Key takeaways
- Most lenders can approve unsecured business loans in one to seven business days, but some lenders may take 30 to 90 days
- The funding timeline depends on the lender’s approval process as well as your business’s creditworthiness
- Online lenders can fund loans faster due to a streamlined application process
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 30 days or longer.
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. However, you’ll need strong finances to prove that you can repay the loan without collateral backing it.
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.
How long does it take to get an unsecured business loan?
Unsecured business loans can take anywhere from one day up to 90 days to receive the loan, but they may be faster than getting a secured business loan. Unsecured loans take less time for approval because the lender doesn’t have to evaluate and process paperwork for collateral.
However, the time it takes to receive unsecured loan funds depends on the exact lender you choose. Compare how long it takes to get an unsecured business loan with each type of lender.
Bank lenders
Traditional banks and credit unions take a longer time to process applications than other lenders, largely because they use humans to evaluate each loan. It may take a week or up to 30 days to get an unsecured loan through this type of lender. However, banks tend to offer the most competitive interest rates, making them worth the effort to apply for a business loan with them.
Online lenders
Online lenders offer the fastest funding and approvals, often advertising funding in as little as 24 hours. These lenders have significantly faster processes because they tend to use software to evaluate loan applications, rather than relying on human underwriters.
But online lenders tend to have high interest rates compared to banks and SBA lenders in exchange for the convenience of their fast approvals. If you can’t wait to receive funds, online lenders may be the best financing option.
SBA lenders
SBA loans can take anywhere from 30 to 90 days to fully process and fund your loan. SBA-approved lenders not only have to undergo their usual underwriting process, but they also must get approval for the loan from the U.S. Small Business Administration.
In some cases, you can get an expedited loan, such as with an SBA Express loan that doesn’t require SBA approval. You can also go through an SBA Preferred Lender to bypass the usual SBA approvals.
However, SBA loans may be worth the wait even if you apply for standard SBA loans because they offer competitive interest rates and long repayment terms. These features help you keep the repayments and overall cost of the loan low.
Bankrate insight
How long it takes to get 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 fast 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 as well as your business’s creditworthiness. Dive into the factors that influence how quickly you can get an unsecured business loan.
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.
Your business’s eligibility
Each lender sets its own requirements to be eligible for its business loans. If your business has strong financials and credit, you may receive a loan approval within a few days. However, if your business falls into a financial gray area, the lender may take more time to evaluate your business’s creditworthiness.
In this case, having strong revenue or considering a secured loan will help you get approved. If your business is denied for the loan, you can reapply after fixing the reason for the denial or find another lender that will take your business.
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 your business has for repaying the loan. It also determines the conditions for extending the loan, such as the down payment.
Lenders use two different methods to figure out your credit risk:
- 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.
- Credit scoring software: Credit scoring models use software to assess a business’s finances and determine whether the business can repay the loan. 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 9.00%
No fees for withdrawals 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
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
Instant withdrawals from line of credit once you’re approved Credit lines up to $250,000 Simple interest starts at 7.80% |
| 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
How long it takes to get an unsecured business loan depends on the lender you choose and your business’s creditworthiness. In most cases, lenders can approve your unsecured business loan within a week, but some lenders like traditional banks take longer.
Online lenders offer the fastest approvals, often within 24 to 48 hours, but they tend to charge higher interest than banks or SBA lenders. Consider which type of lender offers the loan terms, rates and funding timelines you need to receive financing for your business’s growth.
Frequently asked questions
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During the underwriting process, lenders will evaluate 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
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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.
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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.
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