how to get a business loan without collateral in 3 steps

Understanding how to get a business loan without collateral is very important for startups or existing businesses with bad credit records. For every business to thrive, the ready availability and accessibility of capital is a non-negotiable factor. Capital is the very center of any business and limitations in capital or the lack of it can incapacitate the business. Hence at all costs, it is imperative that the capital of the business must be readily available and easily accessible if the business must keep operating. Due to many reasons, this important factor of production; capital might be unavailable or incomplete and this situation calls for drastic actions if the business owner must remain in business. Some of these drastic actions can include taking loans.

A loan is a sum of money or property given out only on certain conditions and for temporal use which upon return, comes with something extra. Something extra could be interesting if the loan is a sum of money and if the loan is equipment or space, it could be an agreed fee. Whether a sum of money or a piece of equipment, it is important to know that loans are almost inescapable and the need for a loan does not necessarily mean something is wrong.

How to get a business loan

The process of getting a loan can be tedious and frustrating which is the first reason people try by all means to avoid loans. However, once the right steps to getting a loan are known, It is a lot easier to secure one than when the steps are not known. In this article, I would outline easily understandable steps to secure a loan.

Although the steps will be direct and easy to comprehend, they are only available to correctly inform you of what steps to take and what to expect if you want to get a loan. These steps do not rule out the importance of a finance expert when taking crucial decisions like securing a loan. Again, the steps to getting a loan are not limited to the ones listed below as the steps differ depending on the type of loan desired to be secured. That being said, here are the general steps to get a business loan;

Know The Purpose For The Loan

Before making the important decision of securing a loan, it is very important to sit back, think carefully and fully comprehend the reason for the decision to get a loan. This step is imperative because here, you understand what the exact problem is, why it requires a loan to be solved and if there are other alternatives to a loan.

Also, good knowledge of the problem helps inform the type of loan that would be most suitable. Not all business problems require loans. While some can be solved with personal savings, others can be solved gradually with the proceeds from the business instead of getting a loan that might become an added burden.

Determine The Type Of Loan Needed

After adequate knowledge of the problem at hand, the next step would be to determine the type of loan necessary. Here, the maximum limit of various loans would be considered, the interest rates on them, the amount of time given to pay back, the collateral needed and many other factors will help determine the best choice to go with. It is in this step you would sit back and find a loan type that is tailored to your preference, either the traditional loans from traditional financial institutions or loans from individuals, family, and friends.

Check Your Level Of Qualification

After listing out the types of loans you consider favorable based on either low-interest rates, longer time to repay, or no need for collateral, the next step would be to determine how qualified you are for the loans you wish to apply for. It is in this step you check your credit score, look around for guarantors, and check what assets can be used for collateral if required.

It is necessary to do this because once you’re able to measure your qualifications against the requirements needed, it will help narrow down the options to the ones you best qualify for and this can save a lot of stress. Rather than trying to visit every financial institution or every known agency for loans and getting disappointed over rejections, you just go straight for the ones that fit your needs.

Aggregate Your Desires For Proper Negotiation

Many people believe that negotiation is out of the question for people trying to secure loans but this is absolutely untrue. Financial institutions and agencies look forward to meeting borrowers as every money lent is an avenue to make a profit from the interest. In this step, aggregating your desires means putting together your varying capacity to use it as an advantage.

Here, you first decide how much time you would need to pay back, and how much interest would be affordable for you. Then subsequently, when you meet with the lenders, you can attempt to negotiate with them based on your desires and get them to bend to your will instead of accepting any option thrown at you. However, it is essential to note that for you to properly and proudly bargain, you must present yourself as being worthy. A good credit score can come in handy here.

Talk To An Expert

At no point, it is excusable to take a financial decision without the advice of an expert. Experts are more conversant with the market and are most likely to take into consideration various influencing factors than an individual would therefore it is important to talk to an expert before taking decisions like this. It is also important to know that not all experts have your best interest at heart. This is why it is important that you know what exactly you want and steer the expert’s guidance towards that part instead of being controlled by the expert. Again, always double-check! It is not criminal to compare and contrast results or different opinions from experts. Remember you have a mind of your own so be careful not to get deceived or led blindly.

 Is it hard to get a business loan?

Most people have this persistent dominant mindset that securing loans can be compared to moving a mountain. Talking in plain words, securing a loan can be both hard and easy and it largely depends on the borrower. For a borrower with a poor credit score and bad history of debt, securing a loan could be pretty hard but for a borrower with a good credit score and a neat history, securing a loan could be easy as he would have more power at the negotiating table than the other person with a bad credit score.

Collateral requirements, reputable guarantors, interest rates, and time to pay back among other factors can become difficulties when trying to secure loans. However, these difficulties can be made easy with the right information and a good financial expert.

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How to get a business loan without collateral in 3 steps

Knowledge of where and how to get a business loan without collateral is very important to a startup or new business. This is important especially when the business doesn’t have the adequate business/personal assets to secure the loan or doesn’t want to risk the business/personal assets for the loan or is afraid that the lender will undervalue the assets. However, borrowing money from traditional financial institutions such as banks will require collateral or personal guarantees before giving a loan to the business to ensure that the money is recovered if the business defaults.

Meanwhile, obtaining an unsecured business loan doesn’t require any collateral or personal guarantees but it may in return require a higher interest rate than a traditional loan.

Why unsecured loans for business?

Due to the need for speedy funding to meet business or personal needs, the market is moving toward business loans without collateral. With the advancement in technology, unsecured loans become competitive and popular in the lending industry.  With this, you can get unsecured loans online from any part of the world. It is easier and quicker to obtain than loans from financial institutions like banks.

The major disadvantage of obtaining a loan without collateral is the high-interest rates. It is understandable because the lenders are taking the risk of the business defaults in repaying the loan. However, this is a small price to pay when considering the speed of getting the loans and the ability to get funds to finance business expansion and growth on time. The ability of the business to finance its expansion on time will contribute to the rapid growth of the business and enhance its profits.

With help of, you can get a business loan of $500 to $10,000 to finance your business without any collateral in just 3 steps. These steps include:

  • Complete a simple online form to see if you are connected with a lender. You can fill out the form here
  • Compare different available options and complete the loan process.
  • Review other non-loan offers available for you to see if any of them make sense to you.


Although securing loans for business purposes is entirely acceptable, it is always good to keep the loans as the last option on the list. Business needs can be settled with personal savings and proceeds from the business itself especially if the business owner is averse to the potential risks associated with borrowing. Loans can also put a strain on the business proceeds as every effort would be turned towards repaying the loan. However, desperate times call for desperate actions and it is okay if securing a payable loan is one of those desperate actions.

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