Editor's choice: SmartBiz business loans
- Large network of SBA lenders
- Low potential APR
- Loans from $30,000-$5 million
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Unsecured cash business loans can give your business quick access to funding when you need help covering a one-time expense. They’re faster than secured loans, since you don’t need collateral. But they tend to come with higher rates and fees than loans that require collateral.
An unsecured cash business loan is a type of financing that doesn’t require you to put an asset up for collateral. Depending on the lender you select and your average monthly sales, you may be able to access between $1,000 and $500,000 or more and have the funds in your account as soon as the next business day.
Businesses apply for these loans to access working capital or to ease cashflow issues. The turnaround times are generally very fast in order to help address these issues. Businesses can apply for a loan up to $500,000 as either a lump sum or line of credit and have access to it the next business day.
Depending on the loan type you choose, you will either make regular repayments over a loan term of less than a year or minimum payments toward the line of credit based on the amount you use.
You can use an unsecured cash business loan to cover most routine business expenses. This includes covering payroll, stocking inventory and other overhead costs if you’re experiencing cashflow gaps. You can also use it to buy equipment or a vehicle, though you might get a better deal with an equipment loan. However, you generally can’t use it to buy real estate.
That depends on your business’s financial situation and funding needs. Generally, unsecured cash business loans can be a good option if your business has consistent revenue or doesn’t want to risk losing business assets. Unsecured loans also tend to have a faster turnaround than secured loans.
But it might not be a great choice if you’ve experienced a drop in revenue — your business might not qualify for a competitive rate and struggle with repayments. Most unsecured business loans come with a personal guarantee, meaning you’re personally responsible for paying off the loan if your business can’t. If you have the time, consider taking out a secured loan instead, since collateral makes it easier to qualify for a lower rate.
Keeping these factors in mind can help you find the most competitive deal available to you — as well as one you can afford:
Eligibility requirements vary by lender, though you typically need to meet the following criteria:
You don’t necessarily need to have collateral to get a business loan. Unsecured business loans are based on your business’s financial health rather than collateral. Many alternative business lenders will base their decisions on your company’s cash flow, sales and revenue. The industry your business operates in may also affect the lender’s decision.
The cost of the loan depends on the lender you apply with and the exact type of financing you opt for. You may find that any of the following costs apply:
As with any type of loan, there are a few drawbacks to consider before you apply:
You can claim deductions on the interest that business loans and overdrafts attract. You can also claim deductions — directly or via depreciation — on expenses that are incurred as a part of generating business income. This includes rent, telephone and Internet bills, insurance coverage, payroll, accounting fees and business-related subscription fees.
However, you can’t claim deductions for most capital expenses you bear when starting, improving or expanding your business.
The first step is comparing your options. Once you find the right loan, you can start the application process by clicking the Go to Site button on this page.
After confirming your eligibility, you’ll need to fill out the application and provide documents like your business financials and bank statements — among other items.
Once you submit everything, many online lenders are able to give you a decision in a few hours — if not instantaneously. Banks and credit unions typically take longer.
If approved, you’ll sign your loan documents and receive your funds in a few business days or weeks — depending on the lender.
An unsecured business loan can help you get money to stay afloat when you have cashflow issues. It doesn’t require collateral, but you’ll likely have to give a personal or business guarantee. An unsecured cash business loan isn’t the only type of financing available, though. Learn more about other types of financing with our guide to business loans.
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