4 Steps to Getting A Business Loan Without Collateral


Online loans, bank loans, Small Business Administration loans, loans for invoices, loans for equipment, and loans for inventory are just a few examples of business loans that don’t require collateral. Good news, then.  

The bad news is that lenders frequently increase interest rates and fees without collateral, or they might demand a personal guarantee or a lien agreement. Thus, you can expect to pay more for these loans, and if you default, you might still be responsible for paying back the debt with your assets.

Requirements for business loans without collateral

Collateral free loans are made available to the borrower with no assurance. These loans have become more common for small businesses. Most lenders have minimum requirements for a company’s annual revenue and length of operation, and the owner’s credit score might also be taken into account. Unsecured business loans, however, might have additional conditions that are meant to safeguard or reward the lender.

  • Personal guarantee: If you fail to make loan payments, a personal guarantee still gives lenders the right to your personal property, even if you are not required to provide collateral. Anyone who owns 20% or more of the business must provide a personal guarantee for all SBA loans, for instance.


  • UCC lien: By the terms of some loans, lenders may file a Uniform Commercial Code lien, which gives them access to your company’s assets if you fail to make payments on the loan. Your company’s assets effectively serve as collateral in this scenario.


  • High annual percentage rates: Since unsecured loans pose a greater risk to lenders than secured loans, you might find that they generally have higher APRs. While SBA loans and bank loans typically have lower APRs, some of the highest APRs for loans can be found online.

Getting a business loan without collateral.

The following sources of funding technically don’t call for collateral, but a personal guarantee or lien agreement may be necessary. Lenders have different conditions and requirements.


  • Online Loans: Online business loans are frequently quicker to approve and fund than bank or SBA loans, but they may cost the borrower more due to high-interest rates. Borrowers may still be required to sign a personal guarantee or consent to a general lien on their company assets, even though not all of them demand collateral. Online loans can be a good substitute for traditional bank loans for business owners who don’t meet those criteria but still have personal credit scores above 600 and have been in operation for at least six months despite the added costs.

  • Banking loans: By way of term loans or business lines of credit, some banks provide unsecured financing. While business lines of credit only require you to pay interest on the money you borrow, up to a predetermined limit, term loans offer an upfront lump sum of money. A bank application for a business loan will probably be more rigorous and time-consuming than an online loan application.


  • An SBA loan: Borrowers are not required to provide collateral for SBA loans. A personal guarantee from business owners with 20% or more equity is nevertheless required for all SBA loans, regardless of their size. The most typical SBA-backed funding option is a 7(a) loan. Unsecured SBA loans are more likely to take the form of a CDC/504 loan, which allows the borrower to avoid putting up additional collateral by using the collateralized property obtained through funding.


  • Invoice financing: Accounts receivable financing is another name for invoice financing, which lends money to business owners in exchange for unpaid invoices from clients. Similar to a cash advance, it helps manage short-term cash flow issues and is frequently easier to qualify for than bank loans. Unpaid invoices may only be used as collateral up to a certain point, though, depending on the terms of the agreement. The owner might have to cover the sunk cost themselves if the client never pays their invoice.

How do I apply for business loans without collateral?

The straightforward steps to apply for a business loan without collateral are listed below:

Step 1:  Select the “Business Loan” tab from the homepage.

Step 2: Pick the best option from the list of preferred loan partners.

Step 3: Choose the required loan amount and repayment term

Step 4: After that, upload copies of all the necessary paperwork.

The last step is to submit your application. Your loan will be verified by the lender before it is disbursed into your account.

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