Best Unsecured Business Loans
Unsecured business loans can help new and existing businesses access the funds they need to succeed without having to pledge any collateral—something of value that secures the loan so the lender can pay it back if there is a serious default. the obligations. However, the lack of guarantees does not mean that borrowers are completely out of trouble.
Since collateral is not required for unsecured small business loans, lenders typically require borrowers to sign a personal guarantee. This is a legal agreement that requires the borrower to repay the debt with their own money if the company fails to do so. Once the loan is paid off in full, the personal guarantee is removed from the account.
The best unsecured business loans are those that allow businesses to access funds quickly, at low costs and with minimal qualification requirements.
We reviewed 18 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility, affordability, customer experience and application process. We selected the top nine lenders based on the weighting assigned to each category:
Loan cost: 35%
Loan Details: 20%
Customer Experience: 20%
Eligibility and Accessibility: 10%
Application process: 10%
Within each major category, we also looked at several features, including available loan amounts, repayment terms and applicable fees. We also considered the minimum credit rating, time in business requirements and geographic availability of the provider. Finally, we evaluated each provider's customer support tools, borrower benefits, and features that simplify the lending process—such as online applications, prequalification options, and mobile apps.
Where applicable, we have awarded partial points depending on how well the lender meets each criterion.
Tips for comparing unsecured business loans
Finding the best source of financing to meet a company's unique needs is critical. To do this, evaluate why the company needs a loan, how much it needs to borrow, and the creditworthiness of the applicant. Next, consider these factors when comparing unsecured business loans:
Eligibility Requirements. Lenders impose a range of eligibility requirements when screening potential borrowers, but generally require applicants to have a personal credit score of at least 680. Financial institutions also review a company's financial records to assess a potential borrower's ability to repay the loan.
Types of loans. There are also a number of types of business loans - some of which are better suited to more specific financial needs. Assess whether you need the money all at once or prefer to access it as needed. Similarly, consider whether a non-traditional method of financing—such as a charge-off—might be better than a term loan.
Available quantities. Generally, unsecured business loan amounts range from $1,000 to $500,000. Choose a lender with borrowing limits that match your business's borrowing needs so you don't have to borrow more or less than necessary.
the terms of the loan. The loan repayment term affects the amount of monthly payments and accordingly whether the company can afford the financing. Make sure you choose a lender that offers loan terms consistent with your business budget and overall financial plans.
cost. The total cost of a business loan may include interest, as well as setup fees, late fees and prepayment penalties. Compare the amount you're likely to pay upfront and over the term of each loan you're considering.
Customer support and reputation. Visit each lender's website for customer support tools and their availability. Also, read online reviews to see what experiences real borrowers have had with customer support representatives and the borrowing process as a whole. Talk to other members of your community or industry to see if anyone has had a positive — or negative — experience with the lender before committing to a loan.
What are unsecured business loans?
Unsecured business loans are a type of business financing that does not require the borrower to provide collateral in exchange for a loan. Just as there are several types of business loans, unsecured business loans come in many forms, each with their own characteristics and purposes. Common unsecured business loans include:
long term loans. Term loans are what borrowers usually think of when they think of business loans - a bank lends a certain amount of money, with interest accruing over time.