Maskot/Getty Images: Illustration by Issiah Davis/Bankrate
Key takeaways
- Most lenders can approve unsecured business loans in one to seven business days
- Depending on the lender's underwriting process, approval and funding can take weeks
- Online lenders can fund loans faster due to streamlined approvals
An unsecured business loan is a loan that isn’t backed by collateral as a security for repaying the loan. Getting approved for an unsecured business loan typically takes one to seven business days with most lenders, though traditional banks can take longer in some cases.
The advantage to this type of loan is that lenders can’t immediately take valuable business assets to cover their losses if you miss repayments. But expect to provide plenty of documentation to prove that your business is in solid financial standing.
Let’s look at how long it takes to get an unsecured business loan from beginning to end — and the steps involved to get there.
Bankrate insight
The costs of unsecured business loans are typically higher than secured loans. That’s because the lender takes on more risk and has a harder time collecting from you if you fail to repay your debt.
Time to funding for different types of unsecured business loans
Common types of unsecured business loans include term loans, business lines of credit, invoice factoring and merchant cash advances. Each one will have different funding timelines due to the different underwriting processes for each type, ranging from a day to several days or weeks.
- Term loans: Provide a lump sum of money with fixed monthly payments, typically spanning 12 months to seven years. Most term loans will take at least two or three days to get approved, but it can take several weeks if you’re getting a large loan or going through a traditional bank.
- Business lines of credit: Ideal for managing unpredictable expenses or cash flow fluctuations as they often offer access to a flexible credit line on an as-needed basis. Many lines of credit from online lenders can take 24 hours or less to get approved, but you should still expect a week or more from traditional banks.
- Invoice factoring: Involves selling unpaid invoices to an invoice factoring company for immediate cash, easing cash flow problems. This type of financing usually takes about a week to deposit funds due to credit checks and verifying the creditworthiness of your clients.
- Merchant cash advances: Businesses get funding based on credit and debit card sales, making this option ideal for quick, small purchases or immediate expenses. You’ll typically see funds in as little as two or three days.
Factors that impact how soon you can get an unsecured business loan
How long it takes to get an unsecured business loan depends on the lender’s application and approval process. That process can include the amount of documentation you need and whether it approves loans manually or by using software.
The application
The bank’s documentation requirements and the methods available to apply determine the length of the application process. Traditional banks often offer applications in person or by phone so that you can work out your needs personally with a relationship banker.
You’ll need to set aside several hours to fill out the application and keep the required documentation handy for a smooth process.
On the flipside, online lenders specialize in streamlined online applications that you can fill out in minutes. They may move to the underwriting process within a few hours.
The underwriting process
Underwriting is the process in which your lender does the heavy lifting to evaluate your business’s creditworthiness and the amount of risk toward repaying the loan. It also determines the conditions for extending the loan, such as the down payment or collateral required. An unsecured business loan doesn’t require you to use business assets as collateral.
Lenders use two different methods to figure out your credit risk: manual underwriting or credit scoring models.
Manual underwriting
Manual underwriting uses a person to review the loan application, which can take up to several weeks. The benefit is that the underwriter can take subjective factors into account for approvals, such as a business owner’s character.
The underwriter will review the loan application as well as the following:
- Check your personal and business credit score.
- Evaluate financial statements, balance sheet and business plan to show how your business will repay the loan.
- Determine how much risk the lender can take on.
- Give recommendations to approve or deny the loan.
Bankrate insight
Lenders may charge an underwriting fee or include the cost in the loan’s origination fee, which is a common business loan fee that covers processing the loan.
Credit scoring software
Credit scoring models use software to assess a business’s financial statements and make calculations. Fintech lenders rely heavily on software and may also use it to pull alternative credit scoring data.
This allows fintechs to approve businesses like startups and bad-credit borrowers that are deemed a high risk by traditional lenders. As you can imagine, using technology speeds up underwriting significantly, with approvals in as little as 24 to 72 hours.
Examples of banks that offer unsecured business loans
Most banks offer unsecured business loans with low interest rates, including business lines of credit, term loans or working capital loans. See what loan features are offered by top banks:
| Lender | Unsecured loan type | Top features |
|---|---|---|
| Bank of America | Business line of credit | Interest as low as 10.00% No fees for cash advances Funding may take a week or more |
| Wells Fargo | Business line of credit | No draw fees Annual fee waived the first year Rewards program with Mastercard Access card Funding may take a week or more |
| PNC Bank | Small business loan | Payments automatically deducted from PNC business checking account 2- to 5-year terms Funding time typically takes 1 to 5 days |
Bankrate insight
Many banks also offer business credit cards, another unsecured funding option. Similar to business lines of credit, these provide access to a predetermined amount to be used on an as-needed basis, but credit limits are often lower than other unsecured business loans or lines of credit.
Examples of online lenders that offer unsecured business loans
Online lenders may specialize in one or more types of unsecured business loans, so you won’t see a uniform selection across all of these lenders. Examples of what you might find:
| Lender | Unsecured loan type | Top features |
|---|---|---|
| Bluevine | Business line of credit | Funding time typically within 24 hours Credit lines up to $250,000 Simple interest starts at 6.20% |
| OnDeck | Business line of credit | Same-day funding available Instant funding on draws from $1,000 to $10,000 |
| Lendio | Term loan | Funding in as little as 24 hours Matches you with 75+ lenders to find the right one Loan amounts up to $2 million |
Bottom line
Because every lender uses its preferred underwriting process, funding speeds are different from lender to lender. Most lenders can provide funding in one to seven business days, although online lenders often streamline loan approvals. Keep in mind that, even with the best unsecured business loan, the lender may reach out for additional information to prove your creditworthiness. This can increase the time to get funding.
Frequently asked questions
Underwriters are essentially evaluating your business to determine whether it can repay the loan. It looks at a variety of factors, including:
- Cash flow shown through accounts receivable and payable
- Credit history
- Business assets and liabilities
- Growth potential
- Industry risk of failure
Fintech lenders are technology companies that rely on software and alternative data to evaluate a borrower’s creditworthiness. Fintechs are non-bank institutions, which means that they don’t hold bank deposits or issue banking products themselves. Instead, they partner with traditional banks to offer loans.
The difficulty of getting approved for an unsecured business loan depends on your credit history and financial statements. Lenders often look for strong revenue, a strong credit score in the 600s and at least one to two years in business. If you’re a new business or have subprime credit, you stand a better chance of getting a business loan through an online lender than a traditional bank.
