Some business owners can’t or don’t want to pledge specific assets, personal or business, as security for a business loan. Even so, many traditional lenders require business loans to be supported by collateral, such as real estate or equipment. As we understand many borrowers prefer unsecured business loans, we’ve reviewed the best unsecured finance providers.
Top 6 Unsecured Business Loans 2020
Loan Amount | |||
|---|---|---|---|
| OnDeck | APR: ~ 30 – 50% | ||
| BlueVine | APR: ~ 30 – 50% | ||
| Kabbage | APR: ~ 30 – 50% | ||
| Fundbox | APR: ~ 30 – 50% | ||
| LoanBuilder | APR: ~ 30 – 50% | ||
| Balboa Capital | APR: ~ 30 – 50% |
*Last Updated: January 2020
What Has Changed With Unsecured Business Loans
This article was first published in May 2017. We update our content regularly to provide the most accurate and up-to-date information. We re-evaluate the rates, terms, and qualification factors of each lender. The most recent changes are related to small changes in interest rates, Fundbox now considering personal credit scores as part of its evaluation, and OnDeck increasing its minimum credit score requirement for term loans from at least 500 to 600.
Some of the changes with the largest impact on our update to the best unsecured business loans are:
Prime Interest Rate Increased
We monitor changes in the prime rate, as they impact the interest rates charged by lenders. When this article was first written in May 2017, the prime rate was 4%. As of this update, the prime rate is now 5.5%. The Federal Open Market Committee is not currently pressing for increases to the fed funds rate, which is the driving factor behind the prime rate. This means that interest rates should remain stable in the coming months.
Fundbox Now Considers Credit Scores
While Fundbox still does not have a minimum credit score requirement, it now considers your personal credit score when evaluating your application. Previously, Fundbox did not pull or review your credit report as part of the application and underwriting process for its small business lines of credit. However, the company performs a soft credit inquiry at pre-approval and a hard credit inquiry before releasing funds.
OnDeck Has Increased Its Minimum Credit Score Requirement
When this article was initially published, OnDeck had a minimum credit score requirement of 500 for its short-term loan product. OnDeck has recently increased the credit score requirement to at least 600 for term loans, matching what was already required for its line of credit.
How We Evaluated Unsecured Business Loans
In evaluating the best unsecured business loans, we considered a variety of lending options. The desire of some small business owners to quickly access funds without providing specific business or personal assets as collateral was top of our minds. None of the providers we reviewed require specific assets (e.g., business equipment, your home) as collateral, but most require a personal guarantee.
The criteria used to evaluate the best unsecured business loans based on small business owner wants and needs include:
- Pricing and cost: What interest rates or fees you can expect each lender to charge when providing you with an unsecured business loan, including the expected APR.
- Speed of funding: How quickly the unsecured business loan provider will provide you with the funds you need.
- Minimum qualifications: What factors the lender considers when qualifying your business for an unsecured business loan.
- Loan terms: What repayment terms you can expect to receive from each unsecured business finance provider.
- Collateral and guarantees: With an unsecured business loan, you won’t be asked to pledge either specific business assets or personal assets as collateral. The providers we reviewed will likely ask you to provide a personal guarantee and blanket UCC filing.
The providers we reviewed provide two basic types of unsecured business loans: small business lines of credit (LOC) and short-term business loans. Both types of financing offer quick funding. With an LOC, you’ll have the flexibility of re-advancing the principal when you pay it back. With a term loan, you’ll be given longer to repay.
Based on this review, OnDeck is our top choice for unsecured business loans. This is because you have a choice between an unsecured business loan and an unsecured business line of credit. Plus, OnDeck can help with of the widest ranges of businesses, since borrowers with scores as low as 500 can qualify and prime borrowers (700 or better credit score) can get the best rates.
