> Marketplace disclaimer: Loanable is a commercial funding marketplace, not a lender. Funding partners underwrite applications and set their own requirements, rates, fees, and terms. Any numbers on this page are labeled examples or come from the cited government sources, not quotes, offers, or Loanable criteria. This article is educational, not legal or tax advice.
By the Loanable Editorial Team · Marketplace editorial · Updated November 2026
An unsecured business loan is financing that isn't backed by a specific asset such as equipment, real estate, or a vehicle. Instead of pledging collateral, you qualify mostly on your revenue, cash flow, time in business, and credit. That makes unsecured funding faster and easier to get for many small businesses, but "unsecured" rarely means "no strings." Most offers still come with a personal guarantee, and many lenders file a general lien on business assets. This guide explains what unsecured really means, the main types of unsecured financing, what lenders check instead of collateral, what it tends to cost, and when a secured option is the smarter move.
What is an unsecured business loan?
With a secured loan, the lender has a claim on a specific asset. If you stop paying, it can take that asset. Equipment loans are secured by the equipment. Commercial mortgages are secured by the building. Invoice factoring is backed by your invoices.
With an unsecured loan, there's no single asset tied to the deal. The lender is betting on the business's ability to repay from cash flow, plus the owner's promise to stand behind the debt. Because the lender has less to fall back on, unsecured financing usually comes with:
- Smaller amounts than secured loans for the same business.
- Shorter terms, often months to a few years rather than many years.
- Higher costs, to make up for the added risk.
- Faster decisions, because there's no appraisal or asset inspection.
"Unsecured" usually still means a personal guarantee and a lien
Two terms show up in almost every unsecured offer. It's worth understanding both before you sign.
Personal guarantee. A personal guarantee is a promise by the owner to repay the debt if the business can't. It doesn't make the loan "secured" in the legal sense, because no specific asset is pledged. But it does mean your personal finances are on the line. Some guarantees are unlimited. Others are capped or limited to certain events. Read which kind you're signing.
UCC blanket lien. Many lenders who call a product "unsecured" still file a UCC-1 financing statement with the state. A blanket lien gives the lender a general claim on business assets, such as accounts, inventory, and equipment, rather than one named item. Under UCC Article 9, a lender's security interest generally needs a signed agreement, and a financing statement under section 9-502 puts other creditors on notice. A blanket lien can make it harder to get other financing later, because new lenders see that someone already has a claim.
You can look up filings against your business in your state's records. For example, California offers a UCC search through the Secretary of State. Most states have a similar search.
The practical takeaway: "Unsecured" usually means "no specific collateral," not "no risk to the owner." Ask every lender two questions: Is there a personal guarantee? Will you file a UCC lien, and what will it cover?
Types of unsecured business financing
Several products can be offered without specific collateral. Each fits a different need.
- Unsecured term loans. A lump sum repaid in fixed payments over a set term. Good for one-time costs like a hire, a marketing push, or a buildout. See term loans.
- Unsecured business lines of credit. A credit limit you draw from as needed, paying interest only on what you use. Good for uneven cash flow. See line of credit and business line of credit requirements.
- Merchant cash advance. Not a loan. A provider buys a share of future sales and collects as you earn. Fast and flexible, but usually expensive. See merchant cash advance.
- Short-term business loans. Smaller amounts repaid over months, often with daily or weekly payments. See short-term business loans.
- Business credit cards. Revolving credit for everyday purchases, usually with a personal guarantee.
- Smaller SBA 7(a) loans. The SBA's 7(a) terms and eligibility page says the SBA does not require collateral for 7(a) loans of $50,000 or less (International Trade loans have different rules). Above that, lenders follow their own collateral policies, but a loan isn't supposed to be declined solely for inadequate collateral. The 7(a) program goes up to $5 million. Learn more on our SBA loans page.
What lenders check instead of collateral
When there's no asset to lean on, underwriting shifts to cash flow and the owner. Each lender sets its own bar, but most review:
- Time in business. Longer operating history means more data and usually more options.
- Revenue. Lenders want to see enough monthly revenue to cover the new payment alongside existing obligations.
- Bank statements. Recent statements show deposits, balances, overdrafts, and other debt payments.
- Credit. Personal credit matters for most small-business unsecured products, and business credit can help if you have it.
- Existing debt and positions. Lenders add up your current payments, including any merchant cash advances, to judge how much more you can carry.
