You might already know that an unsecured business loan — a type of financing that doesn’t require collateral — has several advantages over its secured counterpart. You can leverage your personal or business credit history to get a competitive interest rate without pledging (and potentially sacrificing) collateral.
But finding the best unsecured business loan for your operation is the hard part. Lenders offer various types of unsecured financing for borrowers with different credit scores, lengths of time in business and revenue figures. There are also loans with lower or higher borrowing amounts, (in)flexible repayment terms and designed for specific business needs (such as equipment or invoicing).
Once you know what you’re looking for, it can be easier to find it — especially with our exhaustively researched list of top business lenders.
Methodology
To determine the best unsecured business loans, CNN Underscored Money editors put ourselves in the shoes of a business operator seeking funds. We came up with 22 loan characteristics that matter to most borrowers. Then, our data research team collected information about those characteristics for 29 leading lenders. View our complete methodology below.
- Number of companies reviewed: 29
- Number of data points analyzed: 638
- Number of features we considered: 22
- Number of primary data sources used: 33
Show summary
-
Uplyft Capital
: Best unsecured business loan
-
Upwise Capital
: Best large term loans
-
Fundbox
: Best line of credit for startups
-
SMB Compass
: Best line of credit for established businesses
-
Bank of America
: Best national bank term loan
-
Accion Opportunity Fund
: Best for women and minority business owners (in 45 states)
-
Creditfy
: Best for fast funding
-
Triton Capital
: Best for equipment loans
We receive compensation from our partners for Featured Offer placements, which impacts how and where their offer is displayed.
Featured Offer
OnDeck
APRs
Undisclosed
Loan amount
$5,000 to $250,000
Minimum credit score
625
Uplyft Capital
Best unsecured business loan
Factor rates
1.24 to 1.4 (MCAs)
Loan amount
$8,000 to $500,000
Minimum credit score
600
5/5
Why we picked it
Uplyft Capital, which also ranks as one of the best startup business loans, offers merchant cash advances (MCAs), but it also runs a marketplace that connects you with other lenders if you need more financing options.
Lorem ipsum
The MCAs range from $8,000 to $500,000 with terms of two to 12 months, and all are renewable. Business owners may qualify with at least six months’ time in business, $12,000 per month of revenue (or more) and personal credit scores of at least 600. The company reports that it can offer same-day decisions, and if you’re approved, funds could be deposited in your account soon after.
Lorem ipsum
However, Uplyft’s MCA terms are on the shorter side. The lender also requires a high monthly revenue to qualify.
Pros
- Low minimum credit score requirement
- Fast funding
- Only requires six months’ time in business
Cons
- High factor rates on its MCAs
- Repayment terms limited to 12 months
- High revenue requirement
Who should consider it
Business owners who want the flexibility of a renewable merchant cash advance (or a marketplace to compare other loan options)
*Rates as of April 10, 2024
Upwise Capital
Best large term loans
Fixed APRs
7% to 25%* (term loan)
Loan amount
$5,000 to $25 million
Minimum credit score
500
4.7/5
Why we picked it
Upwise Capital offers a dozen funding types, but its short-term loan is its top option. You may borrow as little as $5,000 or as much as $25 million, with flexible repayment terms ranging from one to 18 months. Payments can be made weekly or monthly.
Lorem ipsum
Upwise says it can fund your loan the same business day as approval — it ranks among the best fast business loans — and it’s possible to qualify with a credit score of 500, annual revenue of at least $150,000 and at least six months’ time in business. Upwise also reviews whether your business has a positive payment history.
Lorem ipsum
The drawback to this term loan is its repayment structure. Compared to Upwise’s regular business term loan, which can require collateral (making it a secured loan), borrowers have a relatively short repayment window, a higher interest rate and potentially more frequent payments. The lender also doesn’t disclose the fees it charges.