The best unsecured business loans are:
OnDeck: Best Overall Unsecured Business Loans for Small Businesses
An OnDeck unsecured business loan is best for prime borrowers (minimum 700 credit score) who can potentially qualify for special interest rates as low as 9% for up to $500,000. Plus, OnDeck is best for unsecured business loans up to $500,000 with credit scores as low as 500. OnDeck offers term loans and an unsecured business line of credit (LOC), and you might be able to get both products.
OnDeck Unsecured Business Finance Rates & Fees
OnDeck’s interest rates for its line of credit start at 13.99% and its term loan starts at 9%. Prime borrowers with strong creditworthiness and cash flows can benefit from OnDeck’s low starting interest rates. Similar to LoanBuilder, there is no prepayment penalty, but you’re responsible for the full interest charge if you pay early (although you’ll likely receive a prepayment discount on the interest).
OnDeck’s lowest starting rates are comparable to those offered by the other lenders on our list, with APRs falling in the range of 30% to 50%. BlueVine, Kabbage, and Fundbox all fall into this range as well.
OnDeck Capital Unsecured Business Finance Terms
The unsecured business line of credit product offered by OnDeck is revolving, meaning you can re-borrow principal on the LOC as many times as you repay it. You’ll be required to pay back LOC advances in six months. OnDeck offers two unsecured business term loan products: a shorter term loan (three to 12 months) and a longer short-term loan (15 to 36 months).
Of the providers on our list, OnDeck’s maximum term loan amount of $500,000 is matched only by LoanBuilder. However, the longer repayment term, of 36 months, offered by OnDeck may be more appealing to some borrowers than LoanBuilder’s 52-week maximum term.
OnDeck Unsecured Business Loan Speed of Funding
With an OnDeck unsecured business loan, it takes about 10 minutes to complete the online application and you can be approved within hours. Your initial funding can happen as soon as the next business day. Ongoing advances for its unsecured business line of credit are funded within 24 hours.
OnDeck Unsecured Business Loan Minimum Qualifications
The time in business and annual revenue requirements are stricter than some of the competition we reviewed. However, at a minimum of 600, the credit score qualifications for OnDeck’s unsecured term loan products are better than most of the other providers we reviewed.
What OnDeck Unsecured Business Loans Are Missing
While OnDeck doesn’t charge prepayment penalties, you don’t benefit from paying off your loan early. This is because, as with LoanBuilder, the amount you owe is determined at the time your loan is originated, and is based on your full repayment term. You’ll owe the full interest charge if you pay early, although you may receive a prepayment discount.
What Users Think About OnDeck
We compiled OnDeck reviews from around the web and our own website. We determined OnDeck generally has positive ratings. Customers who gave positive OnDeck Capital reviews said its professional and friendly customer service made the loan process quick and easy. Customers who provided critical OnDeck Capital reviews said its fees were costly compared to other similar companies. Read more on our OnDeck reviews page.
BlueVine: Best Unsecured Business Line of Credit
BlueVine is best for its unsecured business line of credit up to $250,000, and is also good for businesses with only six months in operation. The minimum qualifications required by BlueVine are competitive, with weekly or monthly repayment options. BlueVine’s pricing is transparent, comparing favorably with others on our list, with as low as 4.8% simple interest per month.
BlueVine Unsecured Business Line of Credit Rates & Fees
BlueVine is straightforward with its pricing and costs, carrying interest rates as low as 0.8% simple interest. This is competitive when compared to other unsecured business finance providers we reviewed. BlueVine does a great job of being transparent about its costs and fees.
Despite being advertised differently, BlueVine’s lowest offered interest rate is in line with competitors such as OnDeck. OnDeck’s short-term loan has a starting interest rate of 9%; if you annualize BlueVine’s monthly simple interest, it equates to a starting rate of 9.6%.
BlueVine Unsecured Business Line of Credit Terms
As with most of the other providers, the unsecured business loan offered by BlueVine is a revolving line of credit. You benefit from applying once and using the unsecured business loan over again once the principal is repaid. The terms it offers are similar to the other providers, but it allows flexibility to choose weekly or monthly payments for borrowers with a minimum 650 credit score.
