An unsecured business startup loan is financing that isn’t backed by a specific asset such as property or equipment: the lender approves it on your credit, revenue and time in business, and usually asks for a personal guarantee or a lien on all business assets instead. For a new business, the realistic options are an SBA 7(a) loan of $50,000 or less, an online term loan or line of credit and a business credit card, plus a merchant cash advance or revenue-based financing once sales are steady.
Key Takeaways
- Only 10% of small firms with debt pledged no collateral or guarantee, and 59% signed a personal guarantee (Federal Reserve Banks, 2026 Report on Employer Firms).
- The SBA doesn’t require collateral on 7(a) loans of $50,000 or less, but owners of 20% or more generally must guarantee any SBA loan (SBA, October 2026).
- Young firms get approved less often: 48% of applicants up to five years old were fully approved, against 63% of firms over 20 years old (Federal Reserve SBCS, 2025 survey).
- NerdWallet puts unsecured online term loans at around 14% up to 99% APR (August 2026), and 60% of online lender borrowers said the cost ended up higher than they expected (Federal Reserve SBCS, 2025 survey).
- Merchant cash advances usually carry factor rates of 1.1 to 1.5, so a $100,000 advance means repaying $110,000 to $150,000 (NerdWallet and CNBC Select, 2026).
What Is an Unsecured Business Loan?
A secured loan names an asset the lender can take if you stop paying, such as real estate, a vehicle or the equipment the loan bought. An unsecured loan names no specific asset. To make up for that, the lender prices in more risk, lends smaller amounts and asks for other protection, usually a personal guarantee, a blanket lien or both. NerdWallet calls the two “common practice among secured and unsecured business loans”.
So “unsecured” rarely means that nothing backs the debt. The Federal Reserve’s survey of small employer firms asked debtholders what they had pledged: 59% had signed a personal guarantee, 51% had pledged business assets, 38% personal assets and 10% portions of future sales, and only 10% had pledged no collateral or guarantee at all (Federal Reserve Banks, 2026 Report on Employer Firms, 4,651 firms with debt, more than one answer allowed).
Personal guarantees put your own assets on the line
A personal guarantee is your promise to repay the business’s debt yourself if the company can’t. For SBA loans it is a rule, not a choice: holders of at least 20% of the business “generally must guarantee the loan” (13 CFR 120.160). If the business defaults, NerdWallet notes you may need to use personal savings or retirement accounts, sell personal assets or have your wages garnished. Harlan Scott, who financed his restaurant partly with an SBA loan, sold two homes and liquidated his other assets to open it, and the bank holds his personal guarantee:
I had to sell two of my homes. … I liquidated all my assets. The bank has a personal guarantee from me on all this. So if we close, I lose everything.
Harlan Scott, Owner, Industry ($2.4M revenue). Watch at 4:03
Blanket UCC liens cover everything the business owns
A UCC filing is the public notice a lender files to claim business assets as security. The Uniform Commercial Code lets that notice say it “covers all assets or all personal property” (UCC section 9-504), which is a blanket lien. Online lenders that don’t take specific collateral may still ask for one, NerdWallet says. A blanket lien also makes it harder to borrow anywhere else, because the next lender sees that everything is already claimed. Our guide to UCC filings shows how to read one before you sign.
Can a Startup Get an Unsecured Business Loan?
Yes, but fewer lenders will say yes, and on worse terms. Lenders that can’t lean on collateral lean on your history instead. NerdWallet lists what unsecured lenders typically want, as of May 2026: a personal credit score in the mid 600s or higher, annual revenue of $100,000 or more and at least 12 months in business. Online lenders go lower, for owners with scores above 600 and at least six months in business.
The Federal Reserve survey shows the gap in approvals. Among firms that applied for a loan, line of credit or cash advance in the prior 12 months, 48% of firms up to five years old got the full amount, against 51% of firms aged 6 to 20 years and 63% of firms over 20 years old. Firms with less than $100,000 in revenue were fully approved 37% of the time.
A pre-revenue startup has the fewest choices: a business credit card, an SBA microloan, or the founders’ own savings. Most of the products below underwrite revenue, so the most useful thing a new company can do for its borrowing power is to bill customers and keep clean records of it. Many bootstrapped companies get there without debt by funding growth from customers.
