4 Options for No Collateral Business Loans
Last updated March 20, 2025
Startup business loans that don’t require collateral, also called unsecured loans, can be harder to come by than secured business loans. Plus, unsecured loans often come with higher interest rates and credit score requirements.
When lenders give out business loans with no collateral, they’re taking a bigger risk on the borrower. If the borrower can’t repay the loan, the lender doesn’t have a specific asset that they can easily liquidate for cash. That’s why in most cases, even if you aren’t putting up a specific piece of collateral for a loan, the loan is being secured in other ways, such as a personal guarantee UCC lien
But you do have several options for small business loans that may come without a collateral requirement: lines of credit, business credit cards, self-securing loans and merchant cash advances.
How much do you need?
No cost to you
Your credit score won't be impacted
Compare multiple lenders with one application
Startup Business Loans With No Collateral: Your Options
As an entrepreneur, you likely already know that starting a business comes with many costs, some big and unforeseen. Fortunately, paying out of pocket isn’t your only option for managing the many startup costs you will face as a small business owner. Here are four funding options that often accept startup businesses and don’t require collateral.
1. Unsecured Business Lines of Credit
To access an unsecured business line of credit through a more traditional lender, such as a bank or credit union, you’ll almost certainly have to meet strict qualification requirements, including good to great credit and at least a couple of years in business.
Many online alternative lenders
How Unsecured Lines of Credit Work
With an unsecured line of credit, you don’t have to provide physical collateral to secure the loan. You’re given a pool of funds that you can tap into whenever you need to. You pay back what you borrow—plus interest. Once you pay the lender back in full, your line of credit gets refilled to its original amount.
Unsecured lines of credit are riskier for lenders than secured lines, so lenders often give you less credit and charge you more interest for the funds you end up drawing.
2. Business Credit Cards
When you’re in the early stages of your business, you may not want to apply for too much financing because you don’t know what kinds of costs will come your way. Business credit cards can help you avoid taking on more debt than you can handle.
Specifically, 0% introductory APR business credit cards are an excellent tool to make purchases and pay them off over a set number of months—interest-free. You’ll want to make sure, though, that you can pay off your balance before this intro period expires and a variable APR—determined by the market and your creditworthiness—sets in.
When to Use a Business Credit Card as a Loan
Here are several examples of when it may make good sense for you to use a business card rather than take out a loan.
- You don’t have time to wait for a loan application to be approved and funded.
- You haven’t been in operation for very long and therefore don’t meet the minimum time in business qualifications for an unsecured loan.
- You have solid personal credit.
- You lack collateral.
Overall, business credit cards can offer up affordable startup financing and help tide your business over until you have enough business history to qualify for a more traditional form of funding.
3. Self-Securing Business Loans
A self-securing business loan is another option for a startup business loan with no collateral. With this type of loan, the asset you’re financing serves as the collateral for the funding, rather than your personal or other business assets. Equipment financing and invoice financing are two common examples of this loan type.
Equipment Financing
If you’re taking out a loan because you need to invest in expensive equipment for your startup, for example heavy machinery or a suite of hardware and software, consider applying for equipment financing
Although it is possible to finance up to 100% of your equipment purchases with an equipment loan, it’s more likely that you’ll pay a small down payment. You’ll then pay back the lender in monthly installments that include interest. When you’ve paid in full, you own the equipment.
The equipment itself acts as collateral for your loan. If you default on your loan, the lender seizes the equipment to recoup their losses—but your personal assets stay safe.
Invoice Financing
If you run a business-to-business company and you’re frequently waiting on your customers to pay their invoices, you may consider invoice financing
An invoice financing company advances you a percentage of your outstanding invoices, typically 80-90%. They’ll hold onto the remaining percentage and charge fees for each week it takes for your customers to settle the invoice. Once your customer has paid in full, you’ll get the reserve amount back, minus the lender’s fees.
With invoice financing, the invoices themselves serve as collateral for the loan.
4. Merchant Cash Advances
A merchant cash advance is a quick and easy way to get a startup business loan without collateral, but it is also the most expensive and risky option.
A merchant cash advance company
With no collateral required and poor credit scores accepted, merchant cash advances can meet your financing needs when you don’t qualify for other business loans. But proceed with caution: Merchant cash advances are the most expensive financing solution on the market and should be a last resort for your business financing.
Why Merchant Cash Advances Are So Expensive
Merchant cash advance companies quote their prices in factor rates
After that, convert your factor rate and any other fees to APR to get a true sense of the total cost of the cash advance. The math here gets pretty complex, but you can find online calculators with a quick search that will do the math for you. You’ll find that APRs on merchant cash advances can skyrocket—reaching the triple digits.
Fundera Can Help
We’re here to take some of the work of finding a startup business loan off your plate.
You can answer these few questions—with no impact to your credit score and free of obligation—to see which unsecured loans you qualify for.
One of our trained sales associates will personally advise you through the entire loan process, from comparing options to signing your agreement.
Let’s get you funded!
How much do you need?
No cost to you
Your credit score won't be impacted
Compare multiple lenders with one application