- Industry. Some industries are seen as riskier and face tighter terms.
Loanable doesn't set these cutoffs, and there's no single score or revenue minimum across lenders. If credit is your main hurdle, our guide to bad credit business funding covers the paths built for that situation.
What unsecured financing costs
Unsecured financing usually costs more than secured financing, because the lender has less to recover if things go wrong. Costs vary widely by product, lender, and borrower, so compare every offer on the same basis:
- Interest rate and APR. For loans and lines of credit, ask for the APR, which folds in fees and gives a better comparison than the rate alone.
- Fees. Origination fees, draw fees, maintenance fees, and prepayment terms all change the real cost.
- Factor rate. Merchant cash advances and some short-term loans quote a factor rate instead of interest. It looks small but can mean a high effective cost over a short payback. Our guide to merchant cash advance rates shows how to compare factor rates with APR.
- Payment frequency. Daily or weekly payments affect cash flow even when the total cost looks reasonable.
Labeled example (illustrative only): Two offers for $50,000 both say "fast and unsecured." Offer A is a 24-month term loan with monthly payments. Offer B is a short-term product repaid daily over eight months. Even if the total payback looks similar, Offer B takes cash out of the business much faster. Compare total payback, payment size, and payment frequency side by side. These are not real or typical offers.
Unsecured vs. secured business loans
Here's how the two usually compare. Individual offers vary.
- Amount: Unsecured is usually smaller. Secured can be larger because the asset supports the deal.
- Cost: Unsecured usually costs more. Secured is often cheaper for the same borrower.
- Speed: Unsecured is often faster, with no appraisal. Secured can take longer, especially for real estate.
- Term: Unsecured is usually shorter. Secured can run years, matching the life of the asset.
- Risk to the owner: Unsecured usually means a personal guarantee and possibly a blanket lien. Secured puts the specific asset at risk, and often a guarantee too.
- Paperwork: Unsecured relies on bank statements and credit. Secured adds asset details, quotes, appraisals, or title work.
When unsecured makes sense, and when to secure it
Unsecured financing can be the right call when:
- You need money quickly for a short-term opportunity or gap.
- You don't own assets you want to pledge, or you don't want to tie them up.
- The amount is modest compared with your monthly revenue.
- You have a clear way to repay within the term.
A secured option is often cheaper and better when you're buying or financing a specific asset:
- Buying equipment? The equipment can back the deal. See equipment financing.
- Waiting on customer invoices? Your receivables can back the funding. See accounts receivable financing.
- Buying or refinancing property? Commercial real estate loans usually offer longer terms. See commercial real estate.
- Need everyday working capital? Compare options on our working capital page.
How to apply through a marketplace
Loanable lets you apply once and compare offers from 150+ funding partners, including lenders that offer unsecured term loans, lines of credit, and merchant cash advances, plus secured options if they fit better. Each partner sets its own terms. Here's the process:
- Apply once with basic business details and recent bank statements.
- Get matched with partners whose criteria fit your business.
- Compare offers on amount, cost, term, payment frequency, guarantee, and lien terms.
- Choose or walk away. The partner you pick handles final underwriting and funding.
Learn more about how it works, or start your application.
Frequently asked questions
Can I get an unsecured business loan with bad credit?
Sometimes. Some lenders weigh revenue and bank activity more than credit, especially for short-term loans and merchant cash advances. Expect higher costs and smaller amounts.
Does a personal guarantee make a loan secured?
Not in the usual sense. A personal guarantee is a promise to repay, not a pledge of a specific asset. It still puts your personal finances at risk if the business can't pay.
How much can I borrow with an unsecured business loan?
It depends on your revenue, cash flow, credit, existing debt, and the lender. Unsecured amounts are usually smaller than secured loans for the same business.
How fast can I get an unsecured business loan?
Unsecured products are often faster than secured ones because there's no appraisal or asset review. Timing still depends on the lender and how quickly you provide documents.
Do unsecured business loans show a UCC filing?
Often, yes. Many lenders file a UCC-1 blanket lien even when no specific collateral is pledged. Ask before you sign, and check your state's UCC records to see what's on file.
Does the SBA require collateral?
According to the SBA, collateral isn't required for 7(a) loans of $50,000 or less, except International Trade loans. For larger loans, lenders follow their own collateral policies.
Check your options
Know how much you need, what it's for, and how you'll repay it. Then apply once to compare unsecured and secured offers from Loanable's funding partners.