The Best Unsecured Funding Options for Startups
Each option trades speed, cost and what you put at risk differently. Here they are with the terms each source states, from the SBA’s capped rates to the merchant cash advance, which NerdWallet counts among the most expensive.
SBA 7(a) loans of $50,000 or less
The US Small Business Administration guarantees loans that banks and other lenders make. Its lender terms state, as of October 2026, that for 7(a) loans of $50,000 or less “SBA does not require collateral”, and the 7(a) Small program goes up to $350,000. NerdWallet gives the same $50,000 threshold. The SBA also caps the rate: on a variable-rate 7(a) loan of $50,000 or less, the lender can charge at most the base rate plus 6.5%. The whole 7(a) program lends up to $5 million (SBA).
The price of the low rate is paperwork, the 20% owner guarantee and time. The SBA quotes 2-10 business days for its own turnaround on a 7(a) Small loan, but that comes after a lender has underwritten you and submitted the request. Harlan Scott says the SBA loan he was told would take a couple of months took thirteen months. Approval is not easy either: in the Federal Reserve survey, 32% of applicants for an SBA loan or line of credit were fully approved and 40% were denied.
SBA microloans are often mentioned next. The SBA states that they go up to $50,000, that the average is about $13,000, and that rates are generally 8% to 13% with terms of up to seven years. They aren’t usually unsecured, though: NerdWallet says microlenders typically require collateral and, in most cases, a personal guarantee.
Online term loans
Online lenders lend a lump sum that you repay in fixed installments, and they can decide quickly because you can connect your financial accounts to their platforms. NerdWallet says funding can arrive in as little as 24 hours, and that unsecured online term loans “can start at around 14%, but reach up to 99%” APR (as of August 2026). NerdWallet adds that lenders often require a personal guarantee, a UCC filing or both.
Read the full cost before you sign. In the Federal Reserve survey, 60% of firms that borrowed from online lenders said the actual cost, including fees and penalties, was higher than they expected, against 37% at small banks and 32% at large banks.
Business lines of credit
A line of credit lets you draw up to a limit, repay and draw again, and you pay interest only on what you’ve drawn. NerdWallet says some banks offer unsecured lines and term loans from $5,000 to $150,000, and that bank applications are slower and stricter than online ones. A line suits uneven costs, such as a payroll gap or a seasonal stock purchase, better than a one-time purchase.
The flexibility runs both ways, because a line the bank extended is a line the bank can call. Chris Vandersluis’s bank called his software company’s line of credit after a year in which the company lost money:
I had to sweat blood that year and continue to start cleaning up all kinds of things, starting with the bank going, ‘We’re calling the line of credit.’ … So it’s like piece by piece we had to make arrangements.
Chris Vandersluis, CEO, TimeControl ($3.4M revenue). Watch at 9:07
Business credit cards
Credit cards are the most common financing product small firms use: 62% of small employer firms use one on a regular basis, more than any other product (Federal Reserve Banks, 2026 Report on Employer Firms). It is also expensive to carry: the Federal Reserve’s G.19 release put the average rate on credit card accounts paying interest at 22.36% in August 2026 (the G.19 covers consumer cards at commercial banks, not business cards). Some well-known companies started on cards anyway:
When we started the business, I put 25,000 on my credit card and my co-founder put 25,000 on his credit card. For some reason Chase gave us this ridiculous limit. It made no sense for a 23-year-old, but that’s how we funded the business.
Henry Schuck, CEO and founder, ZoomInfo ($1.2B revenue). Watch at 4:17
A card works best for costs you can repay within a month or two, before card interest piles up on the balance.
Merchant cash advances
A merchant cash advance pays a lump sum now in return for a share of future sales until a fixed total is repaid. The price is a factor rate, which NerdWallet and CNBC Select both put at 1.1 to 1.5, so a $100,000 advance means repaying $110,000 to $150,000 before fees. NerdWallet calls MCAs usually easier to qualify for than other financing and among the most expensive. You need steady sales to get one. Our merchant cash advance guide for startups explains the costs and contracts, and the merchant cash advance calculator converts a factor rate into an annual cost.
Revenue-based financing for recurring revenue
If your company bills customers every month, you can borrow against that revenue instead of against assets or your credit score. Revenue-based financing advances cash that you repay from future revenue, with no equity sold. Our revenue-based financing guide covers how it is priced and who qualifies, and our overview of bank loans for SaaS companies compares it with bank debt.
Unsecured startup funding options compared
| Option | Typical size | Collateral | Personal guarantee | Cost, per the source |
|---|---|---|---|---|
| SBA 7(a) loan of $50,000 or less | Up to $50,000 without SBA collateral rules | Not required by the SBA | Owners of 20% or more | Variable rate capped at base rate plus 6.5% (SBA) |
| SBA microloan | Up to $50,000; average about $13,000 | Typically required (NerdWallet) | In most cases (NerdWallet) | Generally 8% to 13% (SBA) |
| Online term loan | Varies by lender | May require a blanket lien (NerdWallet) | Often required (NerdWallet) | Around 14% up to 99% APR (NerdWallet, August 2026) |
| Bank line of credit | $5,000 to $150,000 unsecured (NerdWallet) | None on unsecured lines | Often required (NerdWallet) | 10% to 99% (NerdWallet, August 2026); interest only on what you draw |
| Business credit card | Set by the issuer | None | Check the card agreement | 22.36% average on consumer cards paying interest, August 2026 (Fed G.19; business cards not reported separately) |
| Merchant cash advance | Based on your sales | No physical collateral; repaid from future sales (NerdWallet) | Some providers don’t require one (NerdWallet) | Factor rate 1.1 to 1.5 (NerdWallet, CNBC Select) |
If you aren’t sure where to start, three questions narrow it down: whether you have revenue yet, whether it recurs every month, and whether you can wait for SBA paperwork. Without revenue, a card, an SBA microloan or savings are what is left; with steady monthly revenue, revenue-based financing; otherwise the SBA if you can wait, and an online loan or line if you can’t, at a higher cost. Revenue minimums vary by lender: Founderpath’s pages ask for $500K+ in last-year revenue.
What Does a $50,000 Unsecured Loan Cost per Month?
The rate matters more than anything else you negotiate. Here is the same $50,000, repaid in 60 equal monthly payments, at the low end of NerdWallet’s range for unsecured online term loans and at a higher rate a newer business might be quoted:
| Annual interest rate | Monthly payment | Total repaid over 5 years | Total interest |
|---|---|---|---|
| 14% | $1,163.41 | $69,804.60 | $19,804.60 |
| 30% | $1,617.67 | $97,060.20 | $47,060.20 |
Fees add to that. An origination fee taken from the loan means you receive less than $50,000 but repay the full amount, so always compare offers on APR, which includes fees, rather than on the interest rate alone.
Self-Secured Alternatives: Equipment and Invoice Financing
If you need money for something specific, financing that is secured by the thing itself can be a better fit than an unsecured loan, and you don’t pledge anything else. NerdWallet calls these self-collateralizing options:
- Equipment financing: the machine, vehicle or hardware you buy is the collateral, so the lender can take it back if you stop paying.
- Invoice financing or factoring: a lender advances cash against invoices your customers haven’t paid yet and is repaid when they pay.
How to Improve Your Chances of Approval
- Check your personal credit first. Most unsecured lenders price on the owner’s score, so fix errors before you apply.
- Separate business and personal money. A business bank account gives lenders clean revenue history to read.
- Borrow against revenue you can show. Lenders ask for bank statements, tax returns and financial statements; online lenders may connect to your accounts directly.
- Read the guarantee and the lien. Know whether you are signing a personal guarantee and whether the UCC filing covers all assets or only what the loan buys.
- Compare total cost. Put every offer in APR or total dollars repaid, so a factor rate and an interest rate can be compared.
Funding for SaaS Companies With Recurring Revenue
Founderpath is not a startup lender for pre-revenue companies. It funds software companies against the recurring revenue they already have.
Founderpath provides non-dilutive capital for B2B SaaS companies; its revenue financing page lists companies at $1M-$3M ARR and its term loan page $3M+ revenue, and both pages ask for $500K+ in last-year revenue (October 23, 2026). There’s no equity, no warrants, no board seats and no full personal guarantee: Founderpath takes a lien on business assets only, recorded with a UCC filing. Connect your billing, banking and accounting data, and with revenue financing most founders see funds within 24 hours of accepting an offer.
