Best unsecured business loans in March 2023
Michelle Honeyager is a freelance writer for Bankrate. She has had bylines appear in US News, CNET and other financial publications. She has a passion for helping people make the best financial decisions possible.
Helen Wilbers has been editing for Bankrate since late 2022. He values clear reporting that helps readers confidently land deals and make the best choices for their finances. He specializes in auto and small business loans.
Chloe Moore, CFP®, is the founder of Financial Staples, a virtual, fee-only financial planning firm based in Atlanta and serving clients nationwide.
What To Know First
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.
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Definition of Terms
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
-
Minimum qualifying criteria are listed as a personal FICO credit score above 600, six-plus months in business and $180,000 annual revenue. You can get prequalified and apply online. Credibly states that “certain products may not be available in all states,” so you’ll have to check for your state individually.
Funds are deposited directly into your bank account upon approval. Credibly charges a 3 percent underwriting fee and requires a personal guarantee.
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
-
The process to apply involves a 15-minute application, and then Lendio pairs you with loans from over 75 lenders. You can get capital in as little as 24 hours once approved. Requirements vary among lenders, but you’ll need a FICO score of at least 560, six months in business and an annual revenue of at least $50,000.Fees are not disclosed on Lendio’s website, but likely vary among lenders. Loans are available across the U.S.
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
-
You will need fair credit, at least six months in business and at least $250,000 in annual revenue to qualify for a loan with National Funding.
You can apply online or by phone. National Funding will connect you with a funding specialist to make sure you are getting the financing options that work best for you. National Funding charges an origination fee of between 1 and 3 percent and requires a personal guarantee.
National Funding operates in all states.
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
-
Bank of America is an option for more established businesses, as requirements include two years in business, a FICO score of 670 or more and $100,000 in annual revenue. You may apply online if you have a Bank of America Online Banking ID; otherwise, you must schedule an appointment with a small business specialist. The bank does not state online how long approval takes or how long it will take to receive funds.Bank of America charges a $150 origination fee. Loans are available in all states.
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
-
Minimum qualifications include a 625 FICO score, 24 months or more in business and $40,000 in monthly revenue. You'll need double the time in busienss and revenue to qualify for monthly payments. Your business must also be in good financial standing. Your business has to be incorporated or operating in the U.S. To apply, you’ll need to provide the last three months of bank statements or connect your bank account to Bluevine.
Bank wire transfer fees may apply. Bluevine does not offer loans 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
-
Business owners can apply online or over the phone. You may receive a lending decision within minutes and funds within one to three days. Businesses must have been in operation for one year, have a 625 FICO score, have an annual revenue of $100,000 and have a business bank account.
OnDeck charges origination and prepayment fees. The company does not offer loans in Nevada, South Dakota or North Dakota.
The Bankrate guide to choosing the best unsecured business loan
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
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Unsecured loans come in many types, like microloans or lines of credit. The most popular tends to be the term loan, which may offer a high borrowing limit and flexible term lengths.
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That can depend on the requirements of the lender. Businesses typically need to meet minimum annual revenue amounts, time in business and credit scores. There may also be other stipulations like operating in a certain state or being incorporated under a certain business structure.
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Unsecured loans could hurt your credit if you default on them. Because they are a higher risk to lenders, interest rates might be higher. Applying for loans might also temporarily drop your credit score as the lender has to pull a credit report.
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.