Pros
- Flexible weekly and monthly repayment terms
- High maximum loan limits
- Low minimum credit score requirement
Cons
- Short repayment term
- More frequent payments
- Lacks transparency, particularly around fees
Who should consider it
Business owners who need flexible repayment terms and want to borrow a large amount
*Rates as of April 10, 2024
Fundbox
Best line of credit for startups
Fixed APRs
Undisclosed
Loan amount
Up to $150,000
Minimum credit score
600
4.5/5
Why we picked it
Fundbox offers a revolving business line of credit for up to $150,000, with terms of either 12 or 24 weeks. Business owners may qualify with personal credit scores of at least 600, at least $100,000 in annual revenue and a minimum of six months’ time in business. If approved, you’ll receive the funds within the next business day.
Lorem ipsum
Related >> How to get LLC loans
Lorem ipsum
Good to know: A line of credit offers a lot of flexibility: You may borrow up to a prespecified amount, pay down some or all of the balance and use it again during the borrowing term. When the draw period ends, you then have a window to pay down any remaining balance. This financing option is ideal if you’re unsure when you’ll need the funds or the exact amount you need to draw.
Lorem ipsum
Despite the flexibility, Fundbox offers a relatively low borrowing limit and short repayment terms, and it won’t help you build business credit.
Pros
- Fast funding
- Low minimum credit score requirement
- Available to newer companies
Cons
- Low maximum loan limit
- Short repayment terms
- Won’t build business credit
Who should consider it
Business owners who’ve operated for at least six months and prefer the flexibility of a line of credit
SMB Compass
Best line of credit for established businesses
Lowest fixed APR
7.99%* (line of credit)
Loan amount
$10,000 to $5 million
Minimum credit score
600
4.4/5
Why we picked it
SMB Compass provides an unsecured line of credit with higher borrowing limits and lower APRs than many of its competitors. The line of credit ranges from $10,000 to $5 million, and there’s no set term — you can borrow up to the limit repeatedly as long as the account is open.
Lorem ipsum
You may qualify with a minimum credit score of 600 and at least $100,000 in annual revenue, but the lender also requires you to have at least two years’ time in business. If your application is approved, you can get funding in as little as one to two business days.
Pros
- High borrowing limits
- Indefinite term
- Low minimum APR
Cons
- Must have at least two years’ time in business
- Requires fair credit
- Doesn’t specify ineligible industries
Who should consider it
Established businesses that need flexible financing with high borrowing limits
*Rates as of April 10, 2024
Bank of America
Best national bank term loan
Lowest fixed APR
7.50%* (term loan)
Loan amount
$10,000 to $100,000
Minimum credit score
700
4.3/5
Why we picked it
Bank of America’s Business Advantage term loan allows you to borrow up to $100,000 with repayment terms ranging from one to five years. These features give you enough room to borrow what you need and make predictable payments on a longer timeline. Plus, Bank of America provides borrowers with a free business credit report and offers rate discounts to members in the Preferred Rewards for Business program.
Lorem ipsum
However, this loan comes with strict eligibility requirements, including at least two years’ time in business, minimum personal credit scores above 700 and $100,000 or more in annual revenue. There’s also a $150 origination fee you’ll pay if approved.
Pros
- Wide range of repayment terms
- Low minimum loan amount
- Get a free business credit report
Cons
- High minimum credit score requirement
- Origination fee
- Strict requirements for time in business
Who should consider it
Established businesses with strong credit and sub-six-figure borrowing needs
*Rates as of April 10, 2024
Accion Opportunity Fund
Best for women and minority business owners (in 45 states)
Fixed APRs
8.49% to 24.99%*
Loan amount
$5,000 to $250,000
Minimum credit score
Undisclosed
4.2/5
Why we picked it
Accion Opportunity Fund (AOF), which also ranks as one of the best small business loans, is a nonprofit lender that helps marginalized communities access business financing. The lender says 90% of its customers are women, people of color or low-to-moderate income business owners. In addition to its financing options, AOF offers coaching and educational resources in both English and Spanish.
Lorem ipsum
Related >> Business grants for minorities
Lorem ipsum
AOF’s working capital loan ranges from $5,000 to $250,000 and features terms from one to five years. The lender says it considers factors like your cash flow and tax returns to determine whether you qualify, which may be helpful if your credit scores are low.
Lorem ipsum
While you don’t need collateral to qualify for AOF’s working capital loan, it will file a “blanket lien” on loans over $50,000. (This type of lien establishes repayment priority for the lender if you default on the loan or declare bankruptcy.) AOF also charges an origination fee ranging from 3% to 5% and isn’t available in five states (Montana, North and South Dakota, Tennessee and Vermont).
