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Best unsecured business loans in March 2023

Mar 16, 2023
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Compare the best unsecured business loans in March 2023

LENDER AND LOAN TYPE BEST FOR MIN. CREDIT SCORE LOAN AMOUNT MIN. TIME IN BUSINESS
Credibly line of credit Business line of credit 600 Up to $300,000 6 months
Lendio line of credit Bad-credit borrowers 560 $1,000-$500,000 6 months
National Funding working capital loan Large loan amounts 600 $10,000-$500,000 6 months
Bank of America term loan The bank experience 670 $10,000 and up 2 years
Bluevine line of credit Fast funding 625 Up to $250,000 24 months
OnDeck term loan Building credit 625 $5,000-$250,000 1 year

Credibly line of credit: Best for business line of credit

MINIMUM FICO CREDIT SCORE
600
MINIMUM ANNUAL REVENUE
$180,000
MINIMUM TIME IN BUSINESS
6 months
INTEREST FROM
Not disclosed
LOAN AMOUNT
Up to $300,000
TERM LENGTHS
Not applicable

 

Overview: Credibly is an online lender specializing in small to medium-sized businesses. The business was founded in 2010 and has offices in Michigan, Arizona and New York. Credibly offers both unsecured and secured lines of credit alongside working capital loans, merchant cash advances and long-term business loans.

Why Credibly is the best for business line of credit: The Credibly unsecured business line of credit is great for newer or smaller businesses, as it has a fairly low credit requirement at 600 and only requires that a business be operating for the previous six months. Its line amounts range all the way up to $300,000, enough to cover major purchases. This revolving line gives businesses the flexibility to spend, repay and spend again.

Pros: 

  • Convenient online prequalification and application
  • Fairly low credit score requirement
  • Secured and unsecured options   

Cons: 

  • Interest rate range not disclosed
  • Minimum annual revenue may be out of new businesses’ reach

Lendio line of credit: Best for bad-credit borrowers

MINIMUM FICO CREDIT SCORE
560
MINIMUM ANNUAL REVENUE
$50,000
MINIMUM TIME IN BUSINESS
6 months
INTEREST FROM
8.00%-24.00%
LOAN AMOUNT
$1,000-$500,000
TERM LENGTHS
1-2 years

 

Overview: Lendio is an online lender marketplace platform that helps businesses find matches within its lender network. This Utah-based company was founded in 2011. It also offers short term loans, equipment financing and startup business loans. Lendio has both secured and unsecured loans. 

Why Lendio is the best for bad-credit borrowers: Some lenders in Lendio’s consider credit scores as low as 560, so it’s a solid option for anyone with bad credit seeking business loans. By comparison, many banks require scores in the mid-600s or higher, especially for unsecured options.

Pros: 

  • Low minimum annual revenue requirement
  • Flexible term lengths that run one to two years
  • Easy to compare loan offers

Cons: 

  • No face-to-face lending experience for people who prefer it
  • May take up to two weeks to receive funds
  • High maximum interest rates

National Funding working capital: Best for large loan amounts

MINIMUM FICO CREDIT SCORE
600
MINIMUM ANNUAL REVENUE
$250,000
MINIMUM TIME IN BUSINESS
6 months
FACTOR RATE FROM
1.10
LOAN AMOUNT
$10,000-$500,000
TERM LENGTHS
4-24 months

 

Overview: National Funding was founded in 1999 and claims to have worked with hundreds of industries and communities. National Funding offers working capital loans, short term business loans and equipment financing and leasing. 

Why National Funding is the best for large loan amounts: Because unsecured loans aren’t backed by collateral, loan amounts tend to be smaller than they are for secured loans — but National Funding offers up to $500,000. However, loan terms range from four to 24 months, meaning repayment could be a challenge for businesses with low cash flow.

