Best unsecured business loans in December 2024

Bluevine is best for fast funding because you can get an approval decision in as little as five minutes and funding in as little as one day. It also advertises no monthly fees and on-demand access to a revolving line of credit. Loans can be managed through an online dashboard, keeping the funding process simple and speedy when you need to make a withdrawal.

• Founded in 2013
• Online application and dashboard
• Available in 47 states
• 24-hour funding
• Minimal fees

SMB Compass is best for loan variety because the lender offers nine business loan products, including conventional loans and alternative options. Its choices include term loans, business lines of credit, SBA loans, bridge loans and purchase order financing. This product lineup is a wider variety than the two to three offerings most online lenders have, helping you find a loan that suits your funding needs to a T.

• Founded in 2017
• Online application
• Available in 49 states
• Alternative business loans
• High funding limits

OnDeck is best for borrowers looking for a line of credit with flexible repayments and easy access. The line of credit is entirely online and doesn’t have draw fees. You also get multiple repayment options of 12, 18 or 24 months and weekly or monthly payments. These help you pay back the loan on a timeline that works best for you. Many lines of credit offer only one or two repayment options.

• Founded in 2006
• Online application
• Available in 49 states
• Accepts fair credit

Fundbox is best for borrowers who are seeking relatively small funding amounts quickly. Since fees are weekly and potentially high compared to other credit lines, it’s best for borrowers who know they can repay the loan within the repayment period or sooner, as there aren’t any prepayment penalties.

• Founded in 2013
• Online application
• Available in 50 states
• No prepayment penalties
• Inc. 5000 honoree

Bank of America is best for borrowers who are already Bank of America customers and enrolled or eligible for Preferred Rewards. Preferred Reward members can receive interest rate discounts on business loans, ranging from 0.25 percent to 0.75 percent off your interest rate when applying for new business lines of credit or term loans. Preferred Rewards also offers rewards on other banking products, including higher interest on savings accounts, bonus credit card rewards and waived banking fees.

• Founded in 1948
• Available in 50 states
• Thousands of branches
• Rate discounts for preferred members

Wells Fargo is best for borrowers looking to earn rewards from their spending. With a business line of credit enrolled in the rewards program, you can receive one point for every dollar spent, redeemable for travel rewards, gift cards and more. It also offers 1,000 bonus points if you spend $1,000 in qualifying purchases. 

Another unique feature is the line of credit Mastercard access card. This card allows you to spend directly from your business line of credit. These features make its lines of credit accessible and resemble the flexible features offered by most business credit cards.

• Founded in 1852
• Online or in-person application
• Thousands of bank branches
• Top SBA lender
• Line of credit rewards program

• Business plan
• Business license 
• Employer identification number (EIN)
• Recent personal and business tax returns 
• Recent bank statements 
• Proof of business insurance
• Payroll records
• List of accounts payable and accounts receivable 
• Business financial statements (i.e., balance sheet, profit and loss statement)

Term loans provide a single lump sum and have a set amount of time — from a few months up to around five years — to repay it. They’re available from large banks and smaller digital lenders alike. But they can require high annual revenue and a personal guarantee.

Microloans offer limited borrowing amounts, usually around $50,000. They’re good for small businesses trying to get off the ground but may be too limited for businesses trying to scale higher. Rates can be a bit high, too.

With business lines of credit, you have a set credit limit and draw period. These offer larger funding limits and lower rates than a business credit card. You can also borrow repeatedly up to the available credit limit or borrow again once the original borrowed amount has been paid off. You may be limited to a certain number of draws per month or year.

This alternative loan involves selling your unpaid invoices to a factoring company, which then collects the invoice on your behalf and keeps a percentage. Fees may be steep, but invoice factoring can help you cover gaps in cash flow and is an accessible option for borrowers with poor credit.