Both Kabbage and Balboa Capital offer similar loan terms for their unsecured business loans, with maximum loan amounts of $250,000. Like BlueVine, Kabbage offers repayment terms of six or 12 months. However, Balboa Capital allows for a maximum term of 24 months.
BlueVine Unsecured Business Line of Credit Speed of Funding
BlueVine’s online application can be completed in 20 minutes or less, and you can receive funding as soon as the next business day. Once your unsecured business loan is established, you can receive funding the next day for free (via an ACH transfer) or the same day for a $15 fee (via a bank wire).
BlueVine Unsecured Business Line of Credit Minimum Qualifications
In addition to filling out BlueVine’s online application, you’ll also need to provide BlueVine with a connection to your checking account or three months of your most recent bank statements. These qualifications compare favorably to the other providers we reviewed, with the minimum six-month time in business requirement making it an excellent option for newer businesses.
What a BlueVine Unsecured Business Line of Credit Is Missing
While BlueVine offers a great unsecured business line of credit, a minimum 600 credit score is required. All of the other providers with repayment terms greater than six months offer a lower credit score threshold. This is a drawback for businesses that have bad credit. Borrowers with a credit score below 600 may be better served by Kabbage or Fundbox.
What Users Think About BlueVine
We considered BlueVine reviews from around the web. We determined BlueVine generally has positive ratings. Positive BlueVine reviews came from customers who were impressed with a helpful customer support team. Critical BlueVine reviews came from businesses that weren’t happy about being denied financing. Read more on our BlueVine reviews page.
Kabbage: Best for Monthly Repayment Terms
Kabbage offers a $250,000 unsecured business line of credit to help businesses fund working capital, and is best for borrowers preferring monthly repayment terms. Most of the other providers we reviewed only offer weekly payments. It’s also good for established businesses (one or more years) with lower gross annual revenues ($50,000 per year or $4,200 per month for the past three months).
Kabbage Unsecured Business Finance Rates & Fees
Kabbage charges advance fees rather than an interest rate. You can expect to pay 1.5% to 10% of your outstanding balance monthly. On average, you’ll pay 4% for a six-month repayment term and 3% for a 12-month repayment term. Kabbage features no prepayment penalties, so if you pay off your advances early, you’ll save money.
Kabbage Unsecured Business Finance Terms
The unsecured business loan offered by Kabbage is more like an unsecured business line of credit. This means you can re-borrow principal as many times as you repay it. A revolving unsecured business line of credit structure is nice if you need funds frequently, as you only need to apply once. After the unsecured business line of credit is in place, you can use it as needed.
The financing terms for Kabbage are very similar to the terms offered by BlueVine. However, Kabbage is able to fund as little as $2,000 compared to the $5,000 minimum that BlueVine offers. Businesses that require more than $250,000 may be better served by an unsecured small business loan from OnDeck or LoanBuilder, which can both fund up to $500,000.
Kabbage Unsecured Business Loan Speed of Funding
It is simple to apply with Kabbage using its online application. It takes about 10 minutes to fill out the application, with approval in as soon as 10 minutes or a few hours. After receiving approval, you can expect to get funded as soon as the next business day.
Kabbage Unsecured Business Loan Minimum Qualifications
Once you complete an online application, you’ll also need to provide Kabbage with a connection to your checking account or other business accounts. Kabbage can use information from connected accounts (e.g., Amazon, eBay, Etsy, QuickBooks, PayPal) to evaluate your annual revenues. Its connection to ecommerce sites such as Etsy and eBay is value-added.
What Kabbage Unsecured Business Loans Are Missing
While the unsecured business loan offered by Kabbage is a great option, you need to have been in business for at least a year to qualify. If you’ve been in business for less than a year, you might consider an unsecured business loan from Fundbox, LoanBuilder, or BlueVine instead.
