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Camino Financial
By: camino-financial
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Best Unsecured Business Loans: Top 11 Options In 2022

The best unsecured business loans can help you get capital. Especially those that have yet to establish a strong credit history or don’t have valuable assets to offer as collateral.

Obtaining the right loan can take your business from a fledgling start-up to a thriving company. So, keep reading for your complete guide to unsecured loans with the best lenders for 2022.

Apply For An Unsecured Business Loan!

 

What Are Unsecured Business Loans?

Unsecured business loans are financing options that do not require the borrower to put up any collateral.

The terms and conditions of unsecured business loans can vary depending on the lender. That said, they tend to have higher interest rates and shorter repayment terms than secured loans.

Why?

The lack of collateral makes them a higher risk for lenders.

#DidYouKnow
There are several ways to lower your interest rates.

How Do Unsecured Business Loans Work?

Unsecured business loans work much like other types of loans, except that borrowers are not required to pledge collateral in the form of assets to secure the loan.

Unsecured business loans typically offer faster financing and a simpler application process than secured loans. Although they are faster to obtain doesn’t mean they are without risk.

Instead, to determine eligibility, lenders look at the borrower’s:

  • creditworthiness
  • business financials
  • business credit score
  • number of years in business
  • other factors

They typically have higher interest rates and can put the borrower in difficulties if they cannot repay the loan.

Current Interest Rates for Unsecured Business Loans

Unsecured business loans often have higher than average rates for business loans. Borrowing rates and fees vary by lender and loan type, but interest rates on unsecured business loans tend to range between 5% to 80%.

#DidYouKnow That’s higher than rates on secured loans. That’s because lenders feel secured loans are ess risky because there’s collateral backing the loan.

Best Unsecured Business Loans in 2022

We researched the best unsecured loan companies in 2022.

To help you choose the best lender, we have listed loan amounts, interest rates, fees, repayment terms, eligibility requirements, and overall benefits.

Camino Financial Microloan

Camino Financial’s microloans help business owners who need smaller amounts of money to leverage their business.

The Camino Financial unsecured microloan allows customers fast, flexible financing and other benefits.

You can complete the online application in under 10 minutes, and funds appear in your account within 2 to 10 days.

Amounts: $5,000 and $35,000

Rates: fixed rates range from 31.55% to 54.90%

Repayment Terms: 24 to 36 months

Benefits:

  • Camino Financial is unique because it accepts ITIN if you don’t have a Social Security Number.
  • The application is quick and straightforward, and borrowers can expect to receive funds within 2 to 10 days.
  • No prepayment penalties.
  • We offer automated payments, making paying so much easier.

Minimum Requirements:

  • 620+ personal credit score
  • At least nine months in business
  • $30,000 in annual gross sales
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OnDeck

Founded in 2006, OnDeck serves over 700 industries. It offers a quick online application process and same-day funding.

Amounts: $5,000 up to $250,000

Rates: Annual percentage rates (APR) start at 29.9%

Repayment Terms: up to 24 months.

Benefits: With OnDeck, you can apply and have funds in your bank account on the same day.

Minimum Requirements:

  • 600+ credit score
  • At least one year in business
  • Annual gross revenue of $100,000+
  • An open business checking account

Kabbage

Kabbage offers an unsecured line of credit to small business owners. Since American Express backs it, it can provide additional financial tools such as a mobile app that tracks cash flow insights.

Amounts: credit limits ranging from $2,000 to $250,000

Rates: 0.25% – 3.50% (for the 6-month term), 0.25% – 2.75% (for the 12-month term), and 0.25% – 2.50% (for the 18-month term)

Repayment Terms: 6 months, 12 months, or 18 months

Benefits: Kabbage is a great option for those needing access to funds for many small purchases. It has a relatively quick application and approval process. Kabbage also has no prepayment penalty.

Minimum Requirements:

  • 640+ personal credit score
  • A personal guarantee
  • At least one year in business
  • An open business checking account
  • Monthly revenue of $3,000+

National Funding

Since 1999, National Funding has provided $4.5 billion in loans to businesses nationwide.

Amounts: $5,000 and $500,000.

