Best Unsecured Business Loans in 2022

Get an Unsecured Business Loan Without Collateral: The Definitive Guide

Clarify is committed to helping owners live the American dream with uncollateralized funding.

Most lenders require some form of collateral to get a business loan, which can be in the form of real estate, equipment, or other personal assets. As an owner, that opens you up for significant risk.

So how can you avoid that risk? Unsecured business loans, also known as uncollateralized loans, allow an owner to borrow capital without any collateral requirements.

It de-risks your ability to obtain financing and is the loan option of choice for most small businesses.

In this comprehensive guide to unsecured business loans, you’ll learn everything about:

• The different types of unsecured loans available
• The use-cases and advantages for each type of loan
• How you can qualify for business funding
• How to get approved quickly, even with bad credit
• Best ways to use uncollateralized capital to grow your company
• Answers from experts to frequently asked questions about business loans

So if you’re looking to get working capital without putting your assets on the line, you'll love the following guide.

Let’s get to it.

Top Unsecured Business Loan Options of 2022

There are two key benefits of unsecured as compared to secured loans. First, a lender can’t seize your business assets if you fail to pay back the loan. Secondly, you get faster funding.

Having approved over 10,000 small business owners for unsecured business loans, we have outlined the four best lending solutions you need to know about.

1. Unsecured Short-Term Loans

Best loan for: Borrowers who need the fastest possible funding with minimal documentation.

When most people think of a traditional business loan, they are referring to an unsecured short-term loan. It’s the simplest form of lending to understand. You get a lump sum of cash infusion on a fixed interest rate that you pay back based on a loan term length. The term length is usually up to 2 years, and of course, requires no collateral.

We have streamlined our online application to get entrepreneurs approved within minutes. Interest rates start at 7% for credit scores over 550.

Key benefits of unsecured short-term loans:

• Any type of business can get approved
• No collateral requirements
• Competitive interest rates offered by over 75+ lenders
• Highest approval ratio
• Early payoff incentives

Apply for Short-Term Loan

2. Unsecured Business Line of Credit

Best loan for: Borrowers who need a revolving credit line without collateral.

A business line of credit is a revolving credit limit similar to a credit card, but with a lower interest. Unsecured credit lines come with shorter term lengths as compared to their secured alternatives. That’s the tradeoff for not putting down any collateral.

Just like a credit card, you can draw funds from your credit line when expenses arise. And you are only charged interest on those withdrawn funds. This makes revolving business line of credit a great option for day-to-day working capital demands.

Key benefits of unsecured business lines of credit:

• No prepayment penalties
• Lower interest rates than credit cards (starting at 6%)
• Helps increase your personal credit rating
• Funds are available for use on-demand

Apply for Business Line of Credit

3. Unsecured Invoice Financing

Best loan for: Borrowers who want to get paid for outstanding accounts receivables.

Also known as factoring, invoice financing allows owners to get paid for outstanding invoices. The invoices themselves serve as collateral, so you don’t need to risk any assets. You get between 85% to 100% of the invoice value up front, and often the remainder once your customer pays off the balance.

It’s one of the few options where your personal credit score is not a factor at all in the approval process. Hence making it a good fit for owners with bad credit.

Key benefits of unsecured invoice financing:

• Personal credit rating is not a factor
• Get instant cashflow without taking on new business debt
• Quick approvals
• Only collateral needed are your unpaid invoices

Apply for Invoice Financing

4. Merchant Cash Advance

Best loan for: Borrowers who need a lump sum of cash in exchange for a percentage of future sales.

Merchant cash advances, also called MCA, is a lending solution to get a lump sum loan that is repaid via a portion of your future sales. It’s a good option for bridging gaps in cashflow and dealing with unexpected expenses.

An MCA covers your immediate needs for cash while keeping daily accounts payable intact. It’s flexible in the payment schedule as you only pay the lender back when your business generates sales. Retail businesses and restaurants are a good fit for merchant cash advances due to the seasonality of the industry.

Key benefits of merchant cash advance:

• Personal credit score is not a factor
• Easy approval process
• Borrow against future credit card transactions
• No collateral needed
• Flexible payment terms

Apply for Merchant Cash Advance

How to Apply for Unsecured Business Funding

Over 10,000 business owners trust Clarify Capital as their lending partner.

Getting access to working capital fast is often a key factor for business survival and growth. So we created a unique way of raising financing — and it takes just 2 minutes to apply online. We handle the grunt work to get your business approved and funded in as little as 24 hours.

Here is a complete look at how our simple lending process works:

Step 1: Know how much funds you want to borrow

From a business standpoint, we suggest jotting down a list of expenses you expect to pay for in the near future. This can include rent for office space, employee salaries, equipment needs, etc. Add those expenses up to get a ballpark estimate on how much financing you truly need.

