How to Get a Small Business Loan Without Collateral

2015-07-21

Jeffrey Bumbales

Around 8 out of 10 businesses eventually fail, and the primary cause of business failure is lack of investment capital. In order to give your small business the highest chance of success, accessing reliable funding is imperative.

Unfortunately, many businesses neglect to apply for loans, as they worry they may not qualify or they’ll end up accruing greater financial debt.

One of the biggest obstacles standing between small business owners and financing is the intimidating amount of collateral that most loan options necessitate.

Many people lack the necessary assets to provide collateral, making it difficult to qualify for commercial loans.

How to Get a Small Business Loan Without Collateral

For business owners without ample collateral to secure a loan, there are alternative financing options to get you the money you need.

Private Equity Investing

Private equity investing provides entrepreneurs and established businesses with access to ample funding.

While collateral isn’t required, you do need to pitch an outstanding business proposal to investors in order to convince them to purchase shares of your company. The shares they purchase entitle them to a portion of your future profits.

The business plan should contain a compelling financial proposal that outlines your projected revenue plan and business growth, as well as detailing precisely how the money will be spent.

Business Cash Advance

A business cash advance provides an excellent financing option for those without collateral. Most business cash advance agencies don’t run credit checks, making it highly accessible to entrepreneurs of all backgrounds.

The application only takes a few minutes to complete, and applications are generally approved in 24 to 72 hours. The amount of money you qualify for will depend on your current monthly sales, but monetary amounts can reach up to $250,000.

To repay the money, a percent of daily or weekly sales will be automatically deducted from your account.

Revenue-Based Financing

Revenue-based financing is similar to private equity, except you don’t need to sign over a portion of your company in the process. Much like with private equity, eligibility will be determined based on your business plan and the potential success of your business.

To be approved, you need to demonstrate high potential growth, strong financials, and accurate revenue projections. The money is repaid based on your business’s revenue, with a negotiated percentage paid monthly.

Unsecured Line of Credit

A business line of credit can provide your company with a readily available cash flow for whenever you need it. Unlike a secured line of credit, where an equivalent amount of collateral is needed, unsecured credit lines are provided to borrowers at no collateral.

As a result of the elevated financial risk, unsecured credit lines are only available to business owners with excellent business credit and significant annual revenue.

Many business owners lack the needed assets to secure their loan with collateral. Given many lenders are unwilling to provide loans without collateral, this leaves business owners strapped for cash when they need it most.

By pursuing alternative funding options, like business cash advances and private equity, you can qualify for large investment quantities without needing to wager your property as compensation.

For all your working capital needs, contact Credibly. To get started now, fill out our online pre-qualification request form.