What Users Think About Kabbage
We compiled user reviews on Kabbage from around the web. We determined Kabbage has a mix of positive and negative ratings. Users who were positive said Kabbage has a professional team of loan consultants who are clear and precise. Users who were critical complained about high rates and short repayment terms. Read more on our Kabbage reviews page.
Fundbox: Best Unsecured Startup Business Loan With No Collateral
A Fundbox unsecured business line of credit is best for startup businesses. Startup businesses that have been operating for at least six months can potentially qualify for a loan with no collateral for up to $100,000. Your recent financial accounting history will primarily be used to qualify you for an unsecured business loan with Fundbox, so good recent performance is a plus.
Fundbox Unsecured Business Finance Rates & Fees
With Fundbox, there are no hidden fees or additional costs. Plus, if you pay off what you owe early, you can save money. This is because Fundbox doesn’t charge any prepayment penalties or early repayment fees. These rates and fees can be great for borrowers looking for a startup business loan with no collateral financing option.
The expected APR for Fundbox is within the same range as the other providers on our list. Unlike Balboa Capital, which may charge additional fees for origination and prepayment, there are no additional fees associated with an unsecured small business loan from Fundbox
Fundbox Unsecured Business Finance Terms
The unsecured business loan offered by Fundbox is a revolving unsecured business line of credit, similar to some of the others on our list. This means you can re-borrow principal as many times as you repay it. This is a great startup business loan with no collateral.
At $100,000, Fundbox has the lowest maximum funding amount of any of the providers that we have included. Kabbage, BlueVine, and Balboa Capital are all able to fund up to $250,000, while OnDeck and LoanBuilder can fund up to $500,000 through their unsecured small business loans.
Fundbox Unsecured Business Loan Speed of Funding
You can expect an approval within 24 hours of applying. Fundbox typically funds unsecured business loan advances as soon as the next business day. If you meet its funding request cutoff time (before noon Pacific Time, Monday to Thursday) and your request is not on a weekend or banking holiday, you’ll receive your funds the next day.
Fundbox Unsecured Business Loan Minimum Qualifications
You’ll give Fundbox access to your bank accounts or accounting software (it supports integration with a dozen programs). The better your business has performed recently, the more funds you may receive. With a six-month minimum time in business requirement, Fundbox is a great startup business loan with no collateral option for borrowers with good recent history.
What Fundbox Unsecured Business Loans Are Missing
The main downside to Fundbox is that it is only able to provide an unsecured business loan of up to $100,000. While this will be plenty of capacity for some small businesses, others will need more. As with most of the other providers, you’ll need to make a weekly payment, which could be tough with tight cash flow. Businesses needing a higher level of funding may be better served by a short-term loan through OnDeck, or a line of credit from BlueVine or Kabbage.
What Users Think About Fundbox
We compiled user reviews on Fundbox from around the web. In so doing, we determined Fundbox has generally positive ratings. Users who provided positive feedback said Fundbox made the process easy and simple with its professional and helpful representatives. Users who gave Fundbox negative feedback didn’t like not being able to change the payment terms to longer periods. Read more on our Fundbox reviews page.
LoanBuilder: Best Unsecured Business Loans for Borrowers Needing Flexibility
LoanBuilder is the best for borrowers needing an unsecured business loan up to $500,000 with flexible terms. This is because you get to choose your repayment period between 13 and 52 weeks. If approved, you’ll be required to make payments weekly. You need to have been in business for nine or more months, carry a minimum 550 credit score, and have at least $42,000 in annual revenue to qualify.
LoanBuilder Unsecured Business Finance Rates & Fees
LoanBuilder offers single fixed-fee loan pricing (called a total interest charge) on its unsecured business loans. While there are no prepayment penalties, you don’t benefit from paying early. Your total interest charge is determined at the time your loan is originated based on your repayment terms. OnDeck uses a similar approach to early terminations.
