Can You Get Startup Business Loans with No Money?

Written by Laura Roden +2 more

Edited by Abigail Bassett +1 more

Edited by Janet Schaaf

Updated on:

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While some lenders offer startup business loans with no revenue, profits, cash flow or assets required, you might pay a higher price for such financing. If you can afford to wait until your business is more established with a solid cash flow, you can likely secure more attractive interest rates and repayment terms.

Here is what you need to know about how to get a startup business loan with no money and when to consider alternative financing options.

Funding options for startups with no revenue

If you’re a newly established business without a proper cash flow, you might struggle to qualify for a traditional business or SBA loan. Fortunately, there are other startup business financing options you can explore. Just keep in mind that even if the business lender doesn’t require your business to generate much revenue, you still need a plan to repay the loan.

Equipment financing

If you need to purchase expensive equipment for your business, equipment financing might be an option for companies with no revenue. These loans are typically based on the value of the equipment, not your company’s earnings. And because the equipment acts as collateral to secure the loan, business lenders may be willing to lend to startups.

Microloans

Microloans are loans of up to $50,000 that can help startups tackle small funding needs. Because they are geared toward startup businesses, they may not have revenue requirements to apply. Microloans are available from the SBA, as well as other government, nonprofit and peer-to-peer agencies.

Small business credit cards

Business credit cards function like personal credit cards, allowing you to borrow up to a predetermined credit limit. Some may have valuable perks for startups, such as cash back on office supplies, and it’s best to pay your balance in full each month to avoid interest charges. Eligibility for business credit cards is usually based on your credit score and future revenue.

Accounts receivable financing

Accounts receivable financing allows you to use your unpaid invoices as collateral to secure a small business loan — often between 70% and 80% of the invoice amount. Since these lenders focus on the value of your invoices as opposed to your business history, cash flow and credit score, startups might have better luck qualifying for accounts receivable financing than with traditional financing.

How to get a startup business loan with no revenue

If you have limited revenue and can’t provide adequate collateral, you’ll need to prove your creditworthiness in other ways. Here are some basic steps to apply for a small business loan without money.

Understand lender requirements
While small business loan requirements vary based on the lender and loan type, lenders typically evaluate the following criteria before when reviewing a business loan application:
- Personal credit score
- Business credit history
- Available collateral (not required for unsecured business funding)
- Capacity to repay from future revenues or savings
- Length of time in business
  You can review each lender’s criteria before applying to ensure they work with startups with no revenue or collateral.
Know your cashflow and assets
Lenders want to understand where the money for loan repayment will come from. You can get ready to explain this by creating a budget for future cash flows and assets. You can also supply a business plan outlining how you plan to spend the funds.
Be prepared to sign a personal guarantee
Startup lenders frequently require a personal guarantee from the company’s owners. Note that there are some risks involved with signing a personal guarantee, such as losing your home, car and savings if the business defaults on the loan.
Decide what you can afford to repay
Loan payments are based on the loan amount, business loan interest rate, repayment frequency and total time to repay the debt. Try your best to crunch the numbers in advance to ensure you have enough to cover essential startup costs while also staying within your budget. If your estimated payment is more than you can afford, try finding a lender offering a rate and repayment term that fits your needs.

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Use our business loan calculator to estimate how much you could borrow.

Should you get a business loan with no money?

While you can typically access a broader range of loan options with a more robust income stream, here are some scenarios where it could be worth considering small business financing with no revenue.

You’re trying to get your business off the ground

Most businesses need some money to open their doors — for rent, inventory, equipment, payroll services and other operational expenses before you generate sales. If you foresee a short timeframe to ramp up income for loan payments, it may be worthwhile to borrow money.

You need the money to grow

You may find you need money to fund additional facilities, inventory, payroll, working capital and more during your business’s early stages. If you haven’t accumulated much savings yet, loans could help act as catalysts for your business growth.

You are waiting to get paid

Not every business is “cash and carry.” In many companies, customers expect you to send an invoice that may not get paid for several weeks. If you have cash locked up in unpaid invoices, consider invoice factoring or accounts receivable financing to help convert them into cash. You’ll sell a portion of your invoices to a factoring company in exchange for an advance of a portion of the invoice.

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Alternatives to no-revenue business loans

The best way to secure competitive financing for your company is to wait until your business meets a lender’s annual revenue and other requirements. However, not everyone has the luxury of putting their business plans on hold. In that case, here are some alternative ways to access capital for your business.

Early stage businesses

Startups who are not yet earning revenue can try obtaining funds through venture capital or crowdfunding.

Venture capital: With venture capitalism, you can receive money for your startup in exchange for a piece of ownership in the business. No interest is charged or repayment required, which can make this funding method quite attractive, but be aware that you are effectively giving up a portion of equity in your business. Venture capital investors look for companies that will quickly grow in value and can be sold for a more significant profit.
Crowdfunding: You can solicit donations from friends, family and community members to support your business with crowdfunding. While you don’t have to repay the funds, creating a successful campaign can take significant time and effort. Additionally, crowdfunding platforms like GoFundMe and Kickstarter typically take a fee out of your total donations.

Established businesses

You will likely have more financing options at your fingertips the longer your business operates, especially if you have a proven cash flow. Here are some options to consider once your business has been in operation for six months or longer.

Short-term business loans: Lenders typically require at least six months of business history and a credit score above 500 to qualify for short-term loans. You will also likely need a minimum annual revenue of $50,000 or higher.
Business lines of credit: Businesses can access up to $250,000 in revolving funds with a business line of credit, only paying interest on the amounts withdrawn. Most lenders require a minimum of six months in business, although some lenders provide unsecured business lines of credit with no collateral for startups.
Small business grants: Grants provide free money that you don’t need to repay, and the awarding organization takes no ownership of the business. Depending on your business, there may also be additional minority business grants available.

Frequently asked questions

Yes, there are several types of business loans for startups with no collateral requirement, such as unsecured business loans. Lenders may focus instead on credit score, expected future cash flows and a personal guarantee.

While some lenders offer bad credit business loans or no-doc business loans for companies with a spotty or limited credit history, there really aren’t business loans with no credit check. Low-credit-score borrowers can typically find starter loans with an online lender, but be prepared to pay higher interest rates with shorter repayment terms.

You need a steady cash flow from somewhere to stay on top of your business loan payments — either from the business or you personally. So, while figuring out how to start a business with no money, assets or collateral is possible, you need to carefully consider your repayment obligations before signing the dotted line.

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