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Loan Amounts:$10,000 to $5M | Get funding as |
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An unsecured loan lets you borrow money without putting your business equipment, real estate, or personal assets up as collateral. If your business runs into trouble, the lender can't seize your truck or take your office building.
But unsecured doesn't mean no strings attached. Most unsecured business loans still require a personal guarantee, and the lender will typically file a Uniform Commercial Code (UCC) lien on your business. I'll explain both below so you know exactly what you're signing up for.
Below, I cover what truly counts as unsecured, the four types of loans available through Clarify's network, what lenders look at instead of assets, and how to improve your odds of approval.
| Top Unsecured Loan Options | |||||
|---|---|---|---|---|---|
| Loan type | Collateral | Amount | Rate | Repayment | Best for |
| Term loan | None | $10,000 to $5 million | Starting at 6% APR | Six to 36 months | One-time investments |
| Business line of credit | None | Up to $5 million | Starting at 6% APR | Revolving, six to 36 months | Ongoing cash flow |
| Merchant cash advance (MCA) | None | Up to $5 million | Factor rate 1.08 to 1.45 | Based on monthly sales | Strong daily card sales |
| Invoice factoring | The invoice itself | Up to 100% of invoice value | 0.5% to 5% per invoice per month | Tied to customer payment | Business to business (B2B) with unpaid invoices |
What Does Unsecured Mean?
Unsecured means the lender can't take ownership of anything belonging to you or your business (your car, office space, equipment) if you default on the loan. When you sign for an unsecured loan, you promise to personally be responsible for repaying it even if your business defaults.
The main difference between secured and unsecured loans is that unsecured loans let you access financing without using your business or personal assets as collateral. Because there's no collateral, unsecured loans tend to have higher interest rates than secured loans. Secured loans require a specific item, like equipment or commercial property, that can serve as collateral against the loan, and the lender holds title until the loan is fully repaid.
Two things show up on almost every unsecured business loan:
Personal guarantee. A personal guarantee makes the borrower personally liable for the debt if your business can't pay. If you're an LLC or corporation, the legal protection between your business and your personal finances stops applying to this loan.
UCC lien. A UCC lien is a public notice that the lender files to claim a general interest in your business assets. It doesn't take any one specific asset. It just lets future lenders know there's a debt outstanding. UCC liens typically come off when the loan is paid in full.
Once you understand both, the picture gets clearer. Unsecured means no specific asset is pledged. It doesn't mean zero accountability.
A Closer Look at Each Unsecured Option
Below is a breakdown of how each option works at Clarify, what it costs, and who tends to use it.
Term Loan
A term loan gives you a single lump sum up front, which you pay back over six to 36 months in fixed weekly, biweekly, or monthly payments. Funding can land as fast as same-day.
Term loans work well for one-time investments where you know exactly how much you need: a piece of equipment, a marketing push, or a payroll gap before a big client check clears.
Business Line of Credit
A business line of credit gives you a revolving pool of money you can pull from when you need it, then pay back, then pull again. You only pay interest on what you actually use. Funding can land as fast as same-day after approval.
Lines of credit work well for ongoing or unpredictable cash flow: slow months, surprise repairs, or a vendor offering a quick discount. Heads up that lines of credit have stricter qualifications than the other options. You'll generally need a 600+ credit score and at least one year in business.
Merchant Cash Advance
A merchant cash advance (MCA) gives you a lump sum up front in exchange for a portion of your future sales. You repay on a daily, weekly, or monthly schedule, or as a percentage of your card sales. Funding can land as fast as same-day after you're approved. MCAs use a factor rate instead of an APR.
In my experience, MCAs are popular with retailers, restaurants, and other businesses with strong daily or weekly card sales. They also have flexible credit requirements, accepting scores as low as 500.
Invoice Factoring
Invoice factoring lets you turn unpaid customer invoices into cash. You can sell your invoices to a factoring company and collect up to 100% of the value up front.
Factoring works well for B2B businesses with customers on net 30, 60, or 90-day terms. Funding typically takes one to two weeks. Fees can run from 0.5% to 5% per invoice per month. Repayment is tied to when your customer actually pays. Your customers' creditworthiness matters more than yours, which makes factoring an option for owners with bad credit.
