an uninformative site, so you’ll need to get in touch or apply to get all the information you need. Fortunately, StreetShares has excellent customer service. But if that sounds like too much work, or if you won’t meet Streeshares’ relatively lax requirements, then go with another lender on this list.

Strengths
Pro Bullet Low interest rates
Pro Bullet Moderate application requirements
Pro Bullet Responsive customer service
Weaknesses
Con Bullet Unhelpful website
Con Bullet Unavailable in some states

LendingClub: Best for monthly payments

LendingClub
LendingClub

With monthly loan payments and longer loan terms, LendingClub is a great choice for small-business owners who want more flexibility. LendingClub offers unsecured loans up to $100,000.

LendingClub stands out for being one of the few online lenders that allows you to make monthly payments (instead of weekly). If you want an unsecured loan that you pay off on a monthly basis over a long term, it’s LendingClub or bust.

Not all borrowers care about monthly payments, but these payments usually come with a much longer term than you’d find on a weekly paid loan. LendingClub offers terms ranging from one to five years. So not only do you not have to worry about how weekly payments will affect your budget, but you also get the advantage of low payments spread out over several years.

That being said, borrowers complain that LendingClub has costly loan origination fees, so plan for that when you do your loan math. Also, LendingClub offers only unsecured loans up to $100,000. After that, it requires a blanket lien (which allows the lender to seize secured assets if you don’t repay the loan). But if you want a smaller unsecured loan with monthly payments, LendingClub is the way to go.

Strengths
Pro Bullet Longer repayment terms
Pro Bullet Monthly payments
Pro Bullet Low APR
Weaknesses
Con Bullet Small unsecured loan amounts
Con Bullet Costly origination fees

Runners-up

Bank of America

Bank of America offers unsecured small-business loans up to $100,000. As a traditional lender, Bank of America advertises a much lower APR than online lenders—but only if you meet strict application requirements: at least two years in business, a personal credit score in the high 600s, and $100,000 in revenue.

Plus, you have to be a Bank of America member to apply. Otherwise, you have to visit your local Bank of America to become a member so you can apply. These high requirements and the hassle of applying kept Bank of America from making our rankings.

Wells Fargo

Like Bank of America, Wells Fargo has unsecured term loans with attractive APRs (just slightly higher than Bank of America’s rates). These loans range from $10,000 to $100,000.

However, Wells Fargo has even stricter requirements, as it requires a minimum of three years in business. And whether or not you’re a Wells Fargo member, you have to apply in person to get an unsecured loan.

U.S. Bank

U.S. Bank’s unsecured Cash Flow Manager line of credit has credit limits up to $250,000. While that’s a higher unsecured limit than other traditional banks (and higher than many alternative lenders), U.S. Bank’s user experience kept it off our ranking.

Aside from the maximum credit limit, U.S. Bank offers virtually no information about its line of credit on its website, such as credit score or revenue requirements. When we called for more information, we were unable to get in touch with anyone. At least it offers an online application.

BlueVine

BlueVine offers a line of credit and invoice factoring. But while BlueVine appears on many lists of the best unsecured loans, BlueVine doesn’t actually offer unsecured loans.

According to its website, all loans must be secured, though BlueVine doesn’t require a specific type or value of collateral. Because of this, we didn’t include BlueVine in our ranking—but it may still work as an alternative to other collateral-based loans.

OnDeck

OnDeck provides term loans and business lines of credit. Like BlueVine, OnDeck often gets included on lists of best unsecured loans despite offering only secured loans (confirmed via its website).

Again, OnDeck doesn’t require specific types of collateral, but rather a blanket lien on your business. While technically a secured loan, OnDeck could work well for borrowers who simply lack sufficient collateral for other lenders.

Unsecured business loan FAQ

Let’s answer those lingering questions you have about unsecured loans.

Are there unsecured SBA loans?

SBA loans aren’t meant to be unsecured, but they sometimes are.

When you apply for SBA loans, you won’t see them advertised as unsecured or collateral-free. That being said, if you have an otherwise perfect application in which you meet all the SBA loan requirements and then some, lenders shouldn’t turn you down for an SBA loan just because you don’t have enough collateral. So think of them as secured loans with an asterisk rather than unsecured SBA loans.

Note, however, that this only applies if you don’t have sufficient collateral. If you just want an unsecured loan because you don’t feel like offering collateral, you’re out of luck; the SBA requires its lenders to take collateral when it's available.

What are the pros and cons of an unsecured loan?

Unsecured loans, as with all forms of business financing, have good parts and bad parts. You should weigh these carefully to decide if an unsecured loan will work best for your business’s needs.

On the pro side, unsecured loans obviously have no collateral requirements. Many small-business owners like that fact in and of itself, but it also translates to faster applications than those for secured business loans. Why? Because the lender doesn’t have to spend time evaluating collateral.

Plus, no collateral sometimes means you end up with more money. With secured loans, the value of your collateral often determines your loan amount. Since unsecured loans don’t use collateral, you don’t have to worry about getting a small loan because of your less-than-valuable collateral.

But what about the cons? Well, unsecured loans entail more risk for lenders than secured loans; if you default on your loan, they don’t automatically get valuable collateral.

This higher risk for lenders means that unsecured loans usually have higher interest rates and fees than the best business loans, as well as shorter terms than their secured counterparts. That might sound like a raw deal for business owners, but higher fees and shorter terms help mitigate the risk for the lender. Without them, you probably wouldn’t be able to get an unsecured loan at all.

Can you trust these loans to be truly unsecured?

Here’s the dirty little secret about unsecured loans: they’re only kind of unsecured.

To explain, unsecured loans don’t get secured with collateral (as you know). But most unsecured small-business loans still require a personal guarantee, in which you promise personal liability for the loan in case of default. That means your personal assets—including your car, your house, the money in your bank accounts, and that gilded Elvis statue in your basement—are at risk if you default.

(Before you get too up in arms, remember that this only matters if you default on the loan. As long as you pay back what you’re supposed to when you’re supposed to, your personal assets will stay safe.)

So why bother with unsecured small-business loans at all? Well, again, if you don’t have assets to offer as collateral, then good luck getting a secured loan. Also, unsecured loans can usually be discharged if you declare bankruptcy. Secured loans, not so much.

Plus, a personal guarantee generally requires a court order to enforce. If you pledge collateral—particularly if the collateral stays in the lender’s possession—your lender has a much easier time taking those assets from you.

Megaphone
Merchant cash advances

Merchant cash advances count as truly unsecured loans—no personal guarantee or assets needed. But since MCA lenders draw money from your credit card sales no matter what, you might find you prefer a personal guarantee anyway. Business.org has an in-depth guide reviewing merchant cash advances if you'd like to learn more.

The takeaway

Unsecured loans provide a way for small-business owners to get small-business loans without offering up collateral. In exchange, you’ll usually have to pay higher rates and fees—but you still have plenty of good options.

Learn more about how to get an unsecured loan with our guide to getting a business loan without collateral.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

Chloe Goodshore
Written by
Chloe Goodshore
Chloe covers business financing and loans for Business.org. She has worked with many small businesses over the past 10 years, from video game stores to law firms. Those years watching frustrated business owners try to sift through their many options gave her a passion for breaking down complex business topics. She wants to help business owners spend less time agonizing over their businesses so they can spend more time running them.
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