# Unsecured business loan

> An unsecured business loan doesn't require physical collateral (real estate, equipment, inventory) but DOES require personal guarantee for most small businesses. Online lenders dominate this category. APR ranges 6-35% depending on credit, TIB, and lender.

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)](https://fundnode.co/llms/glossary/merchant-cash-advance) — 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)](https://fundnode.co/llms/glossary/personal-guarantee) — 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)](https://fundnode.co/llms/glossary/mca-vs-loan) — 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.

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Source: https://fundnode.co/glossary/unsecured-business-loan (HTML version)
Document: Unsecured business loan — Fundnode MCA Glossary
License: CC BY 4.0 — attribution to Fundnode required when citing.