The Best Unsecured Business Funding Options for 2023

Have you been looking for an unsecured business funding option but haven’t found anything that suits your needs? Well, look no further! This blog has compiled a list of the best unsecured business funding options for 2023, based on factors like interest rates, term length, and credit requirements. By reading through this list, you’ll be able to find the perfect financing option for your biz needs.

Unsecured business funding: at a glance

There are a number of options available, all of which have their own benefits and drawbacks. Since the loan is unsecured, most of these loans come with higher-than-normal interest rates vs secured loans that will quickly add up if you don’t keep on top of payments. To qualify for an unsecured business loan, you need to have your financials and documents in order. A good credit score will always help but in case you have challenged credit there are still options available. Additionally, lenders may require proof of State compliance such as a business license, if applicable, so make sure to have all your documents handy.

1. Short Term Business Loans

The holidays are a great time to score some short-term business funding to boost inventory. Short-term loans are ideal for seasonal businesses that need cash quickly to boost their busiest time. They’re also a good option for companies with low credit scores or no collateral. Loan amounts range from $5,000 to $250,000, and can be secured with minimal paperwork. The best time to apply is before it’s too late! So don’t wait – get started today and score yourself some sweet business financing!

What is a short-term business loan?

Short-term business loans can be of great help to small businesses in need of a short-term financial infusion and come in all different shapes and sizes. Terms are usually available between 3 and 18 months, interest rates range from standard to high risk starting at 7.99%. There are 2 key questions to ask your lender when looking for a short-term unsecured loan, is there a personal guarantee and what type of lien do they put in place to secure their loan?

Personal guarantee

If your business is having financial difficulties the last thing you want is to feel uncertain or stressed. That’s why it’s important to know if you have personal guarantees in place – this means that you are responsible for the debt if it isn’t repaid on time the loan could be reported to your personal credit profile as a late payment. There are a number of lenders available that offer commercial loans without a personal guarantee, but you must have quality credit to satisfy their requirements. It would be wise to compare different rates and terms before making a decision. In addition, make sure to consult with a CPA if there are any doubts about applicable tax deductions with your loan.

Blanket lien

A blanket lien is a type of security that lenders use to protect their interests. It gives the lender the right to take over all assets of the company concerned – including cash, equipment, and even shares. This can be a big problem for businesses seeking new funding while having a current blanket lien in place. Other liens typically are secured by the asset being financed, for instance, an equipment loan may have a lien filed just for that specific piece of equipment financed.

2. Revenue-Based Funding

One of the easiest financing options to qualify for in a hurry is a revenue-based funding option, also known as Merchant Cash Advance (MCA). An MCA is an option if you want to convert your future sales into one lump of cash, today! Merchant Cash Advances are not loans since it is an advance of future revenue, so that being said these tend to be higher in costs due to the risk the funder is taking. Also, since this is based on revenues, credit is not a primary focus to getting approved, and most importantly no collateral is needed to be approved. A Merchant Cash Advance is a great option for businesses that process credit cards as payments in high volume, usually, this option is great for service or retail-based industries like salons, spas, clothing stores, and even restaurants. If you don’t process credit cards as payment, don’t worry there are different payment methods available so read below to learn more about the different payment options that could benefit your business the best.

1. Direct Split

A direct split option is a great “pay as you go” option. Essentially, a funder will provide your approval with what is called a holdback percentage. The holdback is how much the funder will collect from each transaction as you process. For example, if you process $100 and the agreed holdback percent is 10%, then the funder will collect $10 from this transaction directly from your processor, and the net $90 will go to your bank as normal. Keep in mind some processors do not facilitate this option.

2. Lockbox Split

If you do not have an approved processor that can facilitate a direct split, don’t stress there is another way. Lockbox split works in situations where the current processor is not viable, a 3rd party lockbox account is set up in trust with an FDIC-insured bank under your name. You can access this account at any time to view all transactions. The 3rd party bank will manually separate the holdback amount from every transaction and submit your net transactions to your bank account.

3. ACH Payments

But what if you don’t process credit cards at all? Then the ACH program would be your only option for a merchant cash advance. A funder will analyze your bank statements and project your average revenues for the last 3 months going forward. You can expect an approval of up to 100% of your average monthly revenue for the last 3 months. Usually, ACH payments are structured daily, weekly, or bi-monthly.

