An unsecured loan is a type of financing where a borrower doesn't need to provide collateral, such as property or assets, to secure the loan. It's often sought by small businesses and franchise owners looking for capital without risking their assets.

Unlike secured loans, unsecured loans do not require collateral. Instead, lenders evaluate the borrower's creditworthiness and financial history to determine eligibility and interest rates. This makes unsecured loans more accessible to businesses without significant assets.

Unsecured loans offer several advantages, including quick access to funds, flexibility in use, and the ability to retain ownership of assets. Additionally, they can be an attractive option for businesses without substantial collateral or those looking to avoid risking personal assets.

Approval for an unsecured loan often hinges on the borrower's personal credit score, income stability, and debt-to-income ratio. Lenders assess the individual's ability to repay the loan based on their personal financial standing, including employment history, income stability, and existing debt obligations. A strong personal credit history and steady income stream can significantly impact approval and determine the terms of the loan.

While unsecured loans provide flexibility and convenience, they often come with higher interest rates and stricter eligibility criteria compared to secured loans and are dependent on the borrower's personal financial situation.