Pros: 

  • Access to high loan amounts 
  • Also has a focus on equipment financing 
  • Funding specialists available to help

Cons: 

  • Minimum credit score not disclosed 
  • Higher required minimum annual revenue than others on the list at $250,000
  • No monthly payment option — just daily or weekly

Bank of America term loan: Best for the bank experience

MINIMUM FICO CREDIT SCORE
670
MINIMUM ANNUAL REVENUE
$100,000
MINIMUM TIME IN BUSINESS
2 years
Interest from
6.75%
LOAN AMOUNT
$10,000 and up
TERM LENGTHS
12-60 months

 

Overview: The Bank of America is a national bank chain. It offers unsecured term loans and unsecured business lines of credit. It also has several secured options. The bank also offers interest rate discounts through the Preferred Rewards for Business program.

Why Bank of America is the best for the bank experience: Currently the second-largest bank in the U.S., the Bank of America allows you to have an in-person banking experience. Odds are, there is a branch located near you. Term lengths are flexible, ranging from 12 to 60 months. 

Pros: 

  • Traditional banking experience with a large number of offices to visit 
  • Interest rate discount options available
  • Free business credit score monitoring

Cons: 

  • Requirements for approval are more stringent 
  • $150 origination fee 
  • Online application limited to existing customers

Bluevine line of credit: Best for fast funding

MINIMUM FICO CREDIT SCORE
625 for weekly payments, 650 for monthly payments
MINIMUM ANNUAL REVENUE
$480,000 for weekly payments, $960,000 for monthly payments
MINIMUM TIME IN BUSINESS
24 months for weekly payments, 48 months for monthly payments
Interest from
6.20%
LOAN AMOUNT
Up to $250,000
TERM LENGTHS
6 or 12 months

 

Overview: Bluevine is a financial tech company that specializes in serving small businesses. It was founded in 2013. This flexible line of credit allows term lengths of both six or 12 months. Payments can be made weekly or monthly. Bluevine also offers business checking accounts.

Why Bluevine is the best for fast funding: Bluevine states that you can get an approval decision in as little as five minutes and funds in as little as one days. It also advertises no monthly fees and on-demand access to a revolving line of credit. Loans can be managed through an online dashboard. 

Pros: 

  • Fast approval and funding
  • Loan amounts up to $250,000
  • Online loan management

Cons: 

  • High time in business and revenue requirements
  • Maximum interest rate not disclosed
  • Not available in Nevada, North Dakota or South Dakota

OnDeck term loan: Best for building credit

MINIMUM FICO CREDIT SCORE
625
MINIMUM ANNUAL REVENUE
$100,000
MINIMUM TIME IN BUSINESS
1 year
APR FROM
29.90%; average rate is 62.10%
LOAN AMOUNT
$5,000-$250,000
TERM LENGTHS
Up to 24 months

 

Overview: OnDeck was founded in 2006 to help small businesses get funding entirely online. The company states that it has extended $13 billion to small businesses. OnDeck offers both term loans and business lines of credit. Term loan amounts range from $5,000 to $250,000 and term lengths are fairly flexible at up to 24 months.    

Why OnDeck is the best for building credit: OnDeck reports your payments to the major business credit bureaus. That means on-time payments will help you increase your business credit score. It also boasts a minimum time in business for one year, shorter than some other companies on our list.

Pros: 

  • Wide loan amount range 
  • Fixed payments with fairly flexible term lengths 
  • Payments reported to credit bureau

Cons: 

  • High starting APR
  • Maximum APR not disclosed
  • Daily or weekly payments only

The Bankrate guide to choosing the best unsecured business loan

Looking for some business funding? You might want to consider unsecured business loans, which don’t require the borrower to put up collateral. That means that if you default on the loan, you won’t lose your business or other assets. They’re popular because they place less stress on the borrower. 
 
We’ve researched lenders who offer unsecured business loans and have ranked the top six by key features. We also kept an eye on how accessible they are to small businesses based on their qualification requirements. 
 
Read on to find the best unsecured business loans, how to qualify for them and how to choose which one is right for your business. 
 

How do unsecured business loans work? 

With a secured business loan, if you default, the lender can collect the assets you put up as collateral. Unsecured loans do not require you to put your business or other assets up for collateral. It’s a more low-risk option, especially for smaller business ventures and those with variable cash flow.

But that doesn’t mean you can default on the loan without consequences. In place of collateral, lenders typically require you and other business owners to sign a personal guarantee. A personal guarantee states that you will repay the debt. If you default on the loan, anyone who signs can still be legally responsible for paying it. 