Pros
- Helps women and minority business owners access working capital
- Wide range of loan amounts
- Flexible eligibility requirements
Cons
- UCC lien on loans over $50,000
- Relatively high maximum APR
- Origination fee
- Loans unavailable in MT, ND, SD, TN and VT
Who should consider it
Business owners who identify as a minority, a woman or low-income — and can’t get a better deal elsewhere
*Rates as of April 10, 2024
Creditfy
Best for fast funding
Lowest fixed APR
9.49%* (term loan)
Loan amount
Up to $2.5 million
Minimum credit score
500
4.1/5
Why we picked it
Creditfy’s unsecured business term loan goes up to $2.5 million and offers repayment timelines ranging from six months to five years. The lender also provides funding within 24 hours and says it has a 90% loan approval rating, which could be ideal for small business owners who need funding quickly and struggle to qualify for loans elsewhere.
Lorem ipsum
One downside to Creditfy is its website, which offers conflicting information about the repayment options on its term loans. To avoid confusion, you can pre-qualify on Creditfy’s website (resulting in a “soft” credit check that won’t hurt your credit scores). This lender could also be more transparent about eligibility criteria, including its minimum annual revenue requirement.
Pros
- Funding within 24 hours
- High loan amounts
- Reports a 90% approval rate
Cons
- Higher APR compared to some other options
- Conflicting information on website
- Lacking transparency
Who should consider it
Business owners who need to borrow a large amount — and quickly
*Rates as of April 10, 2024
Triton Capital
Best for equipment loans
Lowest fixed APR
5.99% (equipment loans) to 8.99% (working capital)*
Loan amount
Up to $250,000
Minimum credit score
Undisclosed
3.9/5
Why we picked it
Triton Capital offers several financing options, including equipment loans up to $250,000 with repayment terms ranging from one to five years. Business owners may qualify with as little as three months’ time in business and get funding within one to two business days.
Lorem ipsum
One standout feature is Triton’s flexible repayment schedule, where you can make payments monthly, quarterly, annually, semi-annually or seasonally, which can help if your revenue fluctuates throughout the year.
Lorem ipsum
The drawback to Triton’s equipment loans is that the equipment you purchase with the funds acts as collateral for the loan, making it a secured loan. This is a standard feature with many equipment loans, but Triton won’t require additional collateral to qualify.
Lorem ipsum
Related >> The best business auto loans of 2024
Pros
- Doesn’t require additional collateral on equipment loans
- Flexible repayment options
- Only requires three months’ time in business
Cons
- Doesn’t disclose maximum APRs, other eligibility criteria
- Equipment secures the loan
Who should consider it
Business owners who want to finance a major equipment purchase without additional collateral
*Rates as of April 10, 2024
Our picks at a glance
| Lender | Rating | Best for… | Minimum credit score required | Time in business required (months) |
|---|---|---|---|---|
Uplyft Capital | 5 | Merchant cash advances | 600 | 6 |
Upwise Capital | 4.7 | Large term loans | 500 | 6 |
Fundbox | 4.5 | Startup line of credit | 600 | 6 |
SMB Compass | 4.4 | Established business line of credit | 600 | 24 |
Bank of America | 4.3 | National bank term loan | 700 | 24 |
Accion Opportunity Fund | 4.2 | Minority business owners | Undisclosed | Undisclosed |
Creditfy | 4.1 | Fast funding | 500 | Undisclosed |
Triton Capital | 3.9 | Equipment financing | Undisclosed | 3 |
*Rates as of April 10, 2024
Why get an unsecured business loan?
- Cover company expenses: An unsecured business loan allows you to finance any business expenses that may arise, ranging from furniture to inventory, equipment, office supplies and more. This frees up your cash flow for day-to-day expenses.
- No collateral required: Unsecured business loans and lines of credit don’t require collateral to open the account. This is a major benefit if you don’t have anything to secure the loan (such as real estate or equipment) or don’t want the added risk of losing your business assets.
