Unsecured Business Loans »

Unsecured business loans are loans to businesses that do not require the loan be secured by the assets of the business. Traditionally, in order to limit the lender's risk, most business loans require that the loan be secured by the assets of the business. Securing a business loan with some or all of the assets of the business is an important protection for the lender, who in the event of default will foreclose upon the secured assets and sell them to repay the outstanding principal and interest on the loan. Unsecured business loans are an uncommon form of business loan unless the business is extremely creditworthy. Even with a creditworthy business, because of the risk of unsecured business loans to lenders, an unsecured business loan will often require that the business pay an above market rate of interest for the loan.

Additionally, in order to qualify for an unsecured business loan, the lender will insist that the borrower meet a host of requirements designed to ensure that the borrower will be able to repay the loan. Because of the risk involved in making unsecured business loans, even lenders who will make an unsecured business loan will rarely agree to make an unsecured small business loan because most small businesses would not meet the lender's creditworthy requirements. While unsecured business loans exist, such as, an unsecured online loan, most businesses should assume that in order to obtain debt financing the business will need to secure the loan with some or all of the assets of the business.