Imagine this: You’ve finally started your dream business.
It’s actually going well, and an opportunity to expand has come right to your doorstep, and it’s very tempting to take it.
But here’s the catch:
Since you’re just starting out, you don’t have the money to scale it and expand.
What do you do?
Well, in my opinion, as a financial coach and banking expert with over 25 years of experience, one of the best things you can do in this case is:
Getting a startup business loan with no money.
According to Shopify’s survey of entrepreneurs in 2023, small business owners spend an average of $40,000 in their first year of operation.
And that’s a lot of money! Especially for a start-up.
So what do lenders do? They take out a business loan.
The question is, can you do it without money?
Fortunately, it is possible to get a startup business loan without money.
However, you’ll need to find financing that doesn’t depend on cash flow since your problem is that you have no money.
Let me explain:
When you apply for a business loan, lenders tend to look at your credit, income, cash flow, and more.
Also, lenders will consider your business’s industry, location, and view.
In this presentation, I’ll give away the best choices for startup business loans with no money.
I’ll also share the secrets of finding these startup business loans and show alternative financing options to help you scale your businesses.
When finding lenders to help fund your business, you must show that you can repay the loan.
So read on to find out the best startup loans without money.
5 Ways To Get A Startup Business Loan With No Money
If you’re just starting your business journey with limited funds, you’re less likely to be approved for traditional term loans or SBA loans.
But don’t worry, there are a few options to choose from.
Here are a few financing solutions that can help you scale your business even without money:
Microloans
Also known as microfinancing, microloans are small loans given to business owners or entrepreneurs who lack collateral.
Microloans can have specific spending restrictions, but they typically cover the operational cost and working capital for your much-needed equipment and supplies.
Equipment Financing
An equipment financing loan’s underwriting process differs slightly from a traditional term loan.
In equipment financing, the lender fronts you with the money to fund the piece of equipment you need; however, the equipment you buy will serve as collateral for the loan.
Since you’re currently struggling financially, lenders are concerned about your ability to pay back the loan.
The terms of an equipment loan will vary on your business credit, personal credit, longevity of your business, and how well the equipment suits your plan.
Fortunately, if you’re trying to find startup business loans without having any money, revenue may be the least concern when applying for an equipment financing loan.
Invoice financing
In invoice financing, you’ll use your business’s unpaid invoices as collateral.
Invoice financing companies will fund you a percentage of these unsettled invoices.
These companies focus more on the value of your invoices than your credit scores, making it easier for business owners with bad credit to qualify for this type of financing.
Invoice financing can help businesses get their capital through unpaid invoices.
Small business credit cards
Business credit cards work similarly to personal credit cards, giving you the power to borrow up to a settled credit limit.
Some business credit cards offer valuable advantages for startups, like cashback on supplies.
Generally, your credit score and future revenue will decide your eligibility for this card.
Lenders and credit card issuers also consider cash flow when determining eligibility. However, they usually care more about personal credit.
Having at least good personal credit can qualify you for most cards.
Many business owners actually have one or more business credit cards ready in their wallets, especially for startup business owners who need quick cash since, unlike other loans, with credit cards, you don’t need to have any money upfront.
Paying your bills consistently, on time, and in full will help you avoid a decrease in your credit score and interest charges.
Crowdfunding
Even though crowdfunding is a less traditional way to get your startup money, it has become a popular funding source over the years.
Nowadays, online platforms like Kickstarter or Wefunder help create posts about your product or services.
You can choose a goal amount and create rewards for donors, such as early access to your product or offering special features like limited edition creations.
Unfortunately, crowdfunding typically requires you to reach your fundraising goal to be able to receive the money.
But keep in mind that in crowdfunding, the money you raise is purely from donations, meaning you’re not obliged to repay it.
Should you get a business loan with no money?
One of the biggest factors when deciding whether you’ll need to get a business loan with no money or seek other financing options will vary on how you will use the funds.
You must also consider when you need the funds. since taking out loans takes some time.
