An unsecured business loan is a loan the lender makes without taking a specific asset as collateral. No equipment, no real estate, no inventory pledged. That is the whole definition, and it leaves your personal guarantee on the table.
Some loans sold next to unsecured ones carry a general lien on all business assets instead, which makes them secured in the legal sense even though no single asset is named. The Federal Reserve’s 2025 Small Business Credit Survey found that 59% of employer firms with debt had secured it with a personal guarantee, and only 10% had no collateral or guarantee at all.
What is an unsecured business loan?
An unsecured business loan is a term loan or line of credit that a lender approves on the strength of the business’s cash flow and the owner’s credit rather than on pledged collateral. The lender takes no security interest in a specific asset such as equipment, vehicles, or real estate.
Most unsecured loans still require a personal guarantee from the owners. A loan with a general lien on all business assets, filed under the Uniform Commercial Code, is a secured loan even when no single asset is named. Lenders often market the two side by side. Amounts typically run from $10,000 to a few hundred thousand dollars, with terms of six months to five years.
Three layers can stand behind a business loan. Each one answers a different question.
| Layer | What it gives the lender | What “unsecured” does to it |
|---|---|---|
| Specific collateral | A lien on a named asset the lender can repossess or foreclose: a truck, a press, a building | Removed. This is the only layer the word addresses. |
| Blanket UCC lien | A filed claim on the business’s assets in general, without naming any | Removed in the strict sense. A loan with a general lien is secured, but it is often sold as “no specific collateral.” |
| Personal guarantee | The right to pursue the owner’s personal assets if the business cannot pay | Almost always kept. |
Lenders use the word loosely.
Wells Fargo’s BusinessLine is sold as an “unsecured revolving line of credit” and, in the same box, “requires personal guarantees.” OnDeck’s FAQ draws the line in the opposite place. Its line of credit is unsecured. Its term loan is “secured by placing a general lien on the assets of the business” and backed by a personal guarantee, with no specific collateral named.
Both products are marketed to the same search.
Who uses unsecured business loans
- Owners of service businesses with little to pledge. A consulting firm, an agency, or a contractor with leased equipment has cash flow but no fixed assets a bank can lien.
- Businesses that need money within the week. Skipping the appraisal and title work is where the speed comes from. Bank of America’s unsecured term loan requires no collateral and funds as a one-time lump sum.
- Borrowers who want to keep assets free for a bigger loan later. A blanket lien from a small online loan can sit in first position and complicate an SBA or equipment loan behind it.
- Owners who already have collateral tied up. When the building secures the mortgage and the trucks secure the equipment notes, working capital has to come unsecured.
What unsecured loans cost and how big they get
The spread between a bank line and an online term loan is the widest in small-business lending, and the lender’s own disclosures show it.
| Product | Amount | Rate | Term | Published requirements |
|---|---|---|---|---|
| Wells Fargo BusinessLine (unsecured line) | $10,000 to $150,000 | Prime + 1.75% to Prime + 9.75%; prime was 7.00% on Sept. 17, 2026 | Revolving; no annual review | FICO 680 typical; 6 months in business; personal guarantees from 25%+ owners |
| Bank of America unsecured term loan | $10,000 to $100,000 | Set by creditworthiness; $150 origination fee | 1 to 5 years, fixed payments | FICO above 700 typical; 2 years in business; $100,000 prior-year revenue |
| Bank of America unsecured credit line | $10,000 to $250,000 | Variable; $150 annual fee after year one | Annual renewal | Same as the term loan |
| OnDeck line of credit (unsecured) | $6,000 to $200,000 | Average 59.8% APR, half-year ending June 30, 2026 | 12, 18, or 24 months per draw | Personal guarantee on all credit |
| OnDeck term loan (general lien, no specific collateral) | $5,000 to $400,000 | Average 53.2% APR, same period | Up to 24 months | General lien on business assets plus personal guarantee |
| SBA 7(a) loan of $50,000 or less | Up to $50,000 | SBA-capped variable or fixed rate | Up to 10 years for working-capital term loans | SBA requires no collateral (the lender may); unlimited personal guarantee from every 20% owner |
Run the math on a $50,000 draw. At Wells Fargo’s floor of prime plus 1.75%, the line costs about $4,375 a year in interest at the September 2026 prime rate. At OnDeck’s published average line-of-credit APR, the same balance costs roughly $29,900 a year. The second borrower is paying for speed and for a thinner file, and the lender is pricing the absence of collateral into the rate.
