How To Get A Startup Business Loan With No Money? – Loan Approval Process

How do you get a startup business loan with no money? – There are multiple ways to do it. All you need to do is do the right thing and apply for it in the right places.

Actually, several easy-approval startup business loans and alternative financing help startups get the funds they need, even if their revenue is less or negligible.

A startup needs money occasionally to go along with its regular operations. Hence, it needs to get loans. However, you need cash in hand, to be able to get a business loan. When a lender is about to loan your business, it needs to see whether you have a steady flow of revenue. 

In this article, you will learn how to get a business loan for your startup if your revenues are low. 

Is It Possible To Get A Startup Business Loan With No Money? 

According to the Forbes Advisor, “Starting a business can feel like a Catch-22. That’s because, in most industries, you can’t begin operations without significant starting capital. Unless generous investors back your business, you’ll need to take out a business loan. […]“

Some lenders offer startup business loans to startups with no profit, revenue, assets, or cash flow. However, you might pay a higher price to finance the loan. This is a fact that you need to accept while you are applying for a loan. 

On the other hand, if you want to secure a loan at a lower cost, you will need to wait until your business has a solid cash flow. In such cases, you can secure a better repayment term and a more attractive interest rate. 

In addition to taking a loan, make sure your business is protected. To protect your business on various fronts, make sure you avail yourself of startup business insurance.

Business Loan Options For Startups With No Money

NerdWallet assures – “It can take time for early-stage businesses, even those that have been operating for a couple of years, to earn revenue.“

Let’s say you run a startup or any business, but you have limited funds. Hence, it is doubtful that you can secure an SBA Loan. However, it is possible to access other financing options. Here are they: 

1. Microloans

These loans are loans up to $50,000, and they help startups to tackle the need for small funding. Since microloans help startup businesses, generally there are no revenue requirements.

For example, the SBA (Small Business Administration) offers you microloans. On the other hand, government agencies, non-profits, and peer-to-peer agencies also provide you with microloans. 

2. Business Lines Of Credit

According to BankRate.com, “Since a business line of credit is revolving, it allows you to use funds continuously. The lender will give you a set credit limit, which is the maximum amount that you can borrow.“

However, the lender determines whether your startup needs money upfront or not. For example, some lenders charge you origination fees or draw your fees when you withdraw money. However, in general cases, you need to have a minimum revenue of $100,000 to avail of business lines of credit. 

3. Business Credit Cards

Generally, startup owners need to have business credit cards with them. This helps them get access to quick cash. Compared to a business loan, you will not need enough money with you if you want to avail yourself of a card. 

The best thing about business credit cards is that you can boost your credit score as you make repayments. This will help your startup qualify for future business loans.

However, you make sure that you use your business loans responsibly. Furthermore, in some cases, lenders check your personal creditworthiness to qualify your business for a credit card. 

4. Equipment Financing

When you get equipment financing, you secure the loan with the help of commercial equipment that you are buying with the help of your loan funds.

Since you are ensuring these loans, it will be easier for you to qualify for them. In some cases, lenders might require low (for example, an annual revenue of $90,000 or less). 

Furthermore, in some cases, you can also get 100% financing of the loan you apply for. Hence, in such cases, you do not need to put down your equipment payment. 

5. Invoice Financing

Invoice financing is accounts receivable financing that you pay using your unpaid invoices. Hence, to see whether your business qualifies, the financing company will evaluate your clients’ payment histories and invoices.

Afterward, the company will pay 90% of the invoice amount to you. The best part is that you can use the amount however you please. 

However, the structure of payment might differ from company to company. Despite that, most companies will ask you to repay the way your clients play you. Nevertheless, the fees can be higher for such loans.  

Generally, some companies first charge a one-time fee as a percentage of your total invoice. On the other hand, other companies might add another percentage as your invoice stays outstanding every week. Furthermore, to ensure proper accounting, reach out to the best accounting firms for startups. 

6. Merchant Cash Advances 

With the merchant cash advance, you will be able to secure funding based on your past credit. Apart from that, it also depends on your debit card sales.

Here, you do not need to pay anything upfront. However, the payment that happens later is fixed or a percentage of your sales. Moreover, in some cases, some lenders might also ask for daily or weekly repayments. 

How To Get A Startup Business Loan With No Money?

A lender you apply to might determine how you generate revenue as a borrower. Hence, it is important for you to understand what the lender is looking for in you before they give you the loan. Apart from that, you also need to be aware of other positive attitudes you can offer.  

The following are some of the factors you need to consider before you get a startup business loan with no money: 

A. Start Offering Collateral 

Collateral is a valuable asset that lenders use to recover losses in case you cannot repay your loan. Hence, consider offering collateral like real estate, cash, a piece of large equipment, or more. As a result, you can improve your chances of securing the loan. Furthermore, you can also get a better term and rate. 

B. Add A Cosigner 

If you become a loan defaulter, add a personal guarantor to take over your payments, and you will add a cosigner. This enables the lender to mitigate its risks. Furthermore, you can also benefit if your cosigner has better credit, bigger assets, and more. Generally, cosigners are friends, family members, or business partners. 

C. Understand The Requirements Of The Lender 

Different lenders have different requirements for loans. Hence, whenever you apply for a loan, make sure you are learning about the requirements of the lender.

For example, some lenders will determine whether you have a certain amount of money in your bank account. On the other hand, some lenders might look at your personal credit before giving off a loan. Therefore, make sure you know a lender’s needs before you apply. 

Frequently Asked Questions (FAQs) 

The following are some common questions you will find when applying for startup business loans with no money: 

1. Is Getting A Startup Business Loan With No Money Possible?

Yes. Different types of startup business loans do not require you to have a certain amount of money. However, such business loans might have other costs you need to pay or require better personal credit scores, collateral, etc. 

2. How To Get A Startup Business Loan With No Money? 

Here are some things you can do to get a startup business loan with no money: 

1. Start offering collateral 

2. Add a cosigner 

3. Understand the requirements of the lender 

3. What Are The Business Loan Options For Startups With No Money? 

The following are some business loan options for startups with no money: 

1. Microloans 

2. Business Lines of Credit 

3. Business Credit Cards 

4. Equipment Financing 

5. Invoice Financing 

6. Merchant Cash Advances 

Bottom Line

How do you get a startup business loan with no money? – The first thing you can do is offer collateral to the lender. Apart from that, you can also add a cosigner to get better deals.

On the other hand, understanding the other requirements of the lender and meeting them will also allow you to get loans with no money. 

Do you have more suggestions for securing business loans? Consider sharing your ideas and opinions in the comments section below. 

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