Step 2: Apply online

It couldn’t get easier than this. Our online application is three quick steps. There a reason we’re rated 5/5 on Trustpilot and Google reviews. We take ease of funding and quick approval times seriously.

Step 3: Keep a few recent bank statements handy

You get a dedicated lending advisor assigned to you the second you apply online. We reach out to you right away to understand your specific financing needs and answer any questions you may have. Your advisor takes care of all your paperwork, you don’t have to lift a finger.

Step 4: Get funded!

The money is wired to your bank account in as little as 24 hours. We treat you like family and want to see you success, so we’re always available when your business demands more capital in the future.

Apply for an Unsecured Business Loan

How to Qualify for Unsecured Business Financing

We strive to have the highest approval rates for unsecured funding and make the process easy as pie. When you apply with us, we consider you family and do everything possible to get your business approved. Here are three qualification criteria to keep in mind:

1. You should generate over $10,000 in monthly revenue

This helps us see how much total capital you can get as an unsecured loan. The larger your revenues, the more funding you can get.

2. Have been in business for 6 months or more

Your business should be operational for at least 6 months to qualify for unsecured business loans. This helps lenders more confidently meet your financing needs.

3. Have a credit score of 550+

For term loans and business lines of credit, your personal credit score should be over 550. For invoice factoring and merchant cash advances, your credit score is not a factor to get approved.

Prequalify for a Collateral-Free Loan

Why Get an Unsecured Business Loan From Clarify?

Easy funding process, high approval rates, competitive APRs, no collateral need. It’s that simple.

Every business needs working capital for growth and bridging gaps in cashflow. We are a true lending partner that treats you like family, with your best interest at heart. Here are just a few ways Clarify is changing the lending industry:

1. Easy application

Time is your biggest asset. We make the funding process as friction-free as possible with our 3-step online application. It takes a couple of minutes to complete and a dedicated Clarify advisor gets assigned to help you make an informed decision.

2. Highest approval rates

You are more than a credit score. Your business is part of the American dream, contributing to our growing economy with ambition. We work with every entrepreneur to get them approved within a day. No more waiting weeks to get a decision from a traditional bank.

3. Term length up to 2 years

Unsecured business loans with Clarify have term lengths between 6 months to 2 years. We also tailor the re-payment plan to your cashflow and business needs.

4. No lengthy paperwork

We do all the paperwork for you. All you need to keep handy is your most recent bank statements.

5. No collateral requirement

Lower your risk as a business owner. Getting an unsecured business loan protects your assets.

6. No hidden fees

We are a completely transparent lender. There are never any hidden fees or terms you can’t understand. We keep it simple and walk you through all your available options, rates, and term lengths.

7. Competitive interest rates

As the largest marketplace for unsecured business loans, we offer competitive interest rates and terms. Our core mission at Clarify has always been to help small business owners like you achieve success in all their endeavors.

8. Tax deductible

The interest paid on your unsecured loan is tax deductible at the end of the year. When you file your yearly taxes, the IRS allows you to deduct them, thus lowering your overall cost of the financing.

Prequalify for a Loan

Prequalifying does not affect your credit score. See all your funding options instantly.

Top Use Cases for an Unsecured Business Loan

Based on the 10,000+ small businesses we have funded, here is the data on how owners have used their financing:

1. Inventory purchases

A large majority of owners used their capital to buy inventory. This is higher in industries like retail and restaurants, where keeping inventory stocked is key to success. Unsecured financing also helps you manage seasonal fluctuation in sales.

2. Equipment purchases

Almost every business has some form of equipment needs. From vehicles to technology, to commercial machinery. A business loan allows you to repair or replace aging equipment to keep up with demand.

3. Operational cashflow

Handling day-to-day expenses in running a smooth operation required funding. Having access to quick working capital keeps the lights on and paves the way for long term growth.

4. Refinancing existing debt

Many owners have used a business loan to consolidate their existing debt to lower the monthly payments and get additional funds.

5. Hire more employees

To grow your business you need to hire new staff. When you have growth opportunities available, an unsecured business loan allows you to expand your team. The funding lets you pay salaries and employee training.

6. Coronavirus Aid:

We provide financing to be used towards any pandemic-related needs. Funds can be used towards COVID-19 supplies, like Personal Protective Equipment (PPE) and sanitation measures. If the pandemic has impacted sales, an infusion of working capital can help you meet financial obligations in the immediate future.

Other common use-cases for collateral-free funding:

• check  Store renovations & improvements
• check  Acquire another business
• check  Taxes & payroll
• check  Digital marketing & advertising
• check  Pay for emergency repairs
• check  Open up a new location
• check  Buy or rent real estate
• check  Purchase materials in bulk
• check  Manage gaps in cashflow
• check  Unanticipated business expenses
• check  Explore growth opportunities

FAQ on Unsecured Business Loans

We take pride in bringing clarify to small business lending. Here are common questions we get asked by owners looking to get a loan without collateral: