How to Get a Small Business Loan Without Collateral

Approaching the World of Loans

There are so many ways to get a loan — whether for your small business or otherwise — but knowing how to approach that goal is key. There are do’s and don’t’s when it comes to securing a small business loan, and going about it the right way can help to ensure better chances of success!

Starting a small business is challenging, both in mind and body, and financing the small business is arguably the most challenging aspect in the entire entrepreneurial process. Securing a loan is crucial to success, though not everyone is able to front collateral to offer as a security. This significantly lessens the chance of success when attempting to secure a loan. However, like all things in life, there are options available for small business owners to get a loan without collateral. Here are some ways a small business owner can go about doing that!

The Small Business Administration (SBA)

The Small Business Administration (SBA)

The Small Business Administration provides loan programs that are guaranteed by the government, and can help small business owners get the financing they need without putting up collateral. This makes it easier for small business owners to get approved. However, SBA loans are typically quite difficult to secure, as they require a thorough business plan, strong credit history, and solid cash flow projections. While this is an option — and a first option for many, there are several other options to look at.


Microloans are exactly what they sound like: small loans designed specifically for small business owners. Microloans can be a good option for those who don’t have collateral, as the loan amounts are typically small and the requirements are less stringent than traditional loans. Microloans are typically available through non-profit organizations, community-based lenders, and even some traditional banks.

Alternative Lenders

Alternative lenders, such as online lenders, peer-to-peer lending platforms, and merchant cash advance providers, offer small business loans without collateral. These lenders typically have a more streamlined application process, which can make it easier for small business owners to get approved. Like every other type of loan source, alternative lending comes with its unique ratio of pros and cons, and it is important to be aware of those. For example, a con would be that the lender may not be an accredited institution, and could leave the one loaned susceptible to fraud. Interest rates on the return may also be significantly higher, depending on the agreement. It is important to compare the interest rates and repayment terms of these loans, as they can be more expensive than traditional loans.

Personal Loan

If you’re starting a small business, you may be able to get a personal loan to finance your project. Personal loans are unsecured, which means you don’t need to put up collateral. The interest rates on personal loans, however, can be higher than other loan options, so it’s important to compare rates from multiple lenders to get the best deal.

Utilize your personal assets.

If you don’t have collateral to offer, consider using your personal assets, such as your investment portfolio or your savings to secure a loan. This can provide lenders with added security, making it easier for you to get approved. However, it’s important to consider the risk involved in putting your personal assets on the line.

Getting a small business loan without collateral can be challenging, and in some cases more risky, but it’s not impossible. From SBA loans to alternative lending options, there are a number of ways to finance your small business without putting up collateral. It’s important to consider your options carefully and compare the terms and conditions of each loan before making a decision. With the right loan and a solid business plan, you can start or expand your small business with confidence.

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About the Author

Jeff Sekinger

Jeff Sekinger Founder & CEO, 0 Percent Who is Jeff Sekinger? Visionary Trailblazer Sekinger has been in the financial industry for over a decade. Starting

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