- Get funds quickly: Because you don’t need to provide extra documentation for your assets, an unsecured loan could offer quick funding. This feature is helpful if you need money for emergencies or urgent expenses. But keep in mind that all legitimate forms of business financing, even so-called no-doc loans, require some paperwork.
What are unsecured business loans?
An unsecured business loan is a type of financing that doesn’t require collateral. You typically qualify for the loan based on other factors, such as your time in business, minimum annual revenue and creditworthiness. These factors help lenders assess your risk as a borrower.
Lenders take on a bit more risk with an unsecured loan than a secured loan, where the lender can take your pledged asset if you default. So, a lender may charge a higher APR on unsecured loans to compensate for that added risk. They also may require a personal guarantee, which means the lender can seize the business owner’s personal assets — as opposed to pledged business assets — in the event of a default.
Pros and cons of unsecured business loans
| Pros | Cons |
|---|---|
|
|
The primary benefit of an unsecured business loan is that you don’t have to pledge collateral to open the account — and risk its seizure if your repayment goes awry. These loans also typically offer a more streamlined application process since you don’t need to document or appraise your collateral.
However, you may need to provide a personal guarantee that says the lender can seize your personal assets if you default. The lender can also report any missed or late payments to the personal and business credit bureaus after a default, which may hurt your credit scores.
Related >> What to know about no-credit-check business loans
Types of unsecured business loans
| Type | What it is | How it works | Best for |
|---|---|---|---|
Term loans | A loan for a specific amount that comes with predictable payments | You typically get the funds upfront as a lump sum and repay the loan in installments over a set period with a fixed interest rate. | Funding large purchases when you know how much you need (though unsecured term loans may offer smaller amounts) |
SBA 7(a) loans | A term loan that’s guaranteed by the Small Business Administration and comes with long repayment terms, high loan amounts and competitive APRs | You get the funds as a lump sum and repay the loan in installments over a set period with a fixed interest rate. Some of these loans come with a guarantee fee, and approval timelines can be long. | A small business with acceptable credit that otherwise can’t qualify for a competitive unsecured business loan |
Working capital loan | A short-term business loan designed to cover regular operating expenses like payroll, inventory or invoices | These loans usually come with short repayment terms (around six to 18 months) and may charge higher interest rates as a trade-off for convenience. | Short-term financing needs |
Line of credit | A preset amount of money you can borrow against, usually during a specific term | You can borrow up to the specified limit, pay down some or all of the balance and borrow again. You pay interest only on the money you draw from the line. | Flexible financing to cover short-term gaps in cash flow |
Merchant cash advance | An advance against future sales, where the amount you borrow is based on past receipts | You typically receive the funds as a lump sum and repay the advance using money from future sales. The repayment schedule is often daily. | Businesses with a high sales volume that need funding quickly but may not qualify for other business loans |
Invoice factoring | A type of business financing that’s based on your accounts receivable | You sell some or all of your unpaid invoices to a third party for a percentage of their value in cash. The factoring company pursues payment on your invoices and then pays you the remaining percentage, minus their fee. | Businesses with dependable clients who pay their bills over time |
How to apply for an unsecured business loan
- Consider your needs. There are several types of unsecured business loans, and the right one for you depends on why you need funding, among other factors. Also consider how quickly you need the funds and what kind of flexibility you need with the financing structure.
- Check your credit. Pulling your personal and business credit scores can give you an idea of where your credit stands and whether you may qualify for funding. An unsecured loan relies heavily on your credit history. If yours needs work, consider improving your credit before submitting a business loan application.
- Research multiple lenders. Check a mix of large and small banks, credit unions and online lenders to see what they offer. Banks may offer competitive interest rates, but credit unions and online lenders may have looser eligibility criteria.
- Compare details. Review some of the best offers you find in your research. Compare APRs (which account for interest rates and lender fees), repayment terms, restrictions and requirements to qualify. Although you won’t need to put up collateral for the loan, one of the lender’s requirements may include a personal guarantee.
- Get pre-qualified. Many lenders offer online pre-qualification tools to help you check your loan offers. Pre-qualification usually uses a soft credit pull, so it won’t affect your credit.
