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.

how to get a loan without collateral and unsecured small business loans

Collateral Business Loans 101
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What Collateral is Needed for a Small Business Loan?

For most small business loans, some sort of collateral is needed to be leveraged in order to get approved.
This collateral often takes the form of liquid assets: that is, assets that can be easily converted into cash in the case of foreclosure.
The easier the collateral is to convert, the more “liquid” it is considered, and the less risk is taken by lenders, giving you a better chance to obtain high-qualify business financing with better terms.
If you don’t wish to leverage your personal or business assets, there are plenty of great unsecured financing options that do not require collateral.

Examples of Liquid Assets Used as Collateral for Small Business Loans:

  • Commercial Real Estate
  • Business Equipment
  • Inventory and Supplies
  • Invoices and Customer Payments

Although the secured business loans obtained by leveraging such assets are generally considered to be better offers with more agreeable interest rates and terms by small business owners, there are plenty of unsecured business loans with terms that are just as beneficial, and do not require any sort of collateral.
Unsecured financing is virtually exclusive to alternative business financing companies like National.

Can You Get SBA Loans Without Collateral?

No, you cannot. Backed by the federal government, loans given by the Small Business Administration always require some form of collateral before they can be obtained.
Whether you apply for an SBA loan through your local bank, or through an alternative business lender or financing company, since the approval qualifications are set by the SBA itself, and not the lenders providing them, assets will always be needed to ensure the administration that their funds are protected.
This does not, however, make SBA loans a bad choice by any means.
If you have the 2+ years in business, $100K in annual gross sales, and 695+ FICO to get an SBA loan, the low prime rates, long terms and large amounts offered through SBA financing may be the best possible choice for you.
And with alternative financing companies providing SBA loans with expedited processing that gets business owners funded in a fraction of the time taken by banks, and with a fraction of the paperwork, now has never been a better time to apply for SBA financing.

3 Most Common Reasons for Needing Unsecured Financing

  1. You may not want to pledge your personal and/or business assets.
  2. You may not have enough personal and/or business assets to meet your lender’s collateral requirements.
  3. 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:

However, there are also “SECURED” business loans that don’t require your own assets be leveraged, 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:

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 simply because they can! Banks 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.

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. 
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.

How to Apply for Business Loans without Collateral

To learn more, contact our team of Business Financing Advisors today at (877) 482-3008 for a free consultation, or get started right away by filling out our 1-minute application online.
Minutes after completing it, we’ll help you find the best possible financing option in the global marketplace that’s right for your business. 

Learn More About Unsecured Funding in Your Free eBook

Also, be sure to check out our FREE eBook on how to get business funding when banks say no:
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National Business Capital & Services is the #1 FinTech marketplace offering small business loans and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.

Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.

We strengthen local communities one small business loan at a time. For every deal we fund, we donate 10 meals to Feeding America!

About the Author, Megan Capobianco

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

Dislcaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advise from National Business Capital & Services and the author. Do no rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely in this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there maybe errors, omissions, or mistakes.