3. Unsecured Business Line of Credit

If you need flexible funding when you need it as you need it, then a business line of credit may be the perfect solution. This type of loan offers businesses lower costs and you can choose how much you want to borrow and when. Make sure to compare different lines of credit by not just the terms and costs, but whether it is secured or unsecured.

What Is a Business Line of Credit?

With a business line of credit, you only pay interest on the amount drawn making this a quick access to cash as the need arises. A line of credit is similar to a credit card, except the key difference is that instead of credit, a LOC gives you cash. Interest payments are made weekly or monthly, so it’s easy to keep track of budgeting and debts. Also, you can borrow up to $500,000 unsecured with no collateral needed. If you’re an active company that needs short-term financing, an unsecured BLOC may be the perfect option for you.

Pros and cons of unsecured business loans

Businesses of all sizes are turning to unsecured funding options as a quick and easy way to get the financing they need. However, before making the decision, it’s important to consider the pros and cons of this type of financing. The biggest advantage of unsecured loans is that they’re quick and easy to get approval. However, there are some risks that business owners need to be aware of. The biggest downside is that unsecured loans can be risky and expensive if you don’t repay them on time. Additionally, business owners need to be aware of the fact that secured loans may encumber their best assets and in cases of default, a lender may repossess that asset. Before taking out an unsecured loan, it’s important to speak with an experienced financial advisor who can help you weigh the pros and cons of this type of financing.

What Do You Need to Qualify for an Unsecured Business Loan?

To qualify for an unsecured business loan, you’ll need to have a minimum credit score and sufficient revenue to accommodate a payment. Loans can be used for a variety of purposes, such as buying new equipment or expanding. There are many lenders willing to lend money to businesses of all sizes. So, don’t hesitate to research different options and choose the one that best suits your needs. Remember, small business loans don’t have to be difficult – with the right tips and guidance, financing can be a breeze!

At Least $10,000 in Monthly Revenue

Becoming an entrepreneur is a great risk, and for that reason, many banks have minimum revenue requirements. Analysis shows that companies generating over $10,000 a month have a lower risk than businesses that generate under that amount. Mainly it shows a business is viable and growing. Every lender has different requirements so make sure to ask what are their revenue requirements

Registered & active for 6 Months or Longer

86% of startups fail, but AMP Advance is willing to take the risk and be a partner for your success and can work with startup generating revenues in the last 6 months. Being in business for a certain amount of time is not enough to guarantee you access to a loan since there are various eligibility criteria that your company must meet before being given the green light. Therefore, Once you have pre-qualified for loans from different lenders, it’s just a matter of filling out an application and waiting for approval!

A Credit Score of 550+

When it comes to business loans, having a credit score of at least 550+ is definitely high priority. With good credit history in place and all your financial obligations current, you’ll be able to get the financing you need, unsecured. Make sure that you’re comfortable with the terms of the loan before signing anything – understand what payments are required and how much interest will be levied on top of that. And lastly, always put your business first! Don’t take on too much debt which would affect its future prospects adversely. Speak to lenders about your personal situation so they can provide an unsecured business loan tailored specifically for you.

How to get an unsecured business loan with AMP Advance

To find the best option for your business, it’s important to have an accurate estimate of your debt and revenue. Additionally, you’ll need to provide evidence that you can repay the loan on time and without issue. To make the process smoother, compare all of your options and select the best unsecured business loan for your needs in 2023!

Step 1: Determine How Much You Need to Borrow

Before you can apply for a loan, you need to determine how much money you will need. This amount will depend on a number of factors, including your business size and the industry you are in or equipment needed to upgrade or acquire. Furthermore, it is important to take into account any other financial commitments that you may have so you can make sure loan payments are within your budget.

Step 2: Apply Online

By applying online, you are guaranteed a faster and easier process. You will need to provide only basic information like your name, company name, address, etc, and upload your financials. Once your application has been submitted, it will be reviewed by our team of specialists who will contact you if you are successful in getting prequalified for the loan amount that you require.

Step 3: Choose Your Funding Options

Once you have been approved, a funding advisor will reach out to you to discuss the terms of the approval and if any further documents are needed to fund.

Step 4: Get Funded!

By following the four simple steps outlined above, merchants can start their journey to obtaining an unsecured business loan easily. Funding is typically within 24 hours from contracts being signed and can be wired or ACH to your designated commercial account.

In Closing…

Finding the best unsecured business funding is important for companies of all sizes. By understanding the different short-term loan options available, you can find the best financing solution. Make sure to check out our website for more information and advice on getting top-tier unsecured business funding.

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