How to Get a Business Loan Without Collateral

For many small business owners, accessing capital is essential — but putting personal or business assets on the line isn’t always practical. Whether you’re just starting out, operating without large physical assets, or simply want to minimize risk, qualifying for a loan without collateral can be a smart and strategic move.

The good news? It’s entirely possible. Many lenders now offer business loans based on creditworthiness, cash flow, and business performance — not just assets. In fact, most financing solutions offered by SBG Funding do not require collateral, making it easier for business owners to secure capital without pledging property or equipment.

In this guide, we’ll break down exactly how to qualify for a business loan without collateral in 2026. You’ll learn what lenders look for, which loan types are available, and how to boost your approval odds — all while keeping your business and personal assets protected.

What Is a Business Loan Without Collateral?

Not all business loans require you to put assets on the line. A loan without collateral — also known as an unsecured business loan — allows you to borrow money based on the strength of your business, rather than the value of your property or equipment. This type of financing is ideal for entrepreneurs who lack physical assets, operate service-based businesses, or simply want to avoid tying up collateral.

Instead of relying on pledged assets, lenders assess risk using factors like credit scores, time in business, revenue history, and cash flow. While unsecured loans may come with slightly higher interest rates or require a personal guarantee, they’re often faster to obtain and more flexible in structure — making them especially attractive to small and growing businesses.

Before diving into how to qualify, it’s helpful to understand the key differences between secured and unsecured loans, and the types of financing that don’t require collateral.

Unsecured vs. Secured Loans

Secured loans require you to pledge assets — such as real estate, equipment, or inventory — that the lender can seize if you default. Because the lender has collateral as a form of protection, secured loans typically offer lower interest rates and longer repayment terms.

Unsecured loans, by contrast, don’t require specific collateral. Instead, lenders rely more heavily on your credit profile, business performance, and in some cases, a personal guarantee. These loans may carry slightly higher rates, but they’re often quicker to access and more attainable for businesses without high-value assets.

Common Forms of No-Collateral Financing

Several financing products allow businesses to borrow without traditional collateral. These include:

• Unsecured business term loans – Fixed-sum loans repaid over a set term, based on creditworthiness and cash flow.
• Business lines of credit – Revolving credit that can be drawn and repaid as needed.
• SBA 7(a) loans (for smaller amounts) – Loans partially backed by the government, with some unsecured options under certain thresholds.
• Business credit cards – Flexible access to credit with no asset backing.
• Online business loans – Alternative lenders offering fast, unsecured funding based on business performance.

Each of these options varies in terms of cost, structure, and eligibility — which we’ll explore in more detail below.

Key Requirements for Qualifying Without Collateral

When you apply for a business loan without collateral, the lender takes on more risk — which means they’ll look more closely at your financial health, credit history, and overall business performance. Instead of securing the loan with assets, you’ll need to demonstrate your ability to repay through other means.

Below are the core factors lenders typically evaluate when reviewing unsecured business loan applications:

Personal & Business Credit Score

In the absence of collateral, your credit score becomes a key indicator of reliability. Most lenders will assess both your personal credit score and, if available, your business credit profile to evaluate your borrowing history and likelihood of repayment.

• A personal FICO score of 680 or higher is generally preferred for traditional lenders.
• Some alternative lenders may accept scores as low as 600, depending on other factors like revenue.
• A strong business credit file (via Dun & Bradstreet or Experian Business) can further strengthen your application.

Tip: If your business is new or doesn’t yet have a credit file, your personal score will carry more weight — especially with online lenders or fintech platforms.

Time in Business and Revenue History

Lenders want to see that your business is established and generating consistent income. While requirements vary by lender and loan type, typical benchmarks include:

• At least 6–12 months in business (more for banks and SBA loans)
• Minimum monthly revenue of $10,000 or more for many online lenders
• Clear documentation of year-over-year growth or seasonal trends

Startups or very young businesses may face more difficulty qualifying without collateral unless they have strong credit and solid revenue.

Cash Flow and Financial Statements

Because the loan isn’t backed by assets, your ability to repay from operating income becomes critical. Lenders will assess:

• Monthly cash flow and whether it supports your requested loan amount
• Profit and loss statements, bank statements, and tax returns
• Your debt service coverage ratio (DSCR) — a measure of how easily you can meet loan payments

Strong, well-organized financials can offset the lack of collateral and help you secure better rates and terms.

Personal Guarantees & UCC Liens

Even if a loan is labeled “unsecured,” many lenders still use alternate forms of security to reduce their risk:

• A personal guarantee holds you personally liable if the business defaults.
• A UCC lien allows the lender to claim business assets if necessary, but doesn’t require you to pledge specific collateral upfront.