Secured vs. Unsecured Business Loans
When deciding between a secured business loan and an unsecured business loan, it really comes down to what you're willing to risk and how high a cost you're able to bear. Here's how I typically break it down with my clients.
| Feature | Secured loan | Unsecured loan |
|---|---|---|
| Collateral required | Yes | No |
| Approval odds | Easier to qualify with strong collateral | Depends more on credit and revenue |
| Interest rates | Lower | Higher |
| Loan amounts | Typically larger | Typically smaller |
| Speed of funding | Slower | Faster, sometimes same-day |
| Risk to borrower | Lender can seize pledged assets | Personal guarantee, but no asset seizure |
| Best for | Asset-rich businesses chasing the lowest rate | Asset-light businesses or those needing speed |
What Lenders Look at in Place of Collateral
When there's no collateral involved, lenders need other ways to gauge whether you'll repay them. Here's what we consider at Clarify.
Stable revenue
A consistent monthly deposit history shows you can support a loan payment. We require a minimum of $10,000 in monthly gross revenue.
Time in business
Six months for term loans and MCAs. One year for lines of credit. A longer track record means lower lender risk.
Credit score
Most unsecured options require a 550+ credit score at Clarify. MCAs go as low as 500. Lines of credit require 600+.
Bank statements
Three to four months of recent statements show real business activity, ending balances, and any overdraft history.
Personal guarantee
Your willingness to personally guarantee the loan signals you believe your business will make good on its obligation.
Even if you don't have a warehouse full of equipment or commercial real estate, you can still get approved for an unsecured loan if your fundamentals are solid.
Qualifying for an Unsecured Loan at Clarify
To make sure approvals are fast, we've kept our requirements straightforward. Here's what your business needs to meet.
Time in business
Six months for term loans and MCAs. One year for lines of credit.
Monthly revenue
$10,000+ in monthly deposits to your business account.
Credit score
500+ for MCAs. 550+ for term loans. 600+ for lines of credit.
Bank account
An active business bank account in the U.S.
Bank statements
Three to four months of recent statements.
U.S. business
Located or incorporated in the United States.
Minimum Qualifications
$10,000 in monthly revenue
Your business must earn at least $10K per month in a business bank account.
500+ credit score
You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.
Minimum six months in business
Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.
Have a business bank account
Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.
Who Should Choose an Unsecured Loan
You may want an unsecured loan if you don't have collateral, don't want to risk what you have, or need funds as soon as possible.
Service-based or asset-light business. Consultants, agencies, online sellers, and software businesses typically don't have heavy equipment or commercial property to use as collateral.
You don't want to risk personal property. Secured loans can put your home or commercial property on the line. Unsecured options keep your property free and clear.
You want speed over the lowest rate. A loan that funds same-day at 12% can be more useful than a 7% loan that takes three months to close.
You have strong income but are light on assets. Steady monthly deposits matter much more than the length of your asset list.
How To Improve Your Odds of Approval
If you've been turned down before, here are some ways to improve your application.
Pay down revolving debt
Lower utilization on credit cards and lines of credit raises your credit score quickly and shows you're managing what you already have.
Clean up your bank statements
Fewer overdrafts and consistent ending balances show stability to a lender.
Document six months of stable revenue
Three to four months of statements is the minimum. More history at consistent levels builds confidence.
Tie the loan to a specific use
Lenders prefer requests that name a reason ("Q3 payroll," "buy 200 cases of inventory") over generic "working capital."
Be willing to sign a personal guarantee
Most unsecured options at Clarify require a personal guarantee. Refusing usually means a smaller loan, a higher rate, or no offer at all.
Red Flags To Watch For
I've spent 15 years helping business owners recover after dealing with bad lenders, and they all follow similar patterns. A good lender shows you the numbers, gives you time to study the contract, and provides straightforward answers to your questions. If something feels off, slow down. Here's what to steer clear of.
EIN-only advertising
"We'll lend money using only your EIN. No credit check. No personal guarantee." Any lender serious enough to provide unsecured loans of meaningful size won't operate this way.
Advance fees
A real lender takes its fees out of the loan, not from your pocket before funding is done.
Factor rate obfuscation
A lender that can't clearly disclose the total repayment amount, or convert a factor rate into an effective APR, is hiding something.
No rate disclosure
Your offer letter must specifically disclose the APR or factor rate. If it doesn't, walk away.
Pressure to sign now
Reputable lenders give you time to review the agreement. If someone is pressuring you to sign now, it's probably because they don't want you to examine it closely.
