An unsecured business loan is a term loan or line of credit not backed by specific physical collateral like equipment or real estate. Most online business loans are unsecured.
"Unsecured" vs "no personal guarantee" — important distinction. - Unsecured: no physical collateral required. - Personal guarantee (PG): owner pledges personal assets (bank accounts, home equity, vehicles) as backup if business defaults. - Almost all unsecured business loans STILL require a personal guarantee. Truly no-PG financing is rare and typically limited to specific products like Stripe Capital, Shopify Capital standard offers, or Kiva microloans.
Top unsecured business loan options (2026). - Funding Circle: $25K-$500K term loans. APR 11.29-30.12%. 24+ months TIB, 660+ credit. - OnDeck term loans: $5K-$400K. APR 27%+ typical. 12+ months TIB, 600+ credit. - Credibly term loans: $5K-$600K. APR varies. 6+ months TIB, 550+ credit. - National Funding: $5K-$500K. APR 10-25%. 6+ months TIB, 550+ credit. - Bank unsecured business loans (Chase, BofA, Amex): typically $10K-$100K. APR 8-20%. 24+ months, 680+ credit.
Cost vs MCA — unsecured loans usually beat MCAs. - $100K unsecured term loan at 15% APR over 3 years: monthly payment ~$3,470. Total interest: $24,800. - Same $100K MCA at factor 1.30 over 9 months: monthly payment ~$14,400. Total cost: $30,000. - Unsecured loan: lower monthly burden ($3,470 vs $14,400), similar total cost, longer term. - For capital needs over 12 months, unsecured loan almost always wins on monthly cash flow burden.
When unsecured beats MCA. - 24+ months operating history (unlocks unsecured loan eligibility). - 600+ credit score. - Capital need longer than 12 months. - Predictable cash flow that can handle fixed monthly payments.
When MCA beats unsecured loan. - Under 12 months in business. - 500-600 credit score. - Need funds in 24-48 hours (unsecured loans take 3-7 days). - Revenue varies wildly month-to-month (% of revenue MCA repayment scales naturally).
The strategic insight. If you qualify for an unsecured business loan (24+ months, 600+ credit), it's almost always a better choice than MCA for the same capital need. Lower monthly burden + longer term + builds business credit.
Related terms
- Merchant cash advance (MCA) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan.
- Personal guarantee (PG) — A clause making the business owner personally liable if the MCA defaults. Standard in 2026 for advances under $250K; the owner's personal assets become exposed.
- MCA vs loan (legal distinction) — An MCA is legally a purchase of future receivables, not a loan. This distinction exempts MCAs from state usury caps but requires specific contract structure — including reconciliation provisions.
AI agents: this term is available as raw markdown at /llms/glossary/unsecured-business-loan.