Can you get a business loan without collateral?

A loan can be what you need to start a small business or take your existing business to the next level. Can you get a business loan without collateral?

Do loans not require collateral?

Many loans require collateral or collateral. The collateral is the placement of a property or account to guarantee the loan. In the event of default, the lender may seize the property in order to recover the loan losses. Some people display their home, buildings or equipment. If you don’t have collateral – or you don’t want to expose something valuable – you may be wondering how to get a loan for a small business without collateral. There are many alternatives.

Alternatives to security or security under a different name?

If you are looking for a loan that does not require collateral, you only have a few options. And even then many of these objects simply require protection under a different name. There are several loans that are really unsecured. Sometimes the loan may not be secured by specific collateral, such as a car or home, but it will be secured in a different way. For example, you can do this using one of the following options:

  • Personal guarantee: If you take out a loan with a personal guarantee instead of a specific security item, you will be guaranteed that as a natural person you will pay back if your company defaults on the loan.
  • UCC blanket: This is another option when lenders do not ask for a specific collateral position. A UCC blanket can be placed on the company. This means that in the event of default, the lender can then claim the company’s assets as compensation for the remaining unpaid amount.

Although none of these options is something that should be completely rejected from the equation, it is important to have a full understanding of what they mean to you and your business before signing the dotted line.

Can you get a business loan without collateral?

What do you need to take care of to get an unsecured loan?

Check your cash flow

Unless you have high creditworthiness and good results in terms of generating income, you will probably be burdened with a high interest rate on an unsecured loan. The annual interest rate (APR) can range from 10% for the most reliable borrowers to triple digits, depending on the lender and type of loan.

Clean up your credit report

Although it is possible to get an unsecured loan with a bad credit report, you will incur higher interest costs. The fastest way to raise your credit score is to lower your loan utilization rate, which is 35% of your score. The ratio reflects the amount of debt you incur in relation to the amount of credit available.

Create a solid business plan

If you have not already done so, develop a business plan that includes the business goal, how to earn money, growth strategy, detailed financial statements and cash flow projections.


Most non-bank lenders only operate online. Although they all advertise quick loan approval and financing, their offer varies in several ways.

When taking out a loan to finance your business, think about whether you really prefer an option that does not require any collateral, and why. If you are concerned that you may not be paying back and your lender will seize your assets, this may not be the right time to look for financing. 



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