Companies can even take business owners who defaulted on a loan to court.  

In order to prove you pose a low risk to the lender, you typically need a satisfactory credit score, a certain amount of time in business and fairly high annual revenue. You’ll provide documents demonstrating you meet requirements during the application process

Types of unsecured business loans 

Many types of business loans are available as unsecured loans. You’re likely to encounter the following: 

  • Term loan: Term loans are popular. You receive a single lump sum and have a set amount of time — from a few months up to around five years — to repay it. They’re available from large banks and smaller digital lenders alike. However, they can require high annual revenue and a personal guarantee.  
  • Microloan: This type of loan offers limited borrowing amounts, usually around $50,000. They’re good for small businesses trying to get off the ground, but may be too limited for businesses trying to scale higher. Rates can be a bit high, too.  
  • Line of credit: With these loans, you have a set credit limit and draw period. These offer larger funding limits and lower rates than a business credit card. You can also borrow again once the original borrowed amount has been paid off. You may be limited to a certain number of draws per month or year.
  • Invoice factoring: This alternative loan involves selling your unpaid invoices to a lender, which then collects the invoice on your behalf and keeps a percentage. Fees may be steep, but invoice factoring can help you cover gaps in cash flow.
  • Merchant cash advance: This type of credit gets calculated based on credit card sales; you repay them with a percentage of your daily sales. New businesses with less established credit may find MCAs the best available option. However, MCAs tend to have high fees and short repayment terms.

Unsecured business loans pros and cons 

Pros: 

  • Don’t have to offer your business, equipment or real estate as collateral 
  • Tend to be widely available through online lenders, so a good option if you prefer the digital banking experience 
  • Different types and borrowing amounts mean flexibility 

Cons:

  • Still have to sign a personal guarantee stating you and other business owners will repay the loan
  • Defaulting could result in court cases and liquidated personal assets 
  • Harder to find with large banks
  • Approval requirements like credit scores, annual revenue and time in business could be more strict, and interest rates tend to be higher 
 

How to choose an unsecured business loan 

Search for lenders that offer the kind of business loan you’re interested in. 

Compare the lenders you find based on whether you meet their lending requirements and whether they meet your needs. Consider the following factors:

  • How long you need to be in business 
  • What terms lengths are available
  • What the minimum credit score is 
  • Interest rate ranges 
  • Loan amount ranges 
  • Required minimum annual revenue 
  • How fast you might receive funds  
  • Borrower perks the lender offers

Before applying, research each lenders’ reputation. Check their BBB rating and TrustPilot score to ensure they are legitimate and easy to work with.  

Once you have determined the best lender or lenders for you, start the process to either apply or get preapproved, if the lender offers the option. Preapproval can let you see potential interest rates with just a soft credit pull. Applying just for curiosity can dip your credit score as lenders pull credit reports. 

Compare the offers you receive using a loan calculator. Then choose the loan package that’s most attractive to you and comes with the lowest overall borrowing costs.

How to qualify for an unsecured business loan 

Lenders set varying business loan requirements for applicants. Those may include:

  • Minimum time in business: Requirements range from about six months to two years 
  • Minimum annual revenue: You have to prove you have a certain revenue, which can be as low as $50,000 or as much as nearly $500,000
  • Credit score: Required FICO credit scores can be as low as the mid-500s but are often in the mid-600s or higher
  • Miscellaneous information: You may also have to provide basic business and personal details, proof that you operate in the U.S., proof of a business bank account, proof of good standing for your business or other financial details 

If you don’t meet these requirements, don’t despair. Many online lenders look at other data points beyond your credit score. However, if you can’t find a good fit and need money soon, you may need to consider a secured loan.

 

FAQs about unsecured business loans

Methodology

To choose the best unsecured business loans, we ensured all loans featured are broadly available across the United States and require no collateral. We then considered features that make loans affordable and accessible to businesses with different characteristics and needs, including interest rates, credit score requirements, minimum annual revenue and fees. Additionally, lenders were evaluated for notable features such as ease of application and interest discounts.