An unsecured loan is a loan that is given based on the credit history of the borrower and requires no collateral for availing it. Small business owners are the most likely applicants for these loans and are utilized to expand or maintain the business or to maintain the cash flow.

It can be used to add more capital to a business that aids in realizing the goals of the organization. The interest rates vary based on the lender and are more than 14.99%

Though the traditional definition of an unsecured loan is that there is no need for collateral, it works a little different from what is defined. Instead of asking for specific collateral which gets hypothecated to a bank or the financial institution they apply a general law on business assets till the repayment of the loan is fully completed.

This allows people with high creditworthiness or those with good business to get loans without having to pledge their big assets to small business loans.