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Best Unsecured Business Loans for 2022
Erin Gobler – Contributing Finance Writer Last Updated: December 8, 2020
Unsecured business loans can be great resources to help your business grow. Whether you need help financing an upgrade or improvement or want to invest funds in scaling your business, business loans give you the funds and flexibility you need to succeed. Bank and credit unions often offer the best rates and repayment terms when it comes to unsecured business loans. However, non-traditional lenders may also be a good option for those who have poor credit or don’t qualify for a loan from a traditional lender. When applying for loans, make sure to choose your research in order to end up with the best rates your qualify for.
Up to $250,000
1. For businesses organized as a limited liability company or corporation, we do not perform a hard credit pull at any point in our process, which means your credit score will not be impacted. For businesses organized as sole proprietors or general partnerships, we will only perform a hard credit pull after you receive and accept your offer.
2. The rate is a simple interest rate calculated from total repayments over 26 weeks.
3. Once approved, get funds deposited in your bank account in as quickly as a few hours if you choose our bank wire option ($15). Or, choose our free ACH transfer option which typically gets funds deposited the next business day, although it may take up to three.
*There are some industries we cannot serve (see list of restricted industries), as well as some industries and states impacted by the Coronavirus to which we are temporarily not lending. In addition, OnDeck does not lend to businesses in Nevada, North Dakota or South Dakota. OnDeck is no longer accepting new Paycheck Protection Program (PPP) loan applications. Registration terms and conditions apply. Instant Funding registration and withdrawals are currently supported from your desktop and the OnDeck mobile website. They are not currently supported in the OnDeck mobile app. Occasionally, transfer may take up to 30 minutes to complete due to potential Visa & bank processing lags. This benefit is available at no additional cost with a vast majority of major banks participating. Instant Funding is available for transactions between $1K-$10K.
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Lack of product variety causes Lending Club to fall short of being the best lender, but its funding model and streamlined application make it a great lending option for businesses.
2.6 / 5.0
SimpleScore LendingClub 2.6
Median APR 3
Loan Size 4
Product Variety 1
Lending Club is best known for its innovative status when it was a peer-to-peer lending platform. The lender offers unsecured business loans of up to $500,000, so it can finance business projects both large and small. With rates starting at 4.99%, these loans are some of the most competitively priced in the industry. Eligible businesses should be at least one year old, and make over $50,000 per year. Lending Club does charge an origination fee of 3.49%–7.99%, so it may not be the best fit for borrowers trying to steer clear of fees entirely. However, it still represents a great deal for borrowers who are able to qualify.
In The News
In the News:
LendingClub got its start as a peer-to-peer lending network in 2007. But in October 2020, the lender announced it would end the program at the end of the year. LendingClub will still be in the loan business, but investors won’t be able to participate.
Business owners who want to stay away from lengthy, complicated SBA loan application processes will find solace in SmartBiz’s streamlined, simple online application. Couple that with great customer support, and here’s a lender well worth considering.
3.4 / 5.0
SimpleScore SmartBiz 3.4
Median APR 3
Loan Amount 4
Product Variety 3
A SmartBiz standard bank term loan comes with attractive terms, including its low interest rates starting at 6.99% and high loan amounts of up to $500,000. But where the company really shines is its SBA loans. SmartBiz enables small businesses to secure loans through the SBA, which is often recognized as the gold standard when it comes to business loans.
The main advantage of working with SmartBiz to secure a business loan is that it walks borrowers through the complicated process of applying for an SBA loan. Because SBA loans are so competitively priced, they’re difficult to secure and often require additional forms and paperwork. SmartBiz can walk business owners through every step of the process. Terms lengths for SBA loans range from 10 to 25 years, and borrowers can secure up to $5 million in funding. SmartBiz does charge an application fee of up to $3,000, and an SBA guarantee fee of 1.7%–3.75%.
Despite charging an origination fee, National Funding’s competitive interest rates and wide variety of products make it a good lender for any type of business.
4 / 5.0
SimpleScore National Funding 4
Median APR N/A
Loan Amount 4
Product Variety 4
National Funding offers competitively priced loans with a quick and easy application process that can have funds deposited in your account within a day.
National Funding offers unsecured business loans of up to $500,000, making it a good fit no matter how big or small your business project is. Because the lender looks at more than just your credit score and business history, it can create a term loan customized to each business need. The application process is quick and easy, and if you’re approved for a loan you may be able to receive your funds within 24 hours. However, National Funding does charge an origination fee of 2%, so keep that in mind when comparing this lender.
In The News
In the News:
National Funding was named one of the best business loans for women in 2020. The company was one of just one of 14 lenders that earned the title.
Funding Circle helps business owners by placing a special emphasis on helping small businesses access unsecured loans.
3 months–10 years
3.2 / 5.0
SimpleScore Funding Circle 3.2
Median APR 3
Loan Amount 4
Product Variety 1
Funding Circle is another peer-to-peer lender offering unsecured business loans. This lender focuses on lending to small businesses with loans of up to $500,000 and up to 10 years of repayment terms, with rates as low as 4.99%. Funding Circle charges an origination fee of 3.49% to 6.99%, but many other lenders also charge this fee. With a Funding Circle SBA loan, businesses can upgrade their operations, consolidate business debt and pay for upfront costs like inventory and equipment for a 6% flat interest rate. Its streamlined application.
In The News
In the News:
Funding Circle announced a new initiative in 2020 to get people back into the workforce. The opportunity is aimed at people who have been on career breaks for six to 24 months, with jobs available in multiple departments.
Low loan amounts limit American Express from a better score, but its two-in-one business financing shop provides competitive, convenient loans and credit cards to business owners.
3.4 / 5.0
SimpleScore American Express 3.4
Median APR 4
Loan Amount 2
Product Variety 2
American Express is a good choice for an unsecured business loan if you already use it for its credit card offerings.
American Express offers unsecured business loans to borrowers who are already card-carrying members. Loan amounts range from $3,500 to $75,000, with term lengths from six to 36 months. Members can apply to prequalify for a loan, which won’t affect their credit score even if they’re not approved. With rates starting going as high as 19.97%, it isn’t quite as competitive as some other lenders, but still a good option for price-conscious borrowers who appreciate the ease and convenience of working with a company they’re already familiar with.
In The News
In the News:
In an effort to maintain and reward its travel credit card customers, American Express announced new benefits to its travel rewards card. Travel came to a halt in 2020, meaning credit card holders could no longer benefit from their travel rewards cards. In response, American Express temporarily added non-travel benefits including streamlining and wireless services.
With great product variety, many businesses can find a funding solution through Blue Vine. Whether you want upfront funding from invoices or a non-specified-purpose loan, you’ll likely find what you need with this lender.
Up to $5 million
N/A / 5.0
SimpleScore BlueVine N/A
Max APR N/A
Loan Amount N/A
Product Variety N/A
BlueVine offers competitive business term loans, but its strength lies in invoice factoring loans.
BlueVine is a lender that allows businesses to access capital through a process known as invoice factoring. If you have outstanding invoices that haven’t yet been paid, BlueVine allows borrowers to leverage those invoices in order to borrow funds up to $5 million. Businesses receive 85% to 90% of the outstanding invoice amount, then repay the invoice factoring loan starting at 0.25% per week for 6 or 12 months.
It’s unsecured business term loans are also competitive, with rates starting at 4.8% and loan sizes up to $250,000. Funding is quick, but repayment is short — only up to 12 months to repay a loan. Keep that in mind when considering this lender.
Note: BlueVine is only offering Paycheck Protection Loans to businesses at the moment and is not originating term loans.
In The News
In the News:
In October 2020, BlueVine announced that it would be making its small business banking widely available. The company initially launched the program in 2019, offering online financial services such as check deposits, fund transfers, and more. Now BlueVine is expanding the product to include business checking and online payments.
What is an unsecured business loan?
An unsecured business loan is a loan that isn’t backed by collateral, such as a house, vehicle or financial accounts. When you take out a secured business loan, you run the risk of losing your collateral if you fail to make payments. Because unsecured business loans don’t have any collateral associated with them, you won’t lose the property if you’re unable to pay back the loan. This usually means that unsecured business loans come with higher interest rates since they pose a greater risk to lenders.
With an unsecured business loan, the lender will typically use your creditworthiness as the main determining factor in whether you can get a loan and under what terms. There are both advantages and disadvantages to this type of loan, so you’ll need to decide whether an unsecured loan is the best option given your business’s financial situation.
Unsecured vs. secured business loans
Secured business loans require some sort of collateral that the lender can take possession of in the event that the company can’t make payments. For newer businesses, this frequently means that the owner has to put his or her personal property on the line, often a home or vehicle. If the business fails, the owner’s family stands to lose their home, a risk that few want to take. Since unsecured business loans don’t ask for collateral, there’s much less at stake.
Less collateral, more interest
Business owners take on less risk with an unsecured loan, but they do come with some disadvantages. Without collateral, lenders will typically mitigate risk by imposing stricter requirements to qualify and charging higher interest rates. Over the life of the loan, you’ll generally end up paying more in interest with an unsecured business loan than a secured business loan, although this depends on the specific loan type and isn’t a hard-and-fast rule.
Types of unsecured business loans
There are many different types of unsecured business loans your business can take advantage of depending on the amount you need to borrow and what you intend to use it for. Here are a few of the most common unsecured business loan types:
Term loans: A term loan means that your business borrows a fixed amount at a predetermined rate and pays it back in installments over an agreed upon period of time. This is a great option if you know exactly how much cash you need and how long you’ll take to repay it. However, it’s hard to modify the terms of the loan if circumstances change. For example, if you decide you want to pay the loan off before the end of the term, your lender may charge a prepayment fee in order to recoup lost revenue from interest.
Business lines of credit: Business lines of credit are a type of revolving loan in which you’re given a maximum amount to borrow from and can choose how much to take. You’re only charged interest on what you borrow and are typically expected to repay it within a certain time frame. Once you pay off previously borrowed amounts, these are added back to your total credit line and made available for you to borrow again.
Receivables financing: Also known as invoice factoring, this type of business loan involves getting an advance on amounts your company is owed, but hasn’t yet received. For example, if you send a client an invoice with net-90 terms, receivables financing would grant you access to that cash without waiting three months for the client to pay. Since the loan is technically guaranteed by the value of the outstanding invoices, no collateral is required.
Why get an unsecured business loan?
Unsecured business loans can help you to secure the funds you need to help your business grow. Whether you’re planning a move, want to invest in marketing and expansion, or just need a little financial boost to give your business the leverage it needs to succeed, unsecured business loans are a great option if you need a little extra cash for your business. Business loans can include both short-term and long-term loans.
How to choose the best unsecured business loan for you
Decide how much you want to borrow. Small loans and large loans are often best financed in different ways, and if you’re not sure exactly how much you’ll need, a revolving credit line might be the best choice.
Research lending requirements. Each lender has its own minimum requirements for businesses to receive a loan. If you have poor credit or relatively little time in business, you may not qualify for all types of loans. This is especially the case with unsecured loans where no collateral is offered to make up for low creditworthiness.
Compare rates and terms. Calculate how much you’d pay in interest over the lifetime of the loan, and find out if you’d face additional charges if you wanted to pay off the remaining balance ahead of schedule.
Consider fees. Some lenders charge application fees, early repayment fees, and other types of fees. These can be a flat rate or a percentage of the total borrowed amount. A handful of lenders don’t charge any fees at all.
Apply for the loan. Remember that loan applications show up on your credit report for two years, so you only want to apply if you’re certain you’ve chosen the right loan and are fairly confident you’ll be approved.
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In order to qualify for an unsecured business loan, you should:
Research loan options: Find out what loans you might qualify for and which meet your specific needs.
Gather your business information: Many lenders require information about your business, including how long you’ve been in operation and how much money you make in a year.
See if you prequalify: Some lenders allow prospective borrowers to find out if they prequalify without harming their credit score.
Apply for loans: Apply for the loans you think are the best fit, and try to secure the most competitive rates possible.
Business loans FAQs
Credit score requirements vary by lender and loan type. The lenders we reviewed had minimum credit scores as low as 530 and as high as 700.
Every lender charges different fees, but some of the most common fee types include application fees, early repayment fees, guarantee fees, late fees, and closing costs.
These days, most lenders accept online applications that can be completed in a few minutes. Depending on requirements, however, it may take a few days or even weeks for the lender to verify your financial details and decide what terms to offer you. Once a loan has been issued, it shouldn’t take more than a few more days for you to receive the funds.
Not very hard, as most lenders offer business loans of $100,000 or more. Whether you can qualify will depend on your creditworthiness as a business and an individual.
Many lenders require that businesses have a certain amount of annual revenue for a business loan. If your business doesn’t have sufficient revenue or assets, the lender may ask for collateral.
While many business loans are unsecured, that’s not always the case. Some lenders may ask businesses to provide collateral for a loan.
Too long, didn’t read?
Getting an unsecured business loan is an important tool many business owners use to buy inventory, equipment and make long-term investments in the growth of their companies. It’s a good idea to start with your bank first, but if you can’t get approved for a bank loan, or if you need fast cash, there are a variety of other lenders offering flexible financial solutions and competitive rates.
We welcome your feedback on this article and would love to hear about your experience with the business loans we recommend. Contact us at firstname.lastname@example.org with comments or questions.
Last editorial update – December 14, 2020, updated business lender information and business loan buying guide.
We’ve created the SimpleScore to help you objectively compare products and services here at The Simple Dollar.
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Identifies five factors to compare across each brand
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Calculate an average of those five factor scores to get one SimpleScore™
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Some brands offer a variety of financial products, which is why they have different SimpleScores on different pages. We rate individual products that brands offer — not the brand as a whole.
For instance, in our American Express personal loans review we rated the company a 4.25 out of 5 based on rates, loan amount, customer satisfaction, customer support and fees. In our review of the best small business loan rates, American Express earned a 3.4 out of 5 SimpleScore based on its business loan product. By tailoring our SimpleScore to each financial solution, we’re able to give you a more accurate view of each brands’ services and how they compare to competitors’ products.
Lenders with a lower median APR are awarded higher scores — because even if you’re APR is average, your business is not.
Maximum loan size
Lenders that dole out loans with high maximums are also rewarded with higher scores. It takes money to run a business, and businesses need access to as much capital as it takes.
Need more than just a business loan? Lenders that offer more than one type of financial product for businesses score higher than others that don’t.
We gave out higher scores to lenders that have the following subjects covered in their blogs: loans, marketing, employee and staff, and credit or finance resources.
Fees can add up fast and eat into operating costs –– that’s why we give a higher score to lenders that have fewer fees.
Courtney Mihocik is an editor at The Simple Dollar who specializes in personal loans, student loans, auto loans, and debt consolidation loans. She is a former writer and contributing editor to Interest.com, PersonalLoans.org, and elsewhere.