Interest rates for unsecured business loans range from 7% to 75% APR, depending on the type of loan you choose, lender, and business credit profile. If your business has good credit, you can earn low interest rates on unsecured business loans, such as 7% to 10% APR.
However, lenders usually offer higher fees for unsecured and secured business loans, as unsecured loans are not supported by collateral. These loans pose a higher risk to lenders as they cannot immediately seize business assets to repay the loan in the event of default.
Below you will find current unsecured business loan fees on what to look for when comparing various unsecured business loans.
Compare unsecured business LOAsdo not havetes
See this chart for better ideas on the interest rates you will find based on unsecured loans and lenders types.
| Loan type | Average interest rate |
|---|---|
| Period loan | Bank: Average 7.77% to 8.88% APR Online Lenders: 9.00% to 75.00% APR |
| Credit business line | Bank: Average 7.65% to 9.15% APR Online Lenders: 6.00% to 36.00% APR |
| Business Credit Card |
18.00% to 43.99% APR |
| SBA Loan | Fixed interest rate: 13.00% to 16.00% Variability: 11.00% to 14.50% |
| Invoice factoring | Factoring fees from 0.5% to 4% |
| Merchant Cash Advanced | Factor rate: 1.04-1.32 |
Unsecured loan
Some unsecured term loans come with low or short repayment terms to offset the risk of not having business assets not associated with the loan.
Features vary from lender to lender, so compare the interest rates and terms of unsecured business loans set by these lenders.
| Lender | interest rate | detail |
|---|---|---|
| Bank of America | From 7.50% APR | Loan amounts start from $10,000 1-5 years term $150 origination fee |
| Outside | It has not been stated | The loan amount ranges from $5,000 to $1.5 million Up to 18 months requirement Eligible to provide additional funds after 60% repayment |
| Nationwide funding | 1.10+Factor Rate | Loan amounts range from $5,000 to $500,000 18 Month Terminology Original fees from 1% to 3% 660 min credit score |
| PNC Bank | Not disclosed | Loan amounts range from $20,000 to $100,000 2-5 years term 1% origination fee |
| Triton Capital | 8.99% to 74.99% APR | Loan amounts range from $10,000 to $250,000 Terminology for 6-36 months Original fees from 1% to 2.5% |
| US Bank | From 8.49% APR | The loan amount is up to $50,000 Up to 4 years requirement |
Credit for unsecured business lines
The business line of credit provides a way for businesses to access fundraising as costs arise. The lender sets a credit limit based on the business’s ability to pay back and repays the amount drawn within the set repayment period, such as one to two years.
Some banks will lower their maximum credit limits, such as $100,000, against unsecured lines, compared to safe lines. Look at what traditional banks and online lenders offer this type of unsecured loan.
| Lender | interest rate | detail |
|---|---|---|
| Bank of America | From 9.50% APR | Credit limit starting from $10,000 Updated every year There is no lottery fee |
| Blue Vine | From 7.80% simple interest | Credit limit is up to $250,000 6-12 months repayment period |
| Reliable | Monthly interest rates of 3.00% to 5.00% | $300,000 until credit limit Provided through lending partners You can pay the origination fee |
| Fundbox | Weekly rates ranging from 4.66% to 8.99% | Credit limits are between $1,000 and $150,000 12-24 weeks Access to fair credit and low-income borrowers |
| Rendio | 8.00% to 60.00% | Credit limits are between $1,000 and $500,000 Terminology for 6-18 months Suitable for startups and bad credit borrowers |
| PNC Bank | It has not been stated | Credit limits range from $20,000 to $100,000 Annual fee of $175 |
| Wells Fargo | 9.75% to 12.50% APR | Credit limits range from $5,000 to $150,000 SBA Credit Line Options BusinessLine Credit Line Annual Fees |
Business Credit Card
Business credit cards offer solid options for less purchases while earning rewards for business owners. There are a variety of perks, including cards with no annual fees and options to earn cashback when you purchase a qualifying purchase.
Fair and bad credit borrowers can find credit building options, but most unsecured business credit cards require a strong credit score of 670 or higher.
Invoice factoring
Invoice factoring is an alternative type of business finance that does not require collateral as it is guaranteed by future invoices of the business. Instead of interest, factoring companies charge fees for all outstanding invoices.