Rates: 1.10-factor rate

Repayment Terms: 4 months to 2 years with daily or weekly payment options

Benefits: National Funding encourages early pay-off with special discounts. Customers who pay off their total balance within 100 days will receive a 7% discount on the full remaining balance.

Minimum Requirements:

  • 600+ credit score
  • In business for at least six months
  • Minimum gross annual sales of $250,000

Fundbox

Fundbox offers relatively small, short-term loans.

Amounts: up to $150,000, but the program is still in beta and unavailable to all applicants.

Rates: start at 4.66% for 12 weeks or 8.99% for 24 weeks based on creditworthiness.

Repayment Terms: 24 or 52 weeks.

Benefits: Applicants usually receive approval within three minutes and funding within 24 hours.

Minimum Requirements:

  • 600+ credit score
  • In business for at least six months
  • $100,000 annual revenue

Biz2Credit

Biz2Credit is an online lender specializing in large loans above $25,000. It offers unsecured term loans and working capital.

Amounts: Biz2Credit’s working capital loans range from $25,000 to $2 million. Term loans range $25,000 to $500,000.

Rates: The working capital loan does charge a $250 to $400 underwriting fee for this type of loan. Term loan interest rates start at 7.99% and include a $250 to $400 underwriting fee.

Repayment Terms: Customers must pay back working capital loans with business receipts daily, weekly, or bimonthly. Term loans require weekly, monthly, or bimonthly payments over 12 to 36 months.

Benefits: Biz2Credit has a quick application process, fast approvals, and funding within 72 hours.

Minimum Requirements:

Borrowers for a working capital loan must have:

  • 575+ credit score
  • In business for at least six months
  • $100,000+ annual revenue

To qualify for a term loan, the borrower must have:

  • 660+ credit score
  • In business for at least 18 months
  • $250,000+ annual revenue

TD Bank

TD Bank has a wide variety of lending products for small business owners, including term loans, lines of credit, credit cards, checking accounts, and even U.S. Small Business Administration (SBA) loans.

Amounts: from $10,000 to $1 million. Its lines of credit are between $25,000 and $500,000.

Rates: TD Bank does not disclose interest rates or origination fees for unsecured business loans.

Repayment Terms: Term loans from one to five years. Credit lines ranging $25,000 to $500,000

Benefits: Applicants can receive same-day approval, but it may take up to two business days to receive your funds.

Minimum Requirements:

For loans or lines of credit less than $100,000:

  • 600+ credit score
  • In business at least one year
  • Online application and approval

For loans or lines of credit more than $100,000:

  • 660+ credit score
  • In business, at least one year
  • Applicants must apply in person

Rapid Finance

As the name says, Rapid Finance funds most loans within 24 hours. Business owners seeking unsecured financing have a variety of options through Rapid Finance.

Amounts: Unsecured loans can range from $5,000 to $1 million. Lines of credit are available from $5,000 to $250,000.

Rates: Rapid Finance does not disclose annual percentage rates or monthly fees. Depending on the product, Rapid Finance charges origination fees up to 2.5%.

Repayment Terms: Most terms are three to five years. Rapid Finance is unique in that borrowers must make daily or weekly payments — there is no option for monthly payments.

Benefits: Rapid Finance funds most of its loans within 24 hours. Other benefits include more relaxed eligibility requirements and high loan limits up to $1 million.

Minimum Requirements:

  • 550+ credit score
  • In business at least six months
  • At least $5,000 in monthly revenue

StreetShares

StreetShares is an alternative lender that was initially launched to help veteran-owned businesses. Today, loans are available to non-veteran business owners across various industries.

They offer short-term loans and lines of credit.

Amounts: from $2,000 to $250,000. Typically they will not lend borrowers more than 20% of the total business revenue.

Rates: StreetShares never charges annual percentage rates above 39%.

Repayment Terms: StreetShares loans are short-term. Loan terms range from 3 months to 3 years.

Benefits: Approval and funding are relatively fast — two to five days — but not as quickly as some competitors that offer same-day or next-day funding.

Minimum Requirements:

  • 600+ credit score
  • At least six months in business
  • $25,000+ in annual revenue

Bank of America

Unsecured business loans through traditional lenders are harder to qualify for and take longer to obtain funds, but Bank of America stands out for its customer-friendly platform.

