Business Loans without Collateral

  • April 29th, 2013
  • Tyson Steele

business loans without collateral Without collateral, a traditional business loan can be hard to get. A bank usually requires some sort of asset – such as real estate or equipment – which you must surrender if you were to default on the loan. This bank requirement can be frustrating for business owners who are just starting out or who do not own any assets. Business loans with no collateral are especially difficult to get for those with bad credit scores. And, even more, difficult if you need the funds quickly.

Despite this difficulty, there are, in fact, many ways to get alternative business loans.

Types of Non-Collateral Business Loans

The key to getting a business loan without having collateral is to go through the alternative lenders. These lenders offer a few types of loans:

Merchant cash advance: if you have monthly credit card sales, a lender can give you working capital ahead of time, based on your predicted future sales volume. To pay off this loan, the lender simply deducts a percentage of your sales each day until the amount is paid.

Accounts receivable financing: similar to a merchant cash advance, this loan type gives you working capital ahead of time, based on upcoming payments from your customers’ accounts. This helps you buy whatever necessary inventory or resources you need to fulfill those future accounts (or purchase orders).

Equipment Loan: Technically, an equipment loan is a collateral-based loan because the equipment itself, once it is purchased, is used as collateral. However, many alternative lenders still offer this type of loan because the collateral is not considered the borrower’s “personal guarantee.”

Pros and Cons of Alternative Loans

The one downside to the alternatives is their rates. Because they are taking on more risk they must charge a higher interest than a bank.

However, alternative lenders are still very valuable to many business owners. For one, it takes a lot less time to get an alternative loan than it does to get a bank loan. A bank can take 1-2 months to give you an answer while an alternative lender can make a decision in just a few days. Plus, alternative lenders are less focused on credit score and collateral and more focused on cash flow, which makes sense when you think about it: after all, your ability to pay back a loan should be based on verifiable future income, not your historical mishaps (or lack of history thereof).

If you are interested in getting a business loan without collateral, here’s where you can find your options. Answer a few questions, and we simply match you to business loans with the best rates.

About the Author

  • Tyson Steele

Comments

  1. I need a loan for equipment and operations

  2. I need money for equipment

    • Candace, the best place to start would be to answer a few questions on Lendio.com. That way, you’ll be able to quickly see your matches.

  3. I need a loan for equipments and operation.

  4. i need a loan to start my laundry business which i have experience of but no money to start with not even collateral

  5. I need money to start up a business,pls help i ve nothing not even a collateral

  6. I NEED A SMALL LOAN TO START IMPORTATION BUSIÑESS. THANKS

  7. I need a start up business loan. I don’t have any money down or any collateral. My credit is 630+. is there a chance i can get funding?

    • Hey Krysten,

      While that is a somewhat difficult situation, you can check in our system, and if there aren’t any results, it will show you how to get to a place where you qualify. Thanks!

      Erik

  8. want to buy turn key restarant

    • Hey Justin,

      To get started and see all of your loan options to buy that turn key restaurant, visit http://www.lendio.com or fill out the widget. Thanks!

  9. need to buy a freezer to start a dairy

    • Viona,

      Please fill out the form on our homepage //www.lendio.com/ to be instantly matched to funding options that will best fit your business needs.

  10. I need loan for my poultry farming business pls help me i have nothing not even collateral

    • Josiah,

      We would be more than happy to help you with obtaining a business loan. Please feel out the form on lendio.com found on the homepage and one of our funding managers will contact you to answer any questions you have and will also be able to direct you to any additional information that may help your funding needs.

  11. I’m looking for place to lend money to start a small business without collatoral and secure money please ?

    • Hi Lukas,

      There are a few options that could possibly help you out, but the one that comes to mind first is a loan specifically for startup businesses. I would recommend visiting this link and reading up about them ( https://www.lendio.com/business-loans/startup-loans/). If this sounds like something that would work for you, sign-up here https://www.lendio.com/bp/signup and one of our awesome Funding Managers will help you with every step of the process. Thanks and good luck!