How to Get Small Business Loans Without Collateral

Like many business owners, you may be facing a relatively short-term expense such as emergency facility repairs or a higher-than-expected tax bill, or you may be focused on a longer-term investment, such as expanding, upgrading, purchasing new equipment, and so on. In these common situations, getting a small business loan without collateral can be a great option to keep your operation strong and successful.

Most Common Reasons for Needing a Loan Without Collateral

  • You may not want to pledge your personal and/or business assets.
  • You may not have enough personal and/or business assets to meet your lender’s collateral requirements.
  • You’re aware that lenders who demand collateral often undervalue assets in order to further reduce their risk exposure. For example, the industrial equipment that you and every other credible expert in the marketplace knows is worth $75,000 is likely to be valued at $50,000 by a collateral-demanding lender.  

If any of the above applies to you, then you should cross “conventional bank loans” off your list since banks always require collateral in order to get a loan. Along with near flawless credit and 24+ months of business credit history, these requirements can be difficult to meet.

How to Get a Small Business Loan Without Leveraging Collateral

The first thing you want to do is look for the word “UNSECURED.” If this word appears before the name of any business loan, that means the lender does not require any collateral of any kind to be leveraged on your end. This means that if you should default on your unsecured business loan, none of your personal or business assets will be at risk.

Unsecured Business Loans Include:

  • Unsecured Small Business Loans
  • Unsecured Business Lines of Credit
  • And much more.

And much more. However, there are also “SECURED” business loans that don’t require your assets be leveraged as collateral, but someone else’s. In many cases, these options may be just as beneficial, as your company really isn’t losing anything that isn’t already yours. Some examples of these include:

  • Equipment Financing: Leverage your leased equipment as collateral.
  • Merchant Cash Advance: Leverage your customers’ payments, instead of your own capital.
  • And, you guessed it–much more!

Fortunately, you can pursue an option that has benefited numerous small and mid-sized business across the country: apply for a business loan without collateral from an alternative business financing company like National Business Capital to get significantly easier approval. Alternative financing companies are known for finding the best loan deals on the market whether you have impaired credit, a past-discharged bankruptcy, or no collateral at all!

How and Why Do Some Alternative Financing Companies Not Require Collateral?

Part of what National Business Capital stands for is transparency (as our testimonials from satisfied clients verify!). Therefore, in light of the above you may be asking a sensible and important question: why do we offer loans without collateral in the first place?

The answer is simple: we don’t believe — and our stability, growth and success confirms — that collateral is necessary to make a funding relationship work. Our team is focused on what a business is doing today and where it’s headed tomorrow. Collateral isn’t part of the picture, because frankly, it’s irrelevant.

So Why Do Banks Insist On Needing Collateral?   

The first reason is that they can! They make more than enough profit from their other lines of business, such as commercial and residential mortgages, to offset the drop in applications caused by their collateral requirement. The second reason is that underwriting a small business loan costs banks about as much as underwriting a loan for a large enterprise. As such, demanding collateral is a way for banks to claim they offer small business loans, but make it exceedingly difficult to obtain one.

Learn More About Unsecured Small Business Loans

Getting a small business loan without collateral is easier and faster than you think, and keeps your personal and businesses assets where they belong: safely and securely with you.

To learn more, contact that National Business Capital team today. Our team will provide you with transparent, objective information so that you can make an informed decision. We partner with clients to help them advance on their business journey and if you decide to make us part of your success, we’d be honored to help you, too. Start by filling out our 1-minute application, and we’ll help you find a loan option that’s right for your business. 

Also, be sure to check out our FREE eBook on how to get business funding when banks say no:

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About the Author, Megan Capobianco
Megan Capobianco is the Marketing Manager at National Business Capital. Megan is passionate about helping business owners along their journey - providing them with relevant content they can use in their day-to-day operations.