Article summary: Many healthy and thriving businesses don’t have the specific collateral required to qualify for a loan at the local bank. Fortunately, unsecured business loans, or loans offered by lenders that do not require specific collateral, can be a good option for many businesses.
What's Different About an Unsecured Business Loan?
Many small business owners are interested in a loan or line of credit for their business, but don’t have the specific collateral a bank may require, such as real estate, inventory or other hard assets—what do you need to know about unsecured business loans?
Banks don’t generally underwrite unsecured business loans; or in other words, loans without the security of some form of specific collateral. Banks prefer to write loans based on the value of specific assets and take liens on those specific assets. In this way, the bank can significantly reduce its lending risk. This can disqualify businesses without assets that are valued highly by a bank or have assets that are difficult to value or sell—but would otherwise be a good a potential business borrower.
Is an OnDeck Loan an Unsecured Business Loan?
OnDeck makes loan approvals to small businesses based on business fundamentals like cash flow, credit history, and other metrics that demonstrate a healthy business; not based on the value of any particular business asset. In addition to the business credit profile, personal credit score, time in business, and cash flow, OnDeck considers dozens of other factors when evaluating the creditworthiness of any particular business. Making it possible for a healthy business, even if they don’t have specific assets that could be used as collateral, to secure a business loan.
The existence of specific hard assets doesn’t factor into our analysis of business health. When a small business takes a term loan from OnDeck, a general lien is placed on the business’s assets until the loan has been paid off (additionally OnDeck lines of credit are not collateralized with specific assets either). The business owner does provide a personal guarantee for the loan, but there is no lien on the owner’s personal assets. In this way, business owners can get funding from $5,000 – $500,000 in as fast as one business day without needing a specific amount of real estate, inventory or other hard assets; and without needing to have their specific assets appraised and valued.
If you have a healthy business, but you’re not sure about the value of a specific asset or whether or not you have adequate collateral, consider applying for a small business loan with OnDeck and you could get a decision for your business; sometimes as quickly as within an hour.
- Simple: Easy application & fast funding
- Tailored: Funds you need on your terms
- Human: Real, live loan advisors
Compare Loan Requirements:
- Bank Loans: Underwritten using specific collateral. A lien on assets + a personal guarantee
- Equipment Financing: Equipment as collateral + a personal guarantee
- OnDeck Loan: Doesn’t require specific assets for collateral—a general lien on business assets + a personal guarantee
A business loan from OnDeck allows many healthy businesses that don’t have assets that could be used for collateral to successfully apply for a loan.
We’ve already delivered over $10 billion in funds to other small businesses like yours
We can get you an answer on your loan application quickly
OnDeck is a publicly traded company with a Better Business Bureau rating of A+
Ready to unlock opportunity?
We make loans from $5,000 to $500,000
Applying will not impact your personal credit score
What type of loan makes sense for your business?
Financing options to help you grow your business
If you’ve ever heard the adage, “It takes money to make money,” you must be a small business owner. Fortunately, there are more small business loan options available today than ever before—you just need to know where to look and what to look for. You don’t need to be a financing expert to build a successful business, but you do need to consider all the business loan options available to determine which one is best to meet your business need.
Small Business Loans and Lines of Credit
With online lenders and lines of credit, there are more options available today than a traditional term loan from the bank when you need extra capital to fuel growth or fund other business initiatives.
Loans with a Purpose
Depending upon why you’re borrowing (your loan purpose), there could be an option custom fit to meet your business need. Here are some of the financing options available with specific use cases in mind.
Non-Traditional Financing Options
Sometimes it takes a different approach to meet a business’ financing needs. There are a number of options from micro-loans to funding sources that won’t even be described as a small business loan.