Amounts: Unsecured loans for up to $100,000. The unsecured line of credit starts at $10,000 and goes up to $100,000.

Rates: Its unsecured business line of credit APR starts at 6.75%. The rate for term loans is as low as 6.00% but includes a $150 origination fee.

Repayment Terms: Bank of America requires monthly payments based on the balance for lines of credit. Conversely, term loans have a fixed monthly payment based on the term length of 12-60 months.

Minimum Requirements:

  • 650+ credit score
  • At least two years in business
  • $100,000+ in annual revenue

Please note that only applicants with a Bank of America business bank account can apply.

#DidYouKnow
There are also secured and unsecured credit cards.

Where Can You Get Unsecured Loans?

Unsecured business loans are available through:

  • traditional banks
  • credit unions
  • online lenders
  • alternative lenders

Since banks and credit unions tend to have more strict eligibility requirements and higher interest rates for an unsecured loan, this type of financing is often secured through online lenders.

How to Get an Unsecured Business Loan

Obtaining an unsecured business loan involves many of the same steps as taking on any other kind of debt.

  1. Establish your budget and lending needs.
  2. Research lenders and loan programs.
  3. Compare rates, terms, loan amounts, and other relevant information. Use a business loan or business line of credit calculator.
  4. Choose the loan that fits your needs.
  5. Gather required documents (e.g. personal and business bank statements, tax returns, documents regarding other outstanding business loans, your business plan, etc.).
  6. Fill out an application.
  7. Make sure to double-check all the information you input to avoid any mistakes.
  8. Submit all required documentation.
  9. If approved, you will need to sign a contract.
  10. Receive funds.

#CaminoTip Successfully using an unsecured business loan takes lots of planning upfront. Be diligent in researching loan amounts, repayment terms, interest, fees, penalties, and other factors before you apply for a loan.

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Pros and Cons of Unsecured Loans

Advantages

An unsecured loan has no collateral requirements, a huge positive for new businesses. You could also receive more money since the loan amount isn’t contingent on the value of your collateral.

  • Collateral is not required
  • Great for new businesses
  • Great for companies with little to no assets
  • Lower risk of losing business assets
  • Faster application and approval
  • Possibility of more funds

Disadvantages

Since an unsecured loan represents a higher risk to the lender, lenders must mitigate that risk through higher interest rates, shorter term lengths, and other factors.

  • Higher interest rates and fees
  • Shorter loan terms
  • Smaller loan amounts
  • More stringent eligibility requirements

Do Unsecured Loans Really Need No Assets?

Yes and no.

An unsecured business loan doesn’t require collateral in the form of business or personal assets (equipment, inventory, real estate).

Still, some lenders require borrowers to sign a personal guarantee or be subject to a blanket business lien.

What Is a Personal Guarantee?

A personal guarantee holds the borrower personally responsible for the debt if the business cannot repay it. It allows the lender to seize personal assets such as your home, car, or cash if you fail to repay the debt.

There are two kinds of personal guarantees: limited and unlimited. With a limited guarantee, the lender can only collect a set dollar amount from the borrower.

On the other hand, an unlimited personal guarantee means the lender can recover the entire loan amount, including interest and legal fees.

What Is a Blanket Business Lien?

Some lenders may file a Uniform Commercial Code (UCC) lien on business assets, giving them the right to seize those assets if you fail to repay the loan.

The lender may file a lien on certain assets or file a “blanket business lien,” which allows them to seize any assets necessary to recover the debt.

How to Choose the Best Unsecured Loan

Choosing the right financing can make all the difference to your business’s growth. You must find the best unsecured small business loan to meet your business’s unique needs. Here are some things to consider:

Eligibility Requirements

Lenders impose eligibility requirements to make sure they lend to borrowers who can repay the loan. Don’t waste your time applying for loans you do not qualify for.

Evaluate the following requirements from prospective lenders before you apply.

  • Minimum credit score
  • Required amount of time in business
  • Minimum annual revenue

Type of Loan

Think about why you need the money. Do you need a large lump sum or do you need funds available to make many small purchases?

Your requirements will determine whether a term loan, a line of credit, or an alternative form of financing will be best for your business.