While these tools aren’t the same as traditional collateral, it’s important to understand how they work — especially if you’re concerned about protecting personal or business assets.

Best Loan Options That Don’t Require Collateral

Not all lenders require you to put up hard assets to qualify for financing. In fact, many small business owners successfully secure capital through loan types that are specifically structured without collateral requirements. These options vary in cost, speed, and flexibility — and understanding their differences can help you choose the right path based on your business’s needs and financial profile.

Below are the most common types of business loans that typically do not require collateral:

Unsecured Business Term Loans

Term loans provide a fixed amount of capital that is repaid over a set term — typically between 6 and 36 months. They are issued based on your creditworthiness, revenue, and cash flow, not on pledged assets.

• Use Case: One-time expenses, working capital, expansion, or marketing
• Repayment Terms: Fixed daily, weekly, or monthly payments
• Speed & Accessibility: Fast approval through online lenders such as SBG Funding; traditional lenders may take longer
• Costs & Considerations: Higher rates than secured loans; personal guarantee often required

Business Lines of Credit

A business line of credit offers flexible, revolving access to capital without requiring collateral. You can draw only what you need and repay it on your own schedule (within lender terms), making it ideal for managing fluctuating cash flow.

• Use Case: Operating expenses, managing seasonal gaps, short-term needs
• Repayment Terms: Interest-only payments during draw periods; principal plus interest during repayment
• Speed & Accessibility: Moderate to fast approval, especially with fintech lenders
• Costs & Considerations: May include draw fees or maintenance fees; higher interest for lower-credit borrowers

SBA 7(a) Loans for No-Collateral Amounts

The SBA 7(a) loan program allows for partially unsecured loans — particularly for amounts under $50,000 or in cases where no suitable collateral is available. While larger SBA loans typically require collateral, the SBA instructs lenders not to decline a loan solely due to lack of collateral if the business is otherwise creditworthy.

• Use Case: Working capital, equipment, debt refinancing, or expansion
• Repayment Terms: Long terms (up to 10–25 years depending on use)
• Speed & Accessibility: Slower to fund; documentation-heavy
• Costs & Considerations: Collateral may be required for loans above a certain threshold; personal guarantee required

Business Credit Cards & Online Loans

Business credit cards and short-term online loans offer fast access to capital without requiring physical collateral. While not ideal for large expenses, they can serve as useful tools for managing smaller purchases or covering urgent cash flow needs.

• Use Case: Minor operational expenses, emergency funding, building credit
• Repayment Terms: Revolving for credit cards; fixed short-term for online loans
• Speed & Accessibility: Very fast funding, often within 24–72 hours
• Costs & Considerations: Higher interest rates; must monitor usage and payment discipline

7 Pro Tips to Boost Your Approval Odds Without Collateral

Qualifying for a business loan without collateral isn’t just about finding the right lender — it’s also about presenting your business in the best possible light. Since lenders are taking on more risk, they’ll scrutinize your financials, credit history, and overall business health more closely than they would for a secured loan.

Here are seven actionable ways to improve your chances of getting approved:

1. Improve Your Personal and Business Credit Scores

Your credit profile is one of the first things lenders will check. Pay down outstanding debts, correct any errors on your credit report, and avoid maxing out your available credit. If your business has a thin credit file, consider opening trade accounts with vendors to start building it.

2. Strengthen Your Cash Flow Documentation

Lenders want to see that you can comfortably afford loan payments. Keep your financial statements updated — including profit and loss statements, cash flow reports, and recent bank statements — to demonstrate healthy, predictable income.

3. Prepare a Strong Business Plan

A clear, well-organized business plan shows lenders that you understand your market, have a plan for growth, and know how you’ll use the funds. Include financial projections and show how the loan will generate a return or support stability.

4. Reduce Existing Debt Obligations

High levels of existing debt can hurt your approval odds and increase your debt service ratio. If possible, pay down current balances before applying to improve your financial profile and reduce perceived risk.

5. Build a Business Credit History

If your business is new or hasn’t built credit yet, take proactive steps to establish it. Open a business credit card, register with business credit bureaus, and pay vendors or suppliers on time. A strong business credit score complements your personal credit and opens up more financing options.

6. Compare Lenders and Understand Their Criteria

Each lender has its own underwriting standards. Some may weigh credit scores more heavily, while others prioritize cash flow or time in business. Research and compare several options — especially online lenders who often offer more flexibility than banks.

7. Consider Offering a Personal Guarantee

Even if you don’t want to pledge assets, offering a personal guarantee can give lenders added confidence. This means you agree to repay the loan personally if your business can’t. It’s a risk, but it may be the trade-off needed to qualify without collateral.