- Submit the application. Once you choose a lender and a loan, you’ll complete and submit an application. The lender will need to verify details about your business, like revenue, time in business and structure.
- Receive funds. If your application is approved, the lender typically deposits the funds in your bank account. The process can be quick, taking mere days, since the lender won’t need to assess any collateral.
3 alternatives to unsecured business loans
1. Peer-to-peer (P2P) loan
Good option for business owners who may not qualify for a conventional business loan
A P2P loan is a form of financing that connects you with an investor or lender using an online marketplace. These loans often come with more flexible lending criteria, though you may pay a higher interest rate as a trade-off. Plus, there’s no guarantee that you’ll be matched with a willing investor quickly or at all.
2. Business grant
Good option for businesses with the bandwidth to research grants they may qualify for, complete the application process and fulfill ongoing requirements
A business grant is money from an organization, typically a nonprofit or a government agency. The money doesn’t have to be repaid, which is a major plus. But you may need to sift through dozens of options before finding one for which you qualify (although some are straightforward, such as business grants for women). The application process is often extensive and you might need to fulfill ongoing requirements to maintain eligibility.
Related >> How to start a business with no money
3. Business credit card
Good option for new businesses with relatively small borrowing needs
A business credit card gives you (and authorized users) access to an unsecured revolving line of credit. You can borrow up to a preset maximum amount, and depending on the card, you may avoid interest charges by paying off the balance in full each month. While business credit cards are convenient and flexible, they may come with lower borrowing limits and higher APRs compared to other forms of financing.
Unsecured vs. secured business loans: How to decide
When deciding between unsecured and secured loans, consider how they differ and what your business needs.
The biggest difference is that a secured loan requires you to pledge a business asset, which the lender can seize if you default on payments. This option could be a good fit for your business if it has an available asset and you understand the risks of losing it. And because these loans can be easier to qualify for, they may be helpful if your business has trouble getting a loan elsewhere or finding affordable rates.
Related >> How to get a startup loan with no money saved
An unsecured business loan, on the other hand, doesn’t require collateral. Qualification is based on factors like your credit scores and business revenue. So, unsecured loans may be ideal if you don’t have an asset to use as collateral and you have strong personal and business credit.
Methodology
No two unsecured business loans or lenders are the same, so CNN Underscored Money editors and data researchers joined forces to rate similar but unique products from nearly 30 popular lenders. The highest-rated lenders fared best across the following four categories:
Interest rates (30%)
Like other loans, business loan cost comes down to your interest rate, or the cost of repaying your principal. Here, we judged lenders on their advertised APR ranges and available discounts, plus how transparently they share this information publicly.
Loan details (30%)
These are the nuts and bolts of your unsecured loan. We focused on five criteria, including each lender’s product selection, fees, minimum and maximum loan amounts and time to funding.
Eligibility (25%)
Besides narrowing our list of lenders to those that operate nationally or in most of the country, we also evaluated them by the leniency of common business loan requirements, including:
- Minimum credit scores
- Time in business
- Minimum revenue
- Personal guarantee
Repayment experience (15%)
Speaking of flexibility, we also rewarded lenders with multiple repayment options, including payment cadences and term lengths. Also under consideration: prepayment penalties, customer support availability and company reputation, informed at least partly by the Better Business Bureau.
What didn’t make the cut
More than 20 lenders didn’t crack our list of the best unsecured business loans. Most ranked lower because they don’t prominently share enough details about their products. But here are specific examples of why some well-known lenders fell short:
- American Express and Fora Financial could speed up their loan funding timelines.
- Bluevine is among lenders that require two years in business and high monthly revenue.
- Balboa Capital’s minimum loan amount could be lower.
- OnDeck charges an origination fee of up to 4% of the loan amount.
- TD Bank’s three business financing options all require collateral.
- Wells Fargo could offer lower interest rates.
Frequently asked questions (FAQs)
Each lender sets unique credit score requirements for unsecured business loans, but many set a personal credit score minimum around 600 to 700.
Lenders usually require at least six months’ time in business, but some are more or less lenient. The lender may also base your eligibility on your personal credit and business revenue.
Unsecured business loans may come with a higher interest rate to compensate for the lender’s increased risk.
