Short answer: an unsecured business loan does not require you to pledge a specific asset, such as property or equipment, as collateral. That makes it faster and open to businesses without assets, but it usually costs more and comes in smaller amounts. "Unsecured" rarely means no risk to you. Almost every unsecured business lender asks for a personal guarantee, and many file a general lien on your business assets.
Secured vs unsecured business loans
| Secured loan | Unsecured loan | |
|---|---|---|
| Collateral | A specific asset, such as real estate, equipment or vehicles | No specific asset |
| Rates | Usually lower | Usually higher |
| Amounts | Can be larger | Usually smaller, sized from revenue |
| Speed | Slower, because the collateral is valued | Often days |
| If you default | The lender can take the pledged asset | The lender can pursue the business and, through a personal guarantee, you |
Is a small business loan secured or unsecured? It depends on the product. Bank loans, SBA loans over $50,000, equipment financing and real estate loans are usually secured. Online term loans, many lines of credit, business credit cards and cash advances are usually unsecured.
Types of unsecured business financing
| Option | Typical cost | Typical speed |
|---|---|---|
| Online term loan | 14% to 99% APR | Days |
| Business line of credit | 10% to 99% APR | 1 to 7 days |
| SBA 7(a) loan of $50,000 or less | Capped at Prime + 6.5%, about 13.5% in October 2026 | 30 to 90 days |
| Business credit card | Varies by card and credit | Days to weeks |
| Merchant cash advance | 40% to 350% APR equivalent | 1 to 3 days |
| Revenue-based financing | A fixed fee repaid as a share of revenue | Days |
Cost ranges for online loans, lines of credit and cash advances are NerdWallet's April 2026 figures (NerdWallet). The SBA does not require collateral for 7(a) loans of $50,000 or less, which makes a small SBA loan the cheapest unsecured option if you can wait for it (SBA).
What "unsecured" really means: personal guarantees and UCC liens
Two things are common even on loans with no collateral:
- A personal guarantee. You sign a promise to repay if the business cannot. If the business defaults, the lender can sue you personally and go after your personal assets. See personal guarantee in our glossary.
- A UCC lien. Many lenders file a public notice called a UCC-1 claiming a general interest in your business assets, such as receivables, inventory and equipment. It is not tied to one asset, but it gives the lender a claim if you default, and it can make other lenders hesitate. See UCC filing.
Before you sign, ask the lender whether the guarantee is unlimited or limited, and whether they will file a blanket UCC lien.
What happens if you default on an unsecured business loan
With no collateral to take, the lender relies on collection and the courts. Expect late fees and collection calls first, then a demand for the full balance. The lender can sue the business and, under a personal guarantee, you. A court judgment can lead to bank account levies or liens on property. A default also damages your credit, and if the lender filed a UCC lien, it can claim business assets covered by that lien. If you are falling behind, talk to the lender early, before a missed payment becomes a default.
Who qualifies for an unsecured business loan
Because there is no collateral, lenders lean harder on everything else:
- Revenue. Steady monthly deposits are the main thing most online lenders size the loan from.
- Time in business. Many online lenders want at least six months to a year. Banks usually want two years or more.
- Credit. Your personal credit matters, especially for lines of credit and SBA loans. Cash advances weigh it least.
- Cash flow. Existing debt payments, including any cash advances, reduce how much you can borrow.
If your credit is the issue, see bad credit business loans and our post on business loans with no credit check.
How to get a business loan without collateral
- Decide how much you need. Unsecured amounts are smaller, so borrow for a specific need.
- Check whether a small SBA loan fits. Up to $50,000 with no collateral required, at a capped rate, if you can wait.
- Gather three to six months of bank statements, plus ID and your EIN. See how to get a business loan.
- Compare APRs, not payments. Daily or weekly payments can hide a high cost. Our business loan calculator converts any offer to an APR.
- Read the guarantee and lien terms before you sign.
Costs
Unsecured financing costs more because the lender takes more risk. Compare the APR, which includes fees, and the total repayment. Our small business loan rates page has current ranges by lender type, with dates and sources.
Frequently Asked Questions
What is an unsecured business loan?
It is a business loan that does not require you to pledge a specific asset, such as property or equipment, as collateral. Lenders decide mainly on your revenue, time in business and credit. Most still require a personal guarantee, and many file a general UCC lien on business assets.
Can I get a business loan without collateral?
Yes. Online term loans, many lines of credit, business credit cards, merchant cash advances and SBA 7(a) loans of $50,000 or less do not require specific collateral. Expect higher rates and smaller amounts than secured loans, and a personal guarantee in most cases.
Do unsecured business loans require a personal guarantee?
Usually, yes. Most unsecured lenders, and every SBA 7(a) loan for owners of 20% or more, require a personal guarantee. It means you can be held personally responsible for the debt if the business does not repay.
How much collateral is needed for a business loan?
It depends on the lender and loan. Unsecured loans need none. SBA 7(a) loans need none at $50,000 or less, follow the lender's standard policy up to $500,000, and above that are secured as fully as available assets allow. Conventional bank loans set their own collateral rules, which usually grow with the loan amount.
Are unsecured business loans more expensive?
Generally, yes. Without collateral, the lender takes more risk and charges for it. Online unsecured term loans ranged from 14% to 99% APR as of April 2026, compared with bank averages of about 6.4% to 11% in the first quarter of 2026.
What happens if I default on an unsecured business loan?
The lender can demand the full balance, send the debt to collections and sue the business. Under a personal guarantee, it can also sue you. A court judgment can lead to bank levies or property liens, and any UCC lien lets the lender claim covered business assets.
Sources
- NerdWallet: Business loan rates and fees (online loan, line of credit and cash advance ranges as of April 2026; bank averages for Q1 2026)
- U.S. Small Business Administration: 7(a) terms, conditions and eligibility, with collateral rules from SOP 50 10 8
- Bankrate: Wall Street Journal Prime Rate (7.00% in October 2026)