The fee structure may include time windows such as invoices paid within 30 days before charges are raised or revalued.
| Lender | interest rate | detail |
|---|---|---|
| Reliable | 1.11 Factor Rate | Loans up to $400,000 Promote up to 95% of your invoice |
| Rendio | 3.00% price | Advance up to 90% of unpaid invoices Conditions up to 1 year Works through partner lenders |
| SMB Compass | From 12.00% | Loans range from $25,000 to $10 million Terminology for 6-24 months Only 24 hours of funding |
Merchant Cash Advanced
Merchant Cash Advances (MCAS) allows businesses to earn funds based on future credit card sales. Most MCAs evaluate coefficient rates instead of interest rates. Interest is paid upfront on the entire amount borrowed.
MCAS is a risky type of loan that businesses use when they cannot obtain funds through traditional business loans. This is because merchant cash advance approval rates are high as long as your business has sufficient sales volume. However, these loans can come with a sudden triple digit interest rate, so it is recommended to use only the MCA in an emergency.
| Lender | interest rate | detail |
|---|---|---|
| Reliable | 1.11 Factor Rate | Loans up to $600,000 Terminology for 3-24 months $50 management fee 2.5% underwriting fee |
| Rendio | From 1.08 coefficient rate | $5,000 to $2 million loans Up to 3 years requirement Only 24 hours of funding |
| Outside | It has not been stated | Loans ranging from $5,000 to $1.5 million Funds within 24-72 hours |
| Flanderia | 1.19 Factor Rate | $5,000 to $500,000 loans Up to 12 months requirement Minimum Personal Credit Score of 500 |
Factors that influence unsecured business loan rates
The exact interest rates given on unsecured business loans are affected by:
Lender
You are more likely to get lower interest rates at traditional banks than online lenders. However, underwriting can take some time, as banks may require extra time and documentation to ensure that your business is able to pay off the loan.
Traditional banks also tend to work with companies with top credit history, including scores of 670 or higher. Online and alternative lenders typically have more flexible eligibility criteria and may suit them appropriately if they have a lower credit score near 500.
Types of loans
The business line of credit and term loans offers some of the lowest fees available for unsecured loans, provided you have sufficient credit.
With a business credit card, the starting rate is higher than some business loans. Credit card APRs can be comparable to other loans, especially if your card has a 0% APR offer and there are few perfect credits.
Credit score and payment history
The lowest rates are booked with credible companies, including a score of 670+. In general, lenders maintain stricter requirements for unsecured loans than protected loans to ensure that the loan is repaid.
Otherwise, you may need to use a defective credit business loan that charges higher fees and fees.
Revenue
Your business’s financial statements play a major role in any business loan, but especially unsecured loans. Lenders will want to see good cash flow and low liabilities, including debt return of less than 36%.
Lenders can also use debt services coverage rates to see how much revenue a business is generating over debt service repayments. I usually like to see this ratio above 1.25. In other words, your revenue is 1.25 times the debt repayment.
How to compare unsecured business loans
Comparing unsecured business loans is generally similar to comparing business loans. However, some features may differ for unsecured loans.
- interest rate. If you are applying for an unsecured, unsecured business loan, you will likely find that interest rates on the secured loan will be lower. That’s because even if you’re the default, the lender has a guarantee that some or all of the loan will be repaid.
- Factor rate. Some unsecured loans charge a factor rate in lieu of interest. These apply to risky types of loans and can lead to high borrowing costs as they do not incorporate additional financing funds. You need to convert the factor rate into interest rates to see how the loan compares.
- Loan amount. Some lenders lower the maximum loan amount available on unsecured loans compared to protected loan options. This is especially true for traditional banks.
- Repayment terms. Compare the length of the repayment period, such as six months, with the repayment schedule. Some alternative or short-term loans, such as merchant cash advance, require daily or weekly repayments. Make sure your repayment terms and schedules are manageable for your business.
- Additional charge. Additional business loan fees vary depending on the type of loan and lender, so read the loan agreement and understand what you’ll pay. For example, some lenders will charge an origination fee to confirm your loan application. When you withdraw money from the credit line, the credit business line may charge a draw fee.
Conclusion
Interest rates may vary significantly as multiple types of unsecured loans are available. Interest rates on unsecured business loans are generally higher compared to secured loans supported by personal or business assets. Compare offers from multiple lenders and choose loans with the most advantageous rates and terms for your business to get the best deals.