Vague repayment terms
Your contract should spell out exactly how much you owe, how often you owe it, and for how long. Anything vague is a problem.
Sample Payments on a $50,000 Loan
Real numbers help more than ranges. Here are three examples of sample payments on a $50,000 loan. Your Clarify advisor can run examples based on actual loan offers you receive.
$50,000 at 6% APR over 24 months. About $2,216 per month.
$50,000 at 12% APR over 12 months. About $4,442 per month.
$50,000 at 6% APR over 60 months. About $967 per month.
Shorter terms mean larger monthly payments but less total interest paid. Longer terms mean smaller monthly payments but more total interest over the life of the loan.
Get Funded Without Putting Your Assets at Risk
An unsecured business loan gets you the funds you need without risking your assets. Clarify Capital has helped over 50,000 businesses secure more than $1 billion in funding across 1,000+ industries. Our application takes about two minutes, and you can have offers from our network of 75+ lenders within 24 hours.
Want to find out how much funding you could qualify for? Apply today to compare unsecured loan options that fit your business.
Frequently Asked Questions About Unsecured Business Loans
If you still have questions on unsecured business loans, I've compiled some of the most common ones that I hear from my clients below.
Is It Hard To Get an Unsecured Business Loan?
It depends on the lender. Banks traditionally have strict criteria like a 650+ credit score, two years in business, and sometimes collateral anyway. At Clarify, we set the bar lower. With a 550+ credit score, six months in business, and $10,000+ in monthly revenue, the application takes about two minutes, and we'll usually let you know within hours if you qualify for an offer.
How Much Is the Monthly Payment on a $50,000 Business Loan?
Your monthly payment depends on the APR and length of the loan. As a baseline, $50,000 at 6% APR over 24 months runs about $2,216 a month. The same loan at 12% APR over 12 months is about $4,442 a month. Stretched to 60 months at 6% APR, the payment drops to about $967. Your Clarify advisor can show you specific examples based on the offers you qualify for.
Who Is Eligible for an Unsecured Business Loan?
At Clarify, a typical eligible borrower has a 550+ personal credit score, at least six months in business, $10,000+ in monthly revenue, and an active U.S. business bank account. Factoring can qualify applicants with credit scores as low as 500. Lines of credit generally require a minimum 600+ score and at least one year in business.
Can an LLC Get a Loan With No Credit?
True no-credit lending is rare and almost always predatory. At Clarify, we evaluate both your personal credit history and your business's financial performance. Most options require a 550+ personal credit score. Factoring may accommodate newer-to-credit borrowers with strong revenue, but it still requires a minimum 500+ score.
Is a Personal Guarantee Required?
Usually, yes. Most unsecured business loans require at least one business owner to sign a personal guarantee, which means the owner agrees to repay the debt personally if the business cannot. For SBA loans, anyone who owns 20% or more of the business generally has to sign an unlimited personal guarantee. For other unsecured business loans, the exact requirement depends on the lender. The guarantee helps reduce the lender's risk when there is no specific collateral securing the loan.
What Is a UCC Lien?
A UCC lien is a public notice that indicates a general interest in your business assets. It doesn't restrict access to any specific asset. It just lets potential lenders know there's a debt against your company. UCC liens are typically released once the loan is repaid.
Can I Get a Loan With Just My EIN?
EIN-only business loans are rare. While your Employer Identification Number is required for any business loan application at Clarify, we also assess your personal credit, your business's revenue, and your bank statements during underwriting. We don't approve loans based on an EIN alone.
Are There Prepayment Penalties?
For most Clarify loan options, there are no prepayment penalties on unsecured term loans, so you can repay the principal early without penalty and save on interest. Some lenders in our network may include prepayment provisions in their contracts, so always read your agreement carefully before signing.
How Does Clarify Safeguard My Business Information?
Clarify follows SOC 2 security principles to protect your information. Your bank statements, tax ID, and other confidential documents stay encrypted. We only share what each lender needs to extend you an offer, and we never sell your data to any third party.
Michael Baynes
Co-founder, Clarify
Michael has over 15 years of experience in the business finance industry working directly with entrepreneurs. He co-founded Clarify Capital with the mission to cut through the noise in the finance industry by providing fast funding and clear answers. He holds dual degrees in Accounting and Finance from the Kelley School of Business at Indiana University. More about the Clarify team →
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