money 7 Best Unsecured Business Loans of 2023
Best for Short-Term Loans
OnDeck
Our Partner
Minimum Credit Score: 625
Loan Amounts: $5,000 - $250,000
Best for Startups
National Funding
Our Partner
Minimum Credit Score: 600
Loan Amounts: $10,000 - $500,000
Best for Large Loans
Biz2Credit
Our Partner
Minimum Credit Score: 575
Loan Amounts: $25,000 - $2,000,000
Quickest Approval and Fund Availability
Bluevine
Our Partner
Minimum Credit Score: 600 / 650
Loan Amounts: $5,000 - $250,000
Best for Lines of Credit
Kabbage
Our Partner
Minimum Credit Score: 640
Loan Amounts: $2,000 - $250,000
Best for Small Businesses
Fundbox
Our Partner
Minimum Credit Score: 600
Loan Amounts: $1,000 - $150,000
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 struggle to secure business financing from traditional banks or other financial institutions. They may also be a solution for small business owners who don’t want to risk 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 act like credit cards by 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
Best for Short-Term Loans: OnDeck
Best for Lines of Credit: Kabbage
Quickest Approval and Fund Availability: Bluevine
Best for Startups: National Funding
Best for Small Businesses: Fundbox
Best for Bad Credit: Headway Capital
Best for Large Loans: Biz2Credit
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(R) Capital Comparison tool
Helps you build business credit
Offers loyalty benefits
Cons
Requires one year in business and annual revenue of $100K
Borrowing costs can be high
HIGHLIGHTS
- LOC Limit
- Term Loan Amounts
- Minimum Credit Score
- Fees
- Term Lengths
Why we chose this company: OnDeck stands out for its tailorable lines of credit and short-term small business loans, which feature three- to 24-month terms. These options, along with OnDeck’s quick approval and funding times, make it ideal for businesses looking to borrow smaller amounts and avoid long-term debt, or those that need funds quickly.
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. Interest rates also start at 29.90%, though customers will often pay higher interest rates. In fact, the average OnDeck customer pays an APR of 62.1%.
Pros
Low average monthly revenue requirement of $3K
No prepayment penalties
Only pay fees on the amount used
Monthly payments
$250 welcome offer
Cons
Requires a minimum of one year in business
New withdrawals require a new loan agreement
Repayment terms and fee structure can be confusing
HIGHLIGHTS
- LOC Limit
- Minimum Credit Score
- Fees
- Term Lengths
Why we chose this company: Kabbage is an attractive option for small businesses looking for fast funding and a flexible line of credit rather than a lump sum of money. Kabbage may be an especially good option for startups with limited business assets, lower revenue streams or bad credit that need cash flow for working capital or expansion opportunities but haven’t had success with traditional lenders.
Kabbage doesn’t offer short-term loan options, but business lines of credit that can be drawn from multiple times. Each time a borrower draws from their line of credit, a new loan agreement is formed. Borrowers must pay monthly fees — which vary based on term length and the borrower’s creditworthiness — on top of the principal balance. Fees range from 2% to 9% for six-month terms, 7.5% to 18% for 12-month terms, and 15.75% to 27% for 18-month terms.
Kabbage has one of the quickest loan application processes out of the companies we looked at and doesn’t require paperwork. Instead, potential borrowers apply by connecting Kabbage to their primary business bank account, which can be an online checking product or PayPal. However, Kabbage may take one to three business days to disburse funds, which is somewhat slower than competing online business lenders.
To determine eligibility and loan terms, Kabbage looks primarily at a business’s cash flow and banking and accounting data, rather than the borrower’s personal credit. This makes it an attractive funding option for borrowers with a poor personal credit history.
Pros
Receive approval in as little as five minutes
Funds may be available in 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
- Minimum Credit Score
- Fees
- Term Lengths
Why we chose this company: Bluevine offers business lines of credit with short repayment terms that work best for borrowers who need capital fast. Through an online application, Bluevine 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 faster transfers, making funds available in a matter of hours. And unlike similar online lenders, which require more than a year of business operations, Bluevine accepts borrowers that have been operating for as little as six months but not yet more than a year.
Bluevine’s lines of credit can be drawn from as needed, and borrowers only pay for what they use. Credit lines must be repaid in 26 weekly payments or 12 monthly payments, which is less flexible than competitors. These repayment terms can also make payments high. Lastly, while Blue line will accept businesses that have been in operation for a relatively short time, they will need to 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 one year in business and $250K in annual revenue
High rates and daily or weekly repayment terms
Doesn't offer lines of credit
HIGHLIGHTS
- Term Loan Amounts
- Minimum Credit Score
- Fees
- Term Lengths
Why we chose this company: National Funding offers some unique products unavailable from most other online lenders. Its flexible qualification requirements for small business loans and equipment financing options make it a great alternative for certain types of businesses. However, terms, eligibility requirements, fees and rates vary by type of loan.
