An unsecured business loan is a type of loan that does not require collateral or security to be provided by the borrower. This means that the lender is taking a greater risk by providing funds to the borrower without any guarantee that the loan will be repaid.
Because there is no collateral required, the approval process for unsecured business loans is typically faster than secured loans. However, unsecured loans usually have higher interest rates compared to secured loans as the lender is taking on more risk.
Unsecured business loans are typically used by small business owners who may not have sufficient assets to pledge as collateral. The funds obtained through an unsecured loan can be used for various business purposes such as expanding the business, purchasing inventory, or investing in equipment.