It is obvious that the best rates you can get (and the best repayment terms) will be with local banks since you will have the additional credibility layer of being a local business. These will not require collateral which is what you want. What these well established banks and financial institutions do is to tie their own rates to the rates offered by federal funds which are the lowest possible existing rates. In other words, if you have an amazing credit history and a properly established business, you will not find a better rate than those with a local bank. Of course, this is easier said than done: it is notoriously hard to get an unsecured loan, especially if we are talking about a new business without a good enough credit history. There is also the time factor as it could take months to go through the approval process. Hence what this articles claims to do is to offer you online alternatives to those highly coveted "local" loans which include direct and peer-to-peer options. These are mostly for the US market.
Best Unsecured Business Loans (Loanpigs.com Top Picks)
Regardless of your credit history or how your business currently stands, you should be able to get a loan from one of the platform lenders below. They should be able to offer you some of the best rates and repayment terms available (besides what your local bank would be able to offer), through a fast and easy online application process.
Best Loans for Businesses with credit over 600
Best Loans for Businesses with credit under 600
Types: Best Unsecured Business Loans
Currently there are 2 categories of platform lenders: direct and peer-to-peer Peer-to-peer lenders rely on external investors to fund loans. In practice, the money being lent to you may have hundreds of sources (individual investors) from the whole world. They are generally speaking a bit more flexible with approvals and repayment than banks and direct loans, however they will have slightly higher interest rates. Direct lenders lend you money from their own capital as a bank does and the biggest difference is that they do not several of the normal requirements and limitations of a bank. Therefore, they approve loans faster than a bank or a peer-to-peer lender while offering good rates. Here are some of the criteria that you have to be aware when choosing unsecured business loans platforms:
- Range: From 10 thousand to 100 thousand, there are options available to you and all the companies in this article have many options in terms of loan size.
- Rates: Although platform lenders simply are not able to offer the ultra low rates of a bank, they still can be competitive specially if your credit history is not stellar.
- Flexibility: one of the biggest needs of a small business is flexibility when it comes to the ability to fit repayments in a schedule that makes sense financially.
- Approval speed: if fast cash is what you need, in some cases and with some of these lenders you can get your hands on a loan in as little as 24 hours.
- Reputation: Everyone of these platforms have considerable history in the business and experienced professionals behind them. They are also quite reputable in the finance world.
- Streamlined application: As we all know, applying for a loan with a bank can be a hassle with a ton of forms to be filled out. In the case of the companies in this article, most of them are simple and in some you can apply in a matter of minutes.
- Websites: One key advantage of the selection here is great web site design. We have selected companies that happened to offer easy to use and readable websites making the job of selecting between them a bit easier.
The Best Unsecured Business Loans
| Lender | Ammount | Requirements | APR | Repayment |
|---|---|---|---|---|
| Funding Circle | 25k to 500k | No minimum credit score, 2 years in business minimum, 150k annual revenue, 1 year being profitable | 5.49–27.79%. Origination fee 0.99-5.99% | 1-5 years |
| Prosper | up to 35k | minimum 640 credit, no longevity minimum, no income limit | 5.99%-32.99% | 3-5 years |
| StreetShares | 2k to 100k | 600 minimum credit. 1 year in business and 25k annual revenue or 6mo in business and 100k annual revenue | 9-40% | 3mo to 36mo |
| Dealstruck | up to 500k | minimum 600 credit, 1 year in business, 150k annual revenue | 9.99% to 27.99% | 1-4 years |
| OnDeck | 5k to 500k | LOC: 13.99% to 39.99%, Term Loan: 30-50%, origination fee 2.5-4% | 9.99% to 27.99% | 1-4 years |
| Kabbage | 2k to 150k | Credit history varies. 1 year in business, 50k annual revenue | 32%-108%/td> | 6-12 months |
Best Unsecured Business Loans With Credit Over 600
Funding Circle
Highlights:
- Range: 25k to 500k
- APR: 5.49% to 27.79%
- Minimum Credit: none
Funding Circle business model is peer-to-peer and they have terms that range from 1 to 5 years. In order to qualify, you have to have 150k/year revenue and must be in business for a minimum of 2 years (with one year being profitable). During application you will be required to share your tax returns (both personal and your that of your business), bank statements for your business and other documents if the loan is over 300k. There are origination fees of .99%-5.99% and a late fee of 10% if you are late on your payments. For: companies with 2 years of history and revenues above 150k. Not for: companies with less than 2 years in business or with under 150k in revenue. Nevada residents are prohibited from applying.
