An unsecured business loan is a loan that is granted because the borrower has an extraordinarily high credit score. It is “unsecured” because the creditor does not require the borrower to present any property as collateral for the loan. They are also sometimes called personal loans, or working capital loans.

Who Takes Unsecured Business Loans?

Unsecured business loans are friendly to small businesses, in which there are fewer employees and one, or maybe two or three, people with a vested interest in the company. New customer acquisition propels 44.6% of small businesses to apply for a loan. Even though these loans are parceled out by banks, a federal agency called the Small Business Administration actually backs unsecured business loans and is committed to helping small businesses grow.

Entrepreneurs, those special business people fond of financial risk, are probably the biggest fans of unsecured business funding. Baby Boomers, those born between 1946 and 1964, make up approximately 24% of entrepreneurs as of 2013. Not surprisingly, some of the key traits of a successful entrepreneur (at least, according to Entrepreneur.com) overlap with the personality traits associated with Baby Boomers: being a self-starter; a self promoter; being good with money. That last trait may be what money lenders are most concerned with when granting a line of credit.

Small Business Working Capital Loans.

Working capital loans for small businesses may go towards growing a customer base, but it may just as easily go towards employee salaries, rent, or supply costs. Employee salary costs account for about 19.4% of overall costs on average, with inventory following at 7.7% roughly, and rent at 4.6%.

Unsecured business loans are not a magical fix-it, even for small businesses that need the funds. The money must be repaid on the agreed upon schedule, of course. But when the right occasion presents itself, small businesses may breathe a sigh of relief that the option is open to them and their company.