An unsecured business loan has a number of advantages over secured loans. You will not have to use your inventory, home or equipment as collateral. This means that if you are unable to pay the loan, then you will still be able to keep your assets.
Even though you do not need any collateral, you still need to have a good or fair credit. You will also need to have strong personal revenue. However, it is important to note that every lender has its own requirements. Unsecured loans typically allow you to get funds fast. They also have higher interest rates.
Kabbage: The Best Option for People With bad Credit
Kabbage is a great option for people who need funds for short-term expenses. There is no minimum required credit score. You can get the funds within a few days. However, the interest rates typically range from 32 percent to 108 percent. This is not a good option for people who need the funds to pay for a large expense.
OnDeck is a great option for business owners with good credit and need the funds to cover unexpected expenses. It gives you a business line of credit. The interest rates typically range from 14 percent to 40 percent. The required minimum credit score is 600. You must be in business for at least nine months and have an annual revenue of at least $75,000.
You will have to sign a personal guarantee when you get this loan. This means that you will have to pay the funds back even if your business fails.
Lending Club gives both lines of credit and term loans. The interest rate typically ranges from 8 to 35 percent. The minimum required credit score is 600. Collateral is required if you get a loan or line of credit that is greater than $100,000. You must also be in business for at least two years and make at least $75,000 per year.
StreetShares is a great option for new business owners because you only have to be in business for one year to qualify for a loan or credit line. You must make at least $25,000 per year. The minimum required credit score is 600. Keep in mind that your credit limit will not be more than 20 percent of your annual revenue. For example, if you make $100,000 per year, then you will only be able to borrow $20,000.
Need Help Comparing Loan Options?
Nerdwallet can help you compare different lenders. We can help you find a lender that will give you a loan that fits your needs and goals.
William Anderson has been working with small business owners for the past 10 years. He got his start at an investment bank, but felt that he was too detached from where real people were making decisions that affected local economies. As a result, he took his experience and his MBA degree to work helping local small businesses.