Unlike many competitors, National Funding offers larger unsecured small business loans and accepts businesses that have been in operation for six months or less. Its equipment loans don’t come with any upfront costs or require down payments, allowing brick-and-mortar businesses to quickly and easily obtain vital equipment for existing operations or expansion. Its equipment financing options are also available 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
Accepts applicants with six months or less in business
Low credit score requirement
No prepayment penalties
Transparent fees
Cons
Requires $100K in annual revenue
Offers a relatively low maximum credit limit
Only offers weekly payments
HIGHLIGHTS
- LOC Limit
- Minimum Credit Score
- Fees
- Term Lengths
Why we chose this company: Fundbox offers a line of credit for small businesses that need working capital quickly. Besides providing a simple online application that requires minimal documentation, it also uses artificial intelligence to expedite the approval process. This allows Fundbox to offer three-minute loan approvals and next-day funding.
Fundbox solely offers lines of credit. However, unlike other 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.
Businesses that sign up for a Fundbox Flex Pay account get an additional three days to make repayments. In the near future, the lender will also launch Fundbox Plus, a new program that will offer loyal customers benefits such as 20% lower fees, monthly payments and extended repayment terms for $99 a month.
Fundbox is best for newer startups that have been operating for less than a year and borrowers with bad credit. It could also be a solution for those who need immediate financing for business expenses. Nevertheless, Fundbox’s short repayment terms and weekly payments can be costly and stress businesses with highly variable cash flow.
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
- Minimum Credit Score
- Fees
- Term Lengths
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. New businesses with annual revenue between $50,000 to $100,000 may also find easier approval with this lender, but those with revenue above $100,000 will likely find better rates elsewhere.
Headway Capital is more flexible than some competing online lenders, offering longer-than-average weekly or monthly repayment terms. Borrowers are encouraged to pay loans early too, 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
Funds available within 72 hours
Discount on loans for eligible borrowers
Cons
Requires $100k in annual revenue of 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
- Minimum Credit Score
- Fees
- Term Lengths
Why we chose this company: Biz2Credit offers both unsecured term loans and working capital loans. It’s somewhat stricter with eligibility requirements for term loans than other online lenders, but offers higher loan amounts. Biz2Credit’s term loans work well for established businesses that need more capital and/or longer repayment terms than those offered by other online lenders. Borrowers choose between weekly, biweekly, or monthly payments for working capital loans.
Biz2Credit has relatively lax eligibility requirements for working capital loans. It accepts credit scores as low as 575 and businesses that have only been in operation 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 it easier for businesses with variable revenue to manage payments.
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
- LOC Limit
- Minimum Credit Score
- Fees
- Term Lengths
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.
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
- LOC Limit
- Minimum Credit Score
- Fees
- Term Lengths
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.
Rapid Finance is likely 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 odds of loan approval.
Main things to know before choosing 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 types of unsecured business loans are term loans and lines of credit. Term loans provide borrowers a lump sum of money they must repay by the end of the loan term. Business lines of credit, on the other hand, 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.
Loan costs: The total cost of a loan includes the principal loan amount, interest and fees such as underwriting, late payment, prepayment, credit draw, monthly maintenance and origination fees. Some lenders are more transparent about fees than others.
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.
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. Borrowers with good credit that can demonstrate higher, consistent business revenue often receive lower interest rates.
Generally, unsecured business term loans and business lines of credit feature APRs as low as 7% and as high as 60% or more. Unsecured business loans that use unpaid invoices as collateral utilize factor rates, which generally range from 1.1 to 1.9 and are often equivalent to very high APRs.
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)
Unsecured Business Loans FAQs
Is it safe to use unsecured business loans?
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 kind of businesses need unsecured business loans?
Any business can use unsecured business loans. These loans are popular with small businesses and start-ups that have yet to establish good credit, lack collateral or have only operated for a short time, making traditional lending products unavailable to them. Unsecured business loans are also good for any business that needs funds as quickly as possible, whether it be for surprise expansion opportunities or sudden gaps in cash flow. Some businesses, even those with good credit and traditional funding options, may choose to use unsecured business loans so that they can use their collateral as leverage for other funding opportunities.
What is the difference between unsecured and secured business loans?
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.
How long does it take to get an unsecured business loan?
You can get an unsecured business loan much faster than a secured loan. Traditional financial institutions can offer unsecured loans faster than other loan products but are not as fast as most online lenders. Many online lenders use streamlined application systems that can approve applicants in minutes or hours and provide funding within a day, sometimes faster.
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 eligibility 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
Best for Short-Term Loans: OnDeck
Best for Lines of Credit: Kabbage
Quickest Approval and Fund Availability: Bluevine
Best for Startups: National Funding
Best for Small Businesses: Fundbox
Best for Bad Credit: Headway Capital
Best for Large Loans: Biz2Credit
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