Tips and Advice

Should I Get An Unsecured Small Business Loan?

Unsecured business financing loans allows you to obtain a loan without putting up collateral. Learn the pros and cons of unsecured business lending today.
making a business loan decision
By David Kirsch
Updated on: November 9th, 2022

making a business loan decision If you have been in business for two years or more and have established a good business credit profile, getting an unsecured loan for your small business may be a good option for you.

An unsecured small business loan allows you to take out a loan without having to put up any personal or business collateral. One way to think of unsecured business lending is as a credit card — you don’t have to put any assets up to get this type of loan.

Also, in the event that you’re unable to make the payments, the lender can’t sell off your personal or business assets. In addition, unsecured small business loans are granted mostly based on your credit history, so if your business hasn’t been in operation long enough to meet a traditional lender’s requirements, you can still obtain financing. Terms on an unsecured small business loan can range anywhere from 12 to 60 months, with rates starting at 6.78 percent.

Pros of Obtaining a Small Business Loan

  1. Does not require a business owner to put up assets for approval.
  2. If you have a great credit history, your approval rate will be high.
  3. No pre-payment penalties in most instances; if you pay off your loan quickly, you save on the interest.
  4. Minimal paperwork required to obtain unsecured business financing means faster approval.
  5. Cash available for any use.
  6. Likely to have a fixed interest rate.

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Cons of Obtaining a Small Business Loan

  1. Interest rates may be higher than if you secured the loan with an asset as lenders need to offset the higher degree of risk involved.
  2. Higher interest rates cause individual loan payments to be higher.
  3. If you have poor credit, or are a new company, you may have difficulty obtaining one.
  4. Terms will likely be shorter than other forms of financing.
  5. If you are unable to quality for a small business loan, don’t worry. There are other business financing solutions that may better fit your needs or offer you more affordable terms.

If you need help in finding out what type of loan is best for your small business, AmOne is here to help. Since 1999 our free service has helped over one million businesses obtain the unsecured business financing they need. AmOne’s financial search specialists can be reached toll-free at 1-800-781-5187. You can also learn more information about AmOne and about your unsecured small business loans options on our website.