Amount

Before you choose a lender, establish how much money you need to borrow. Unsecured business loan amounts usually range from $1,000 to $500,000 but can stretch into the millions.

When you have an established goal and a type of investment, you can choose a lender that offers unsecured loans in the amount you need.

Terms

A loan’s term refers to the amount of time you have to pay off the loan and the size and frequency of payments.

Unsecured business loans often have shorter periods which means higher prices and, sometimes, more recurring costs.

You must understand your business’s finances and budget so you can choose a loan you’ll be able to pay off easily.

Cost

Don’t forget that it costs money to borrow money. Costs often associated with an unsecured business loan are interest, fees, origination fees, late fees, and prepayment penalties.

Be sure to consider each when researching loans, and calculate how much you’re likely to pay over the life of the loan.

The Reputation of the Lender

Finally, choosing a reputable lender is key to protecting your finances.

We recommend:

  • visit each lender’s website to learn more about the company and its services
  • read online reviews
  • check the Better Business Bureau or your state Attorney General’s office to learn about the credibility of potential lenders

Watch out for these red flags:

  • Lots of bad reviews
  • Extremely low eligibility requirements
  • No credit history check
  • Asking for payments upfront

Lending Alternatives

When you think of an unsecured business loan, you probably think of a lump sum to be repaid over time or perhaps a line of credit.

However, alternative forms of unsecured lending can allow business owners to access funds on an as-needed basis or may offer solutions to those with low or nonexistent credit scores.

Invoice Factoring

Invoice factoring may help businesses struggling with cash flow due to unpaid invoices.

Essentially, the company sells the outstanding invoices to a lender for 80% of the invoice’s total value. The lender then goes after the customers to fulfill the full payment.

Please note: While invoice factoring is easy to obtain, it often comes with high fees.

Merchant Cash Advances

Merchant Cash Advances (MCAs) occur when a business borrows money from a lender in exchange for a portion of future credit card sales.

MCAs can be a good solution for businesses that need to access funds quickly and have a high volume of transactions. The problem is that they tend to have the highest interest rates in the market.

Should You Get an Unsecured Loan?

The decision to obtain an unsecured business loan is personal, with many factors to consider.

Unsecured loans are best for business owners who:

  • Do not own valuable assets to pledge as collateral
  • Need fast funding
  • Have a newer business
  • Can afford higher interest rates and fees
  • Can handle shorter or less flexible terms
  • Meet the necessary qualifications

If most or all of these sound like you, then an unsecured business loan may be an appropriate option.

Microloans from Camino Financial can give your business the boost it needs to grow and succeed. We offer competitive rates and flexible repayment terms to help you get the most out of your loan.

Even better yet, because we offer unsecured loans, you don’t have to put your assets at risk.

We work with businesses of all sizes, and we can tailor a loan to fit your specific needs. Plus, we have a simple online application process that makes it easy to get started.

So if you’re looking for a small business loan, Camino Financial is the right choice. Begin your application today.

Apply now!

 

FAQs

How hard is it to get an unsecured business loan?

Unsecured small business loans are typically faster and easier to obtain than secured loans because lenders do not have to take time evaluating collateral to approve the borrower.

Unsecured loans represent a higher risk to the lender, so there may be strict qualifications or higher interest rates.

Can you get an unsecured business loan with bad credit?

Because unsecured business loans are risky to lenders, most lenders require a credit score of 600 or higher.

Getting invoice financing loans or Merchant Cash Advances may be easier to obtain with a lower credit score.

Are there unsecured SBA loans?

Yes. It is possible to obtain an unsecured SBA loan in smaller amounts. For the standard SBA 7(a) loan, lenders do not have to take collateral for loans up to $250,000.

Which banks offer unsecured business loans?

Nearly all banks offer unsecured loans, including Bank of America and Wells Fargo.

Banks are more risk-averse than online lenders, so they may have higher interest rates and more stringent qualifications for unsecured options.

What are the best unsecured personal loans?

Here are some of the best traditional and alternative lenders for unsecured personal loans:

  1. Marcus by Goldman Sachs
  2. Discover
  3. Best Egg
  4. Upstart
  5. Sofi
  6. LightStream
  7. Rocket Loans
  8. LendingClub
  9. Happy Money
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