The expected APR for LoanBuilder appears be in sync with the other lenders we reviewed, but this could be deceiving. LoanBuilder charges a total interest charge on the amount that you borrow, meaning that the entire amount of interest is accrued upfront and is payable regardless of when you repay the loan. Other lenders, like OnDeck, accrue the interest over time, which allows you to save money by repaying the loan before its maturity date.
LoanBuilder Unsecured Business Finance Terms
As with some of the other providers on our list, the unsecured business loan offered by LoanBuilder is a revolving unsecured business line of credit. This means you can re-borrow principal as many times as you repay it. This provides good flexibility if you know you are going to need advances more than one time, as you only need to apply for the loan once.
You can choose the repayment term (13 to 52 weeks) that best allows you to accomplish your business objectives, which provides great flexibility. If you want a lower fee, a shorter repayment term is a better option. If you want a lower payment, you might opt for a longer repayment term.
LoanBuilder Unsecured Business Loan Speed of Funding
To qualify for an unsecured business loan with LoanBuilder, you need to complete an online application, which takes about 10 minutes. Once your unsecured business loan is established, you can expect to receive advances within 24 hours of request.
LoanBuilder Unsecured Business Loan Minimum Qualifications
In addition to the above factors, your business must not have filed for bankruptcy, needs to be located within the 50 United States, and have an active business record with your local Secretary of State.
LoanBuilder’s minimum qualifications compare favorably to the other providers we reviewed. Only Fundbox and BlueVine have shorter time in business requirements. As to annual revenue, other than Fundbox (which has no requirement), LoanBuilder has the lowest minimum.
What LoanBuilder Unsecured Business Loans Are Missing
While LoanBuilder ties with OnDeck for the largest unsecured business loan amount at $500,000, its maximum repayment term is only one year (52 weeks). For the same amount, OnDeck offers repayment terms as long as three years (36 months). Also, as with OnDeck, you don’t benefit from paying early, as you owe the total interest charge regardless of when you finish paying.
What Users Think About LoanBuilder
We compiled LoanBuilder user reviews from around the web. In so doing, we determined LoanBuilder generally has positive ratings. Users who provided positive reviews said LoanBuilder’s process was quick and efficient, and its representatives were responsive to requests. Users who left negative reviews for LoanBuilder said the pricing is too expensive. Read more on our LoanBuilder reviews page.
Balboa Capital: Best Unsecured Business Loan for No Minimum Credit Score Requirement
Balboa Capital offers an unsecured business loan up to $250,000 that’s best for its no minimum credit score requirement. While Balboa Capital will review your credit scores, there is no minimum score required. The terms and interest rates you’ll be able to get are based on your creditworthiness. To qualify, you need to have been in business for at least one year.
Balboa Capital Unsecured Business Finance Rates & Fees
The interest rates offered by Balboa Capital are based on your selected repayment terms and creditworthiness. You can estimate your monthly payment by using its small business loan calculator, which is a nice feature. It does not disclose other fees on its website, and so it’s possible you could be charged an origination fee or other fees.
The typical rates, costs, and fees you can expect from Balboa Capital are as follows:
- Starting interest rate (total interest charge): Starts at 10.7% to 15.3% total interest charge, but varies based on your business profile and repayment term
- Expected APR: ~30% to 50%
- Origination or maintenance fees: Possible
- Prepayment penalties or termination fees: Possible
- Additional fees: Possible
Similar to LoanBuilder, Balboa Capital charges a total interest charge on your loan. This means that the amount of interest that you will pay is calculated and instantly accrued to your loan at the onset. This full amount of interest will be due regardless of how quickly you repay the loan, offering no benefit to early repayment.