59%
Share of employer firms with debt that secured it with a personal guarantee; 51% used business assets, 38% used the owner's personal assets, and 10% pledged no collateral or guarantee
Source: Federal Reserve Banks, 2026 Report on Employer Firms (2025 Small Business Credit Survey)
The share securing debt with personal assets rose from 31% in 2019 to 38% in the 2025 survey. The Cleveland Fed’s Ann Marie Wiersch summarized the chart this way when the report was presented in April 2026:
In practice, lenders often require that financing be secured in multiple ways, including commitments from the business owner. And these findings demonstrate the interconnectedness of business finances with the owner’s personal finances.
That interconnectedness is the point of this post. On an unsecured loan the lender has no appraisal to lean on, so the owner’s personal financial statement carries the underwriting. Your household balance sheet is what the guarantee is worth.
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When you need one
- A one-time working-capital gap of $10,000 to $100,000, such as a payroll bridge while a large receivable clears. A bank unsecured term loan fits if you have two years of history.
- A standing cushion you draw on a few times a year. An unsecured line at a bank costs an annual fee of $95 to $175 at Wells Fargo after year one, and nothing in interest until you draw.
- Funding inside a week when a bank’s timeline will not work. Online lenders fill this slot at the rates in the table above.
- A first loan for a business with no fixed assets, where the alternative is a merchant cash advance against future sales. In the Fed survey, 10% of debtholders had secured debt with portions of future sales.
- An SBA 7(a) loan of $50,000 or less, which the SOP exempts from collateral while keeping the guarantee. Our guide to SBA 7(a) requirements covers the rest of the file.
Unsecured vs no personal guarantee
Searchers conflate these two, and lenders benefit from the confusion. They sit on different axes. “Unsecured” is about the business’s assets. “No personal guarantee” is about the owner’s.
| Unsecured loan | Secured loan | Loan with no personal guarantee | |
|---|---|---|---|
| Specific collateral pledged | No | Yes | Sometimes |
| General lien on all business assets | No (that makes it secured) | Sometimes, in place of named collateral | Sometimes |
| Owner personally liable | Usually yes | Usually yes | No |
| Who offers it | Banks, online lenders, SBA 7(a) of $50,000 or less | Banks, SBA, equipment lenders | Corporate charge cards, some asset-based lenders |
| What the lender underwrites | Cash flow, owner credit, owner’s PFS | The asset, then cash flow | Business revenue and bank balance only |
A loan can be unsecured and still put your house at risk through the guarantee. A loan can be secured by a $200,000 press and leave your personal assets alone. The product that skips both is rare, and the path to it runs through years of business credit, as our post on getting a business loan without a personal guarantee explains. For what signing the guarantee commits you to, see what a personal guarantee is.
The blanket lien deserves its own check. A UCC filing on “all assets” from a $30,000 online loan can take first position on everything the business owns if nothing was filed ahead of it. A later SBA lender on a loan over $50,000 must take a first lien on whatever its loan finances under SOP 50 10 8. It may require you to pay the earlier loan off or get it subordinated before closing.
Search your state’s UCC records before you apply for anything larger.
How to apply for an unsecured loan well
Expect the personal financial statement to do the work collateral would have done. A bank underwriting a $75,000 unsecured term loan with a guarantee from a 700-FICO owner is underwriting that owner. The personal financial statement is the document that shows what the guarantee is worth: liquid cash, retirement accounts, home equity, and the debts against them. Build it from statements, and make the cash line match the bank statements the lender will also pull.
Know the lender’s published minimums before you apply, and treat them as screens. Bank of America requires two years under current ownership and $100,000 of prior-year revenue. Wells Fargo lists six months in business and a typical 680 FICO score. An application that misses a published minimum is usually a hard inquiry for nothing.
Read the security language in the agreement, not the product page. The product page says unsecured. The agreement says whether a UCC-1 will be filed and against what. OnDeck’s terms of use state both facts in one sentence: a personal guarantee on all credit, and a general lien for term loans.
Price the total cost, not the rate. Origination fees, annual fees, weekly payment schedules, and early-payoff terms change the APR materially. OnDeck notes that paying off a term loan early may still leave part of the unpaid interest owed. A 24-month loan with daily payments and an origination fee deducted up front costs more than its headline rate suggests.
Keep the guarantee in proportion to the business. The Fed data says most owners sign one. The decision is how much personal exposure a $40,000 working-capital gap justifies. If the answer is “not my house,” an SBA microloan or a smaller bank line may fit better than the fast online offer.
Before you apply, run your own numbers through the free net worth calculator so the figure on your personal financial statement matches what the guarantee is backed by. The full document list is in documents needed for a business loan, the business loan applications use case covers assembling the file, and the types of business loans guide places unsecured products among the alternatives. More on this topic is in our business lending archive.
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- SBA Form 413 with every section filled
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- 7 days free, no card
