Do you need flexible financing options? Are you wondering how to get a small business loan without collateral?
No matter if you’re a startup, sole proprietorship, or fast-growing corporation, it’s always a bit daunting to attach assets on the dotted line when signing for a small business loan.
Businesses never want to forfeit property upon default, so no-collateral business loans are a coveted financing option.
However, unsecured small business loans still require some personal responsibility. But we’ll get into that soon.
Our last post covered how to get a quick business loan– collateral included. Keep reading to learn about your no-collateral business loan options.
It’s not as impossible to get a loan without collateral, as one may believe.
What is an Unsecured Business Loan?
You might be familiar with no-collateral business loans, but it’s always nice to have a refresher. We’ll keep it quick.
A small business loan without collateral (aka unsecured) is a type of loan that does not have any business equity or property attached to it.
So, if you default on your loan, the lender cannot seize any of your business assets. The entire construction of the loan is based on your credibility, trustworthiness, and a personal guarantee that you’ll repay the amount borrowed.
As a borrower, not having to put any business equity on the line is ideal.
What You Need to Know About Unsecured Small Business Loans
Before you dive into the financing waters, so to speak, here’s a quick rundown of what you should know about unsecured small business loans.
- While it might be a bit difficult to get an unsecured small business loan, it’s not impossible! Don’t feel defeated by statistics.
- No collateral does not equal no responsibility. You’ll still have to put some personal equity on the line.
- Each lender offers different financing options & approval requirements for no-collateral loans.
- Online lenders have more flexibility in what they can offer and, thus, have less harsh requirements & terms.
- Evaluate your business’ finances first to determine your credibility & overall ability to repay the money.
Get a Business Loan Without Collateral
Lenders need reassurance that you’ll repay the loan, only for their peace of mind, which is where collateral comes in. However, here’s how to secure financing for your small business with no collateral.
- Analyze your small business’ financial state, as well as your personal finances. Can you agree to a personal guarantee or a blanket lien? Are you prepared to repay the loan in a certain time period?
- Look for online lenders who offer business loans without collateral or low-risk financing options.
- Get a free quote from a lender and apply. Ensure that no collateral is on the line before signing.
Here are a few types of unsecured small business loans that are worth looking into.
- Merchant Cash Advance
- LOC (line of credit)
- Invoice, or Inventory Financing
As with everything in the realm of finance, always do your research to see which loan is best for you.
Use Online Lenders for Unsecured Small Business Loans
To no surprise, online business loans have a 75% chance of approval; that’s incredibly higher than traditional bank financing. Small business owners who have poor or little credit can find solace with online lenders because they typically offer better loan options.
Merchant Funding Solutions works with small businesses of all kinds, serving up no-collateral business loans with a smile. We seriously recommend getting a free quote. You’ll learn about all your loan options at no cost to you.