What Are the Options for No Collateral Business Loans?

If you need to borrow money for your business, you’re probably wondering how much it will cost and how long it will take to get the money. But what about collateral? Traditional lenders require a borrower to provide an asset that can be used as security in case of default, but what if your business doesn’t have any equity or other valuable assets? You still have options. In this guide you’ll explore five approaches that don’t require collateral:

Get an unsecured loan from an online lender

To get an unsecured business loan, you’re going to need a lender who will approve your loan request without collateral. If you’re like most people, that probably means applying for a personal loan from one of the big banks; however, it might be time to check out your other options.

Online lenders are more likely to offer you a loan than traditional banks because they can make more money by giving loans at higher interest rates. They also tend to be more flexible about repayment schedules and will often offer better deals if they can see that you have good income potential or collateral that could be sold if things go badly (like an investment property). You can also get startup business loans for bad credit guaranteed online. Lantern by SoFi professionals says, “You can get a secure startup business loan without collateral which can help you with your business.”

Apply for a merchant cash advance

A merchant cash advance, or MCA, is a way for businesses to get funding without having collateral. It’s usually used when you need cash quickly and need more time to get traditional financing. But you should go into an MCA knowing what it is, how it works and how much money you can expect to borrow so that you’re not surprised by any surprises.

The biggest benefit of an MCA is that there’s no collateral required — most MCAs are unsecured loans because they don’t involve collateral like other business loan types do. This means that if you don’t repay your loan on time or at all, the lender can’t take anything from your business (though they can sue). Another benefit of MCAs is their flexibility: since they’re unsecured loans, lenders often give out more money than they would if they were lending against a car or house — sometimes as much as $250K!

Obtain a short-term line of credit

If you’re not a good candidate for a business loan with collateral, consider obtaining a short-term line of credit. This type of loan is similar to a credit card but with lower interest rates and longer repayment periods. A short-term line of credit can be used for business expenses like buying inventory or paying employees.

Get funding from a peer-to-peer network

Peer-to-peer (P2P) lending is financing that connects borrowers and investors via an online platform. The borrower’s credit score, income and other qualifications are not the only factors considered when deciding whether to lend. For example, borrowers can get loans for up to $50,000 at interest rates typically between 4% and 15%.

Investors can choose their risk tolerance by selecting the loan grade they want their money in:

  • Grade A: Lowest risk with very low returns.
  • Grade B: More moderate risk with average returns.
  • Grade C or D: Higher risk but also higher return potential.

 

No collateral business loans are a great option for raising funds for your business. Instead, they can help you grow your company, expand into new markets and reduce your debt load.

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