Can You Get A Business Loan Without Collateral?

01 Jul 2021

When you’re just starting with your business, getting funded is of utmost importance. You need to set the base, buy the right equipment, kick off the marketing plan, and offer discounts to attract potential customers.

And these needs keep on growing. If you get funded, you not only satisfy these needs but also start with an impact. And nothing beats a grand entry in a competitive market!

Well, but for all this to happen, you need money. And there are only three options:

  • Use your own money
  • Borrow from family or friends
  • Apply for a personal or business loan

Although that is always an option, at some point all of us run out of resources. 

Where do we go next? It’s possible that family members or friends will be willing and able to help out. But for many of us, it’s the last place we want to go to get money for our business.

That leaves you with one course of action - apply for a personal or business loan. But for that, you need collateral. Banks won’t lend money to a business that has no collateral. After all, they need some form of security!

So what are the options left for you if you do not have anything to offer as collateral? To be frank, not many. 

The only option that remains is to get a business loan without collateral. But can you really get a business loan without collateral?

Well, yes, you can! And here’s how you can get it.

Let’s clear out the basics before we get into how you can get funded:

1. What Is A Collateral?

Cambridge Dictionary describes collateral as ”valuable property owned by someone who wants to borrow money that they agree will become the property of the company or person who lends the money if the debt is not paid back.”

It acts as a security deposit in exchange for the money lent to you. The higher the amount of lent money, the larger the collateral stake.

There are various types of collateral that you can put at stake:

  1. Property
  2. Equipment
  3. Cash
  4. Invoices

2. Secured Vs. Unsecured Business Loan

This collateral comes in very handy when securing a loan. It gives surety to a lender that his interests are insured. And that’s the reason they offer business loans at lower interest rates and higher flexibility. This type of lending process is called a secured loan.

These loans are tied to your assets and hence the given flexibility.

But what if you do not have anything to offer as collateral? Can you still secure a loan?

Yes, absolutely!

Although the interest rates will be slightly on the higher side, and flexibility limited. There’s more than a few options to choose from.

To make this application process as simple as possible, Greenpoint Capital offers a 4-step application process. You can get it done in less than 3-minutes!

Now, getting back to unsecured loans. You must be curious about different types of available unsecured loans and which one is better suited for you.

Let’s find it out!

3. Types Of Business Loans With No Collateral

a. Merchant Cash Advance

Merchant cash advance seems to be working on collateral, but on the contrary, it takes a part of future receivables.

It acts as a security and can yield a good amount of funding. The process is simple, and the rules are straightforward.

The minimum criteria to get the advance is to have your business operational for at least three months and a cash-flow of more than $25,000 per month.

b. Term Loans

Although not entirely out of the ‘collateral equation,’ term loans are available in some cases without collateral.

A term loan is exactly what you would expect from the name - a loan request for a one-off investment. The repayment period is usually one to five years!

c. Business Line Of Credit

A business line of credit may or may not require collateral, subject to the lender and the amount.

A business line of credit gives you instant access to a set pool of usable funds that can be put in action at any point in time and the interest rate is only to be paid for the used portion.

It is a very flexible way to set a new business plan in motion, improve cash flow, or address an emergency.

4. Contact Greenpoint Capital To Speed The Process

Business Loan

Getting a business loan without collateral is a tedious process. Getting the loan amount approved, completing the application process, and the documentation can prove troublesome if not handled by experts.

Hence, you should get the help of Greenpoint Capital. With our years of experience providing funding as high as $10,000,000 and our connections with an extensive network of funding partners and investors, you’re almost guaranteed to get the funding you need.