Disclaimer: Information in the unsecured business loans articles is provided for general information only, does not constitute financial advice, and does not necessarily describe Biz2Credit commercial financing products. In fact, information in the unsecured business loans articles often covers financial products that Biz2Credit does not currently offer.

As a small business owner, you put your blood, sweat, and tears into what you built. The journey is rewarding, but it’s not without major risks. Even if you have a solid business plan in place and are profitable, you’re bound to face economic challenges at some point. When facing uncertainty and hardship due to the economy or related events, the Small Business Administration (SBA) can provide various funding options — including some with no collateral. Here we break down how unsecured SBA loans can support your business in challenging times.

Article Summary:

• Unsecured SBA loans don’t require applicants to provide collateral.
• Many of these loans have limits of $50,000.
• Business owners can also look into alternative unsecured small business loans.

Types of Economic Challenges Your Business Might Face

You do what you can to control the variables in your business. But some things are simply out of your control. The economy. The stock market. The weather. All of these things can impact your business, which is why it’s crucial to have a contingency plan. Some economic challenges your business might face include:

• Recessions.When there’s a major economic downturn like the Great Recession or the one that followed the COVID-19 pandemic, it affects consumers and business owners alike. Higher unemployment means less discretionary income which can hurt your business.
• Natural disasters. Fires and earthquakes in the West. Hurricanes in the East. Tornadoes in the Midwest. Unexpected natural disasters can hit at any time and cause major economic damage to your business.
• Tariffs.President-elect Donald Trump has stated his plans for adding tariffs to imported goods. This may hike up costs for small business owners.
• Supply chain delays. All of the events that have occurred in the past few years have disrupted many things, including the supply chain. If there are supply chain delays, that can impact your business.
• High interest rates. In the past several years, we’ve gone from rock-bottom rates to a stubborn high-interest rate environment. When rates are high, so is the cost of borrowing.

If you’re dealing with the aftermath of one or more of these economic challenges, times might be tough. You might look into different business financing options to cover some gaps or help stabilize cash flow. To qualify for secured business loans you must provide a form of collateral. This can be real estate, equipment, or something else of value.

You might not have what’s needed to meet the eligibility requirements. Depending on your business needs, you might not be an ideal candidate for a loan with a traditional lender. Unsecured SBA loans may be available if you’ve exhausted your other options.

How Unsecured SBA Loans Help Small Businesses in Trying Times

The Small Business Administration states on its website that it aims to “ignite change and spark action so small businesses can confidently start, grow, expand, or recover.”

If you’re looking into financing solutions and don’t have collateral available, you can get an SBA loan unsecured of up to $50,000. However, it depends on the type of loan. The following are unsecured SBA loans according to their website:

• 7(a) Small
• SBA Express
• Export Express

Other loan options from the SBA may have collateral requirements, or if the loan amount exceeds $50,000. But if you need a business loan of up to $50,000, here’s how the SBA can help during trying times.

SBA Backs the Loan

The primary way the SBA supports small businesses is by backing the loans that lenders offer. In other words, the SBA works with lenders and guarantees part of the loan, therefore reducing the risk for them. This can be a tremendous help for borrowers.

Competitive Rates and Terms

Unsecured SBA loans can come with competitive interest rates and terms. The SBA has a max interest rate and for 7(a) loans of $50,000 or less it’s currently a base rate plus 6.5%. The base rate is typically based on the prime rate.

Disaster Assistance

In addition to traditional SBA loans, the SBA also provides disaster loans. These are available to business owners in a declared disaster area. The main disaster loan types are:

• Physical damage loans. Provides loans to cover physical assets damaged in an eligible disaster.
• Mitigation assistance. Offers funding to make updates to help mitigate future damage.
• Economic Injury Disaster Loans. Business funding for operating expenses after a qualifying event.

You can typically submit your loan application online or make an in-person appointment. While you might be able to go through the application process smoothly in the future, at the time of publishing, the SBA notes that new loans are delayed due to a lapse in Congressional funding. The agency had exhausted its resources after hurricanes Helene and Milton. Exactly when the SBA will receive more congressional funding is to be determined.

Eligibility for Unsecured SBA Loans

Eligibility requirements for unsecured SBA loans depend on the lender and type of loan. The SBA partners with lenders who might have their own underwriting criteria. However, the basic requirements to get an SBA loan unsecured include:

• Your business is based in the United States or its territories
• You operate a for-profit business
• Be creditworthy
• Exhaust other financing options

If you’re concerned with your credit score, the SBA site states that you still may qualify for startup funding if you have bad credit.

Alternative Unsecured Business Loans

Unsecured SBA loans can help in a pinch or if you’re dealing with a disaster or other economic challenge. However, getting an SBA loan unsecured may take longer than other options. Whether you need fast business funding or want to know your options, here are some alternative unsecured small business loans:

• Term loans. You can get term loans from traditional banks and online lenders, which offer a lump sum. Your repayment is on a fixed term. If you have a solid personal or business credit score, you may qualify for lower interest rates.
• Business line of credit. A flexible option is an unsecured business line of credit, allowing you to access a specific credit limit. You can alternate between paying and using your available credit.
• Business credit cards. To get short-term assistance now, a business credit card can help you access revolving credit. Just be aware of carrying a balance with higher interest rates.
• Merchant cash advances (MCA). For a fee, you can access a cash advance in the form of a lump sum. It’s repaid through a portion of your future debit and credit card sales.

Be aware that lenders may look at your personal credit, annual revenue, and overall creditworthiness. Even then they may require a personal guarantee.

Final Thoughts

Running a business is full of surprises. Sometimes those surprises are unwelcome and could impact your ability to run your business or generate an income. Whether it’s a recession or a natural disaster, you can turn to unsecured SBA loans as a life raft to get back on track.

Frequently Asked Questions (FAQs)

Can You Get a Business Loan No Personal Guarantee?

You might be able to find a business loan with no personal guarantee, but it’ll be a challenge. Check alternative lenders and different types of financing.

Can You Get An SBA Loan Without A Personal Guarantee?

The SBA requires an unconditional personal guarantee for individuals who own 20% or more of the small business they’re getting the loan for.

How Do You Qualify For An Unsecured Loan?

You must have a certain level of creditworthiness and meet the minimum eligibility requirements to qualify for an unsecured loan. While you might not need to use business assets as collateral, you need to show the lender that you’re a reliable business.

Can I Get A Business Loan With My EIN Number?

If you have an EIN from the IRS, you may be able to get a business loan with it. However, if you don’t have enough credit history, you still may need to use your personal credit.

How Much Can You Borrow For An Unsecured Loan?

Business owners can generally borrow between a couple of thousand dollars up to $50,000 or more in unsecured small business loans. However, it depends on your credit history and the lender.

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