Not every business has real estate, equipment, or other assets to pledge as collateral — and that shouldn’t automatically rule out financing. While fully unsecured loans are less common than secured ones, several realistic options exist for business owners who can’t (or don’t want to) put up collateral. Here’s what’s actually available.
What «No Collateral» Really Means
Most «unsecured» business loans still require a personal guarantee from the business owner, even if no specific asset is pledged as collateral. This means that while the lender can’t automatically seize a named piece of equipment or property, the owner remains personally liable for the debt if the business defaults. True no-collateral, no-personal-guarantee loans are rare and typically reserved for very strong, well-established businesses.
1. Online Term Loans
Many fintech lenders (OnDeck, Fundbox, Credibly) offer unsecured term loans based primarily on business revenue and cash flow rather than collateral. Approval is faster than traditional bank loans, though interest rates tend to be higher to offset the lender’s added risk.
2. Business Lines of Credit
Several online lenders offer unsecured lines of credit up to $100,000–$250,000, particularly for businesses with strong, consistent monthly revenue. As with unsecured term loans, a personal guarantee is still typically required.
3. SBA Loans Under $50,000
While larger SBA loans usually require collateral when available, the SBA generally won’t decline a loan solely due to lack of collateral for smaller amounts, particularly SBA microloans. The business’s cash flow and creditworthiness carry more weight in these cases.
4. Business Credit Cards
Business credit cards are, by definition, unsecured financing. They’re best suited for smaller, ongoing expenses rather than large investments, but they’re one of the most accessible no-collateral options, especially for newer businesses building credit.
5. Merchant Cash Advances
A merchant cash advance provides funding in exchange for a percentage of future sales, with no collateral required. However, this comes at a significantly higher effective cost than most other financing options, so it should generally be considered a last resort rather than a first choice.
6. Revenue-Based Financing
Similar in spirit to a merchant cash advance but often more structured, revenue-based financing ties repayment to a percentage of monthly revenue rather than a fixed payment, without requiring physical collateral.
What Lenders Look at Instead of Collateral
When collateral isn’t part of the equation, lenders lean more heavily on:
- Monthly and annual revenue, verified through bank statements
- Personal and business credit scores
- Time in business
- Cash flow consistency (steady vs. highly volatile revenue)
- Existing debt obligations
Because the lender is taking on more risk, expect higher interest rates and often lower maximum loan amounts compared to secured financing.
How to Improve Your Chances Without Collateral
- Strengthen your business credit profile ahead of time by registering with Dun & Bradstreet and paying vendors on time.
- Keep clean, consistent bookkeeping so lenders can clearly verify your revenue and cash flow.
- Consider a smaller loan amount first, then build a repayment track record before applying for larger unsecured financing.
- Compare several unsecured lenders, since rates and terms vary significantly between fintech providers.
Frequently Asked Questions
Does «no collateral» mean I won’t be personally liable? Not necessarily. Most unsecured business loans still require a personal guarantee, meaning you remain personally responsible for the debt even without pledging a specific asset.
Are unsecured loans more expensive than secured loans? Generally, yes. Because the lender takes on more risk without collateral to fall back on, interest rates on unsecured financing tend to be higher.
Can a startup get an unsecured business loan? It’s more difficult, but SBA microloans, business credit cards, and some online lenders with more flexible underwriting are realistic options for newer businesses without collateral to offer.
Conclusion
Lack of collateral doesn’t have to be a dead end for financing your small business — it simply narrows down which products make sense for your situation, usually at a somewhat higher cost. Focus on strengthening your revenue documentation and credit profile, and compare multiple unsecured lenders before committing. For a broader look at what lenders typically require, see our guide on [small business loan requirements in the U.S.].