This is a type of bad credit loan, which gets calculated based on credit card sales. You repay them with a percentage of your daily or weekly sales. New businesses with less established credit may find merchant cash advances (MCAs) the best available option. But MCAs aren’t technically loans and aren’t subject to usury laws. So they may have high fees and short repayment terms, and interest rates may soar into the triple digits.

If you have an asset or savings to offer as collateral, a secured business loan is a good alternative to an unsecured loan. While offering collateral increases your company’s risk, it reduces the lender’s risk. That can make it easier to qualify for a loan and help keep borrowing costs low.

Another option for your company is to use crowdfunding to raise cash.

One way to crowdfund is to pre-sell a product. Customers pay you up front and you use that cash to produce and ship a product to them. You can also try crowdfunding to raise money from people who like your company. This allows you to pay for expansion or new equipment with no expectation that the funders get something in return.

The total cost you’ll pay for an unsecured business loan includes the down payment, interest rate and any fees the lender charges. The loan interest will be the largest cost, but rates can vary widely from 7 percent to 75 percent APR based on the type of loan and your credit. Lenders may also ask you to put down 10 percent or more of the loan amount in addition to charging an origination fee, closing costs or other fees.  

How you use an unsecured business loan depends on the type of loan you get. Most loans don’t include many restrictions on uses, but different loans cater to different needs. For example, unsecured term loans work well for one-time purchases. But a business line of credit can pay for small, day-to-day expenses, and it lets you tap the credit over and over again as it refreshes after you pay off previous loans.

Unsecured business loans aren’t hard to get if you meet the standard business qualifications. For most lenders, you’ll get approved if you have a strong personal credit score of 670 or higher, at least two years in business and a trajectory of growing revenue. But if you fall below these qualifications, you’ll need to find lenders willing to work with you or consider putting up collateral to boost your odds of approval. 

If you miss one or two payments on an unsecured business loan, you can keep the loan in good standing by making the payments plus any interest and fees charged. But if you miss multiple payments, the loan could go into default. While an unsecured business loan isn’t tied directly to collateral, lenders can still go after your business assets through legal action if you default. You may have also signed a personal guarantee, which guarantees the loan with your personal assets if your business can’t pay.

Access to small business funding is a challenge for many business owners. Rate hikes and bank turmoil have led to lenders tightening credit standards and eligibility requirements. This can make it difficult for startups, bad-credit borrowers and business owners in underserved areas to get approved for small business loans. 

Our experts consider several factors in this category and award higher scores to lenders that offer flexible loan amounts, fast approval and funding and inclusive time in business and annual revenue requirements.

The affordability of a business loan often depends on a business owner's financial profile. A business with high revenue and a flexible budget will likely be able to afford most loan options. Businesses considered high risk, such as startups or those with bad credit, may struggle to find loans with affordable interest rates and reasonable fees. 

We consider a business loan affordable if the payments are manageable, you have the lowest possible rate based on your creditworthiness and there are minimal fees. Lenders that have lower rates, offer rate or fee discounts and have minimal fees receive higher scores. 

A good customer experience requires a lender to be transparent, efficient and responsive. Reputable lenders that value their customers are easy to communicate with, responsive to your questions and concerns and willing to go the extra mile to make sure you have a positive experience for the life of the loan.

Lenders offering online accounts and applications and a range of customer support availability score higher in this category. 

While the Truth in Lending Act (TILA) protects consumers against unfair or harmful lending practices, it doesn’t apply to business loans. This can make it harder to get straightforward and upfront information on loan costs when comparison shopping. We score lenders that make it easy to find rates and fees, as well as eligibility and credit score requirements, higher than those who do not disclose information.

Loan flexibility is finding a loan to meet your needs, even if you don’t have high annual revenue, several years in business or the best credit score. Loan flexibility can look like lenders that offer multiple lending products, variety in loan terms or unique options to give business owners the opportunity to fund their businesses in a way that works for them.

Lenders scoring high in this category offer varied products and services to cater to all types of borrowers and businesses.