Check what you qualify for. It takes less than 5 minutes.
Unsecured Business Startup Loans FAQ
Can I get an unsecured business loan for a startup?
Yes, but the choice is narrow until you have revenue and some history. The SBA doesn’t require collateral on 7(a) loans of $50,000 or less, online lenders and banks offer unsecured term loans and lines of credit, and business credit cards are unsecured by design. Expect a personal guarantee in most cases: 59% of firms with debt in the Federal Reserve’s survey had signed one. In the same 2025 survey, firms up to five years old that applied for a loan, line of credit or cash advance were fully approved 48% of the time, against 63% for firms over 20 years old.
What credit score do I need for an unsecured business loan?
It depends on the lender. NerdWallet says unsecured lenders usually look for a personal credit score in the mid 600s or higher, and that online lenders can work for owners with scores above 600 and at least six months in business. Below that, the options that remain tend to be the most expensive, such as merchant cash advances, which NerdWallet describes as usually easier to qualify for.
Can an LLC get a startup loan without collateral?
Yes. An LLC can borrow in its own name, but a new LLC has little credit history of its own, so lenders look at the owners. That’s why a personal guarantee is common: SBA rules say owners of at least 20% generally must guarantee the loan, and the guarantee makes you personally liable even though the LLC is the borrower.
What is the monthly payment on a $50,000 business loan?
It depends on the rate and term. Repaid in equal monthly payments over five years, $50,000 costs about $1,163 a month at 14% interest ($69,805 in total) and about $1,618 a month at 30% ($97,060 in total), before any fees. 14% is the low end NerdWallet gives for unsecured online term loans.
Does the SBA require collateral?
Not on small loans. The SBA states that it does not require collateral for 7(a) Small loans of $50,000 or less, except International Trade loans. From $50,001 to $500,000, lenders follow their own collateral policies, though a loan isn’t to be declined only for inadequate collateral. Owners of 20% or more generally must sign a personal guarantee at any loan size.
What happens if I default on an unsecured business loan?
The lender can’t seize a specific pledged asset, but it can still come after you. With a personal guarantee, NerdWallet notes you may have to use personal savings or retirement accounts, sell personal assets or have your wages garnished. With a UCC lien, the lender has a legal claim on some or all of the business’s assets.
Is a business credit card a good way to fund a startup?
For small, short-term costs you can repay quickly, it can be. Credit cards are the most common financing product small firms use, at 62% in the Federal Reserve’s 2025 survey. The catch is the rate: the Fed’s G.19 data put the average rate on credit card accounts paying interest at 22.36% in August 2026 (a consumer-card figure, as business cards are not reported separately), so a balance you carry for a year gets expensive. Repay within the billing cycle where you can.
Sources and Method
We checked every figure in this guide on October 23, 2026, against the source itself. Where only one source states a lender or program term, the text names that source and dates it. The SBA program terms come from the SBA’s own pages and are matched by NerdWallet where noted. The monthly payments are our own calculation with the standard amortization formula, 60 equal monthly payments and no fees. Founderpath’s terms come from its product pages on the same day.
- Federal Reserve Banks, 2026 Report on Employer Firms, published 2026 (survey fielded September 3 to November 14, 2025, 6,525 responses, convenience sample)
- Federal Reserve, G.19 Consumer Credit, released October 7, 2026 (August 2026 data)
- SBA, 7(a) loan terms for lenders, SBA 7(a) loans and SBA microloans, read October 23, 2026
- 13 CFR 120.160, loan conditions, current eCFR text
- Uniform Commercial Code section 9-504, Cornell Legal Information Institute
- NerdWallet, how to get a small business loan without collateral, updated May 15, 2026
- NerdWallet, unsecured business loans, updated August 21, 2026
- NerdWallet, SBA microloans, updated May 29, 2026
- NerdWallet, merchant cash advance, updated May 21, 2026, and CNBC Select, best merchant cash advances, updated August 25, 2026
- Founderpath revenue financing, term loan and line of credit pages, read October 23, 2026
- Founder quotes from Founderpath’s published interviews, linked at each quote
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