Unsecured business loans do not require any collateral and merely rely on the credit history and financial capability of the borrower. This type of loan is usually offered to individuals or business owners who are considered to have good credit or those who have large balance sheets, short-term assets and/or impressive cash flows that are in excess of the required loan payment.

Unsecured loans carry more risks, they offer lower loan amounts, higher interest rates and shorter repayment terms. Despite these things, however, unsecured loans can be a relatively easy and flexible way for business owners to get additional funding for their endeavors.