Prosper
Highlights:
- Range: up to 35k
- APR: 5.49% to 32.99%
- Minimum Credit: 640
Prosper is also a peer-to-peer lender with loans available for businesses and for individuals as well. This is good only if you are looking for small loans up to 35k and when you are so new to business that you do not have the credit history to qualify for larger loans. Terms are 36 to 60 months. They take a little longer to qualify you: up to 2 weeks in total turnaround time to get your hands on the money. For: new businesses with under 12 months of history looking to borrow 35k or less. Not for: people looking to have money quickly since it takes 2 weeks to be approved. Also not good for established businesses.
Street Shares
Highlights:
- Range: 2k to 100k
- APR: 9% to 40%
- Minimum Credit: 600
Street Shares is also a peer-to-peer lending system. They with with companies that have at least a year long history with revenues of 25k per anum. It is also possible to qualify if you only have 6mo of history but you will be required to demonstrate 100k of revenue per anum. Repayment is from 3 to 36 months. You cannot have had bankruptcies in the past 3 years and no tax liens or collections (there are exceptions). After approval, cash is released to you in 1 to 5 days. For: businesses with at least 12 months of history, 600 credit, 25k/year revenue Not for: businesses needed over 100k. Not available in North & South Dakota.
Dealstruck
Highlights:
- Range: up to 500k
- APR: 9.99% to 27.99%
- Minimum Credit: 600
Dealstruck is a direct lender. They have unsecured business loans that you can pay in up to 4 years. You are required to have a business history spanning at least 12 months and 150k/year revenue. They have a calculator on their site that is helpful to estimate your monthly dues based on a variety of criteria. You get your loan in 5-7 days. For: businesses with 12 months of history or more and 150k/year revenue. Not for: companies with less than 12 month long history, companies with bad credit.
Best Unsecured Business Loans With Credit Under 600
OnDeck
Highlights:
- Range: 5k to 500k
- APR: Line of Credit: 13.99% to 39.99% and Term Loans between 30%-50%
- Minimum Credit: 500
OnDeck is a direct lender. They have 2 options available for businesses: term loans and lines of credit. A line of credit is better suited for well established companies with interest rates ranging on the lower side of things. Term loans are more businesses with less history and that are also seeking smaller loans. Term loans do not have a de facto interest rate as they charge a fixed percentage for every dollar you borrow. In practice, term loans can cost significantly more. Origination fees range between 2.5% and 4%. They are fast to hand over the loan amount: sometimes you get the money in 24h. Payment terms can be between 3 and 36 months. You are required to adhere to an automatic payment structure that is either daily or weekly and there is no advantage in paying it off earlier like with normal loans. This is the case because you are required to pay fixed fees. To qualify, you need at least 1 year in business, 500 credit and 100k in revenues. For: businesses with credit between 500-600 needing more than 100k. If your credit is higher, try Dealstruck. Not for: businesses with credit above 600 that can qualify for better rates and payment terms.
Kabbage
Highlights:
- Range: 2k to 150k
- APR: 32-108%
- Minimum Credit: variable
Kabbage is one of the most flexible players in the industry which means they are willing to work with people with less than stellar credit scores or don't have much of a history in business to qualify for loans from banks or sources with lower APRs. Kabbage's application is online and they take into consideration data such as online sales and shipping performance as well as your credit history. This is a good option for online businesses including Amazon stores. You must have at least 50k/year in revenue and 1 year in business in order to qualify. Loans are like a line of credit which means you get approved for a certain amount and you can borrow up to that amount once a day, so you only pay what you use. You must repay in 6-12 months. For: businesses with 1 year in business at least and a credit history. Not for: businesses with credit score above 500 that need more than 150k.
Why Get an Unsecured Business Loan?
The more obvious advantage of getting an unsecured business loan - as its name suggests - is flexibility. If you are in need of fast money, an unsecured business loan is a fantastic if not the best alternative. These are usually easier to get, required fewer checks and you get your hands on the money faster albeit you pay a higher interest rate. In order to understand why you end up paying more, you have to learn the difference between a secured and an unsecured loan. A secured loan has colateral p being it a car, or a house in the case of a mortgage or any other asset that you promise the bank to use as security in case of default. A secure loan has much lower interest rates but are harder to get because your asset needs to be evaluated. Unsecured loans are obviously much easier to get because there is no collateral involved. There is no risk of losing a valuable asset such as your house or your car in case you cannot make your payments. Plus, all you are required to provide during the application process is your credit scores and revenues. Of course, you pay higher interest since the landing party is taking a higher risk without any physical asset as protection.
The Conclusion
This is an incredibly useful and important tool for any business and most people use these to capitalize on a strong moment in the economy, to spur growth, or to simply get more inventory, equipment and so on. The best route here is to start with your local bank and see what they may be able to offer and work your way from there as you seek for the most affordable solution for your unsecured business loan.