Unsecured business loans

Unsecured business loans are a valuable financing option for businesses that need funds without having to pledge collateral. Unlike secured loans, which require assets as security, unsecured loans do not put your valuable property or equipment at risk. Here’s how they work:

1. Definition:

   • An unsecured business loan is a type of loan that does not require any collateral. You don’t need to provide cash, equipment, or real estate as security.
   • Since there’s no pledged asset, lenders typically charge higher interest rates for unsecured loans compared to secured ones.

2. Key Points:

   • No Collateral: You won’t risk losing valuable assets like land, property, or equipment.
   • Personal Guarantee: Although collateral isn’t necessary, lenders often require borrowers to sign a personal guarantee. This legal agreement ensures that if the business defaults, the borrower must repay the debt using personal funds.
   • Once the loan is fully repaid, the personal guarantee is removed from the account.

3. Eligibility and Options:

   • OnDeck: Offers unsecured loans ranging from $5,000 to $250,000 with a minimum credit score of 625 and a one-year business history.
   • BlueVine: Provides unsecured loans from $6,000 to $250,000 for businesses with a minimum credit score of 625 and at least two years in operation (Flex 6 plan).
   • National Funding: Offers unsecured loans between $10,000 and $500,000, with buy rates starting at 1.11%. Minimum credit score required is 600, and the business should have been operating for at least six months.
   • Fundbox: Provides unsecured loans from $1,000 to $150,000, starting at 4.66% interest. Minimum credit score required is 600, and the business should be at least six months old3.
   • TD Bank: Offers unsecured loans ranging from $10,000 to $1 million. Specific credit score requirements are not disclosed, but the business should have at least one year of operation.
   • Biz2Credit: Provides unsecured loans up to $1 million+, with a minimum credit score of 600 and a business history of at least 12 months.

Remember to compare the terms, costs, and customer support of different lenders to find the best unsecured business loan for your needs and budget

Categories: Business, Collateral, Financing, Interest Rates, Unsecured business loans