Balboa Capital Unsecured Business Finance Terms
The typical loan terms offered by Balboa Capital include the following:
- Loan amount: Up to $250,000
- Repayment term: Three to 24 months
- Repayment schedule: Monthly
- Collateral: Possibly a blanket UCC filing on business assets
- Personal guarantee: Possibly required
The terms offered by Balboa Capital compare favorably to the other unsecured business loan providers on our list. Its repayment term of 24 months is one of the longest on the list, second only to OnDeck. Business owners may also appreciate the monthly repayment period.
Balboa Capital Unsecured Business Loan Speed of Funding
To apply for an unsecured business loan with Balboa Capital, you’ll apply online in as quickly as 90 seconds and do not have to provide any paperwork. You’ll receive a decision as soon as your application is complete. Once approved, you’ll receive the funds you need to run your business in a few days.
Balboa Capital Unsecured Business Loan Minimum Qualifications
Balboa Capital will evaluate you for an unsecured business loan by considering:
- Credit score: No specific requirement and all scores considered, although it is checked
- Time in business: Minimum one year
- Annual gross business revenue: Minimum $300,000
Similar to Fundbox, Balboa Capital checks your credit scores, but it doesn’t have a specific minimum credit score requirement. Your credit score is simply one factor it will consider when qualifying you for a loan. Its annual gross revenue of $300,000 is the highest of the providers we reviewed, which could be a drawback for some borrowers.
What Balboa Capital Unsecured Business Loans Are Missing
Balboa Capital requires its borrowers to have at least $300,000 in annual gross business revenue, which is the highest of the unsecured business finance providers we reviewed. It also isn’t as transparent about its fees and some of its loan terms as the other providers on the list. Businesses with lower annual revenues may be interested in an unsecured small business loan from OnDeck, or one of the other providers on our list.
What Users Think About Balboa Capital
We compiled user reviews on Balboa Capital from around the web. We determined that Balboa Capital has a mix of positive and negative reviews. Positive Balboa Capital reviews praised the company’s streamlined process and customer service experience. Negative Balboa Capital reviews noted billing issues and said their loan terms were unclear or changed over time. Read more on our Balboa Capital reviews page.
Alternatives to Unsecured Business Loans
In some cases, an unsecured business loan might not work for your business. Examples include if you’re a micro business, just started your business, or need a larger credit limit (the maximum limit offered in this article is $500,000, with $100,000 to $250,000 being more common). Most business owners use financing, and so there are alternatives.
The best alternatives to an unsecured business loan include:
- Small business credit card: A business credit card is a good option for businesses that want to manage employee expenses or earn rewards, or want a startup business loan with no collateral. Check out our review of the best small business credit cards.
- Accounts receivable financing: Accounts receivable financing is good if you have unpaid invoices, as you can receive quick funding against your invoices of up to $5 million or more. Check out our review of the best invoice financing companies.
- Merchant cash advances: A merchant cash advance (MCA) helps businesses get lump sums of financing in exchange for a fixed share of their daily credit card and debit card receivables, and are good if you have poor credit. Check out our review of the best merchant cash advance providers.
- Peer-to-peer business loan: A peer-to-peer business loan is provided by lenders that use a combination of traditional funding sources and individuals to fund a single loan, providing another option for startup business loans with no collateral. Check out our review of the best peer-to-peer business loans.
- SBA loans: SBA loans are best for prime borrowers (minimum 680 credit score) with some collateral who need long term (up to 10 years) working capital financing up to $5 million. Check out our review of the best SBA lenders.
Bottom Line – Unsecured Business Loans
With an unsecured business loan, you don’t have to pledge physical assets (e.g., your house, business equipment, other real estate) directly to secure the loan. However, most unsecured business loan providers still require a blanket UCC filing on your business assets and a personal guarantee. The providers we reviewed are all good unsecured funding options.
OnDeck’s unsecured business loan is our top choice. It offers unsecured term loan products up to $500,000 that can be used in conjunction with an unsecured line of credit up to $100,000. This is great if you need multiple types of financing. OnDeck is also appealing to prime borrowers who can potentially qualify for special interest rates that can make the rates as low as 9%.
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