If you’re in a rush, then maybe this might not be the loan for you since it sometimes takes a lot of time to process your application.
Most of the time, you’ll be able to get more suitable loan offers when you have steady revenue and money to put down for the loan.
However, if you really want to capitalize on your business’s growth opportunity, getting a loan with little money may be very helpful as long as you can create a concrete plan to repay the loan effectively.
When To Get a Business Loan With Little To No Money
- Cover Startup Cost
- Expanding your business
- Paying unexpected fees
- Utilize a business opportunity
- Debt consolidation
When not to get a business loan with no money
- When you have a weak revenue
- When you’ll use it to cover daily operational expenses
- When you need the funds right away (these loans take time)
- When it’s not suitable for your budget
How to get a startup business loan with no money or revenue
If you currently have insufficient revenue, you must make it up to your potential lender or credit card issuer.
You have to show that you can repay the loan in other ways. Here are a few ways to get that much-needed financing:
Make A Strong Business Plan
First, you must create a strong business plan to get funding for your business.
A business plan outlines your business concept, market, and projections.
A strong and well-qualified business plan shows potential investors you’re serious and have a clear plan for the startup’s future.
A strong business plan must include the following:
- Executive Summary
- Company Description
- Products and Services
- Market Analysis
- Organization and management
- Product line
- SWOT Analysis (strengths, weaknesses, opportunities, and threats)
- Marketing and Sales Strategy
- Funding Request
- Financial Analysis
- Appendix
Check Your Assets
When a lender decides to work with you, they’re taking risks.
They need some assurance that you’ll be able to repay the debt in full.
That’s why lenders might look at your revenue.
If your business has difficulty generating revenue, consider other positive things you can offer as collateral.
Gather All Lender’s Requirements
Before heading out to the nearest credit card issuer or lender, you must first thoroughly research the lender’s requirements.
Ensure you have your financial statements, credit reports, tax returns, business plans, and business licenses ready for your meeting.
Conversely, some lenders require a specific amount of money in their business bank accounts before considering lending you money.
Will You Be Able To Repay The Loan?
Of course, when applying for a loan, you should be sure you can repay it.
If it doesn’t fit your budget, this might not be the right time to get a loan.
Moreover, loan payments will depend on your loan amount, interest rate, and loan terms.
Some lenders offer monthly payments. However, most startup business loan payments must sometimes be made weekly or daily.
Alternative Financing Options For Startup Businesses
If the loans above still don’t suit what’s best for your business, here are a few other alternative financing options that can help your startup business:
Business grants
Business grants are funds issued by the government, a company, or a philanthropist.
Business grants are basically free money, meaning you don’t have to pay them back.
Business grants are made to help small business owners.
However, it’s not easy to qualify for business grants since they can have very specific qualification requirements.
Competition for business grants can be fierce since it’s essentially free money.
Venture Capitalists and Angel Investors
Venture Capitalists (VCs) and Angel Investors are often confused with each other.
Well, there are similarities, such as they specialize in funding startups.
However, venture capitalists are usually big and established companies that want to invest in businesses to help develop them through direct participation in their operations.
On the other hand, angel investors are typically individuals who are willing to fund startups or businesses in their early stages that might not exhibit the growth rate required by a VC firm.
Friends and family
Lastly, it’s not uncommon to ask your family and friends.
Just ensure that you are serious and professional about it.
Even if you’re close with them, it’s still important to show a concrete business plan so that they can understand what they will be investing in.
Be transparent, and don’t pressure them to give you funds. Let them know that even if they reject your proposal, you’ll still be good friends with them.
Can You Get A Startup Business Loan With No Money?: Final Thoughts
Whether it’s for starting your business, trying to expand, or paying unexpected fees, small business loans can help provide support when used correctly.
If your money or revenue is insufficient, you must be creative and find alternative funding options.
You can use any valuable, available resources and offer them as collateral.
Ensure you have a strong business plan and responsibly use your business assets to show lenders you’re responsible enough to repay debts.
Look for loans that don’t necessarily just look at your revenue but also your creditworthiness.