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Key takeaways
Securing a startup business loan without money or revenue is challenging but not impossible.
Certain loan types, like microloans, invoice financing, and business credit cards, cater to new or underfunded businesses.
Startup loans often carry higher interest rates, fees, and may require personal guarantees.
Exploring alternatives like grants, crowdfunding, or equity financing can reduce reliance on debt.
How does a startup business loan work, and can I get one with no money?
Business loans often have fairly strict criteria to qualify. For example, you may need at least two years in business or meet minimum revenue requirements just to be eligible to apply.
These requirements mean some business loans aren’t an option if you’re a newer business with little cash or no revenue. Still, some loan types and other financing options might work for now.
However, most business funding options for startups with no money come with higher rates and fees. As you become more established, business loans should become more affordable.
If you’ve recently started a business, you’ve likely invested all your money into it, so you may not have a large savings to fall back on. And as a startup, your business may not be earning much revenue yet from paying customers or clients.
If you don’t have any money personally, and your business isn’t generating much revenue yet, those are two major stumbling blocks to getting traditional business loans. That’s why you’ll have to look outside the box to get financing to grow your business.
Types of business loans for startups with no money or revenue
Finding business financing when you don’t have any money can be challenging. You’ll still need to meet other requirements, you’ll likely pay higher rates than more established businesses and you may need to sign a personal guarantee, but there are a few options.
Microloans
Microloans are small business loans — usually up to $50,000 — and are typically awarded to startups, women- or minority-owned businesses or businesses in underserved areas. These types of loans are usually offered through non-profit, community-based lenders or government agencies like the Small Business Administration (SBA). Microloans might be the right option if you don’t have capital or revenues and can’t find business financing elsewhere.
Equipment financing
Lack of revenue or money may not be as big of an issue with equipment financing because the equipment is used as collateral for the loan. Secured business loans are usually easier to qualify for than unsecured loans, making them a more viable option for startups or businesses with no cash. Some equipment loan lenders require a downpayment, but others may finance up to 100% of the loan.
Invoice financing
If you’re short on cash but have unpaid invoices, you may be able to get a loan based on the value of your outstanding accounts receivables. With invoice financing, the financing company fronts you a lump sum, which you repay, plus fees, as your customers pay their bills.
You won’t need to put any money down, but the financing firm needs to confirm the invoices are valid and that your customers are creditworthy. Also, it can be one of the more expensive forms of business funding.
Invoice factoring
Invoice factoring is similar to invoice financing in that you receive funding based on unpaid invoices, but instead of taking out a loan, you sell your invoices to a third-party firm that takes over the collection process. Invoice factoring is another option for businesses that don’t have cash but are expecting incoming revenue.
The factoring company fronts you up to 90% of the value of your invoices and then — once the customer pays — sends you the difference minus its fee. Like invoice financing, factoring can be pretty expensive, and you also lose control of your invoices, which may cause a disconnect with your customers.
Merchant cash advances
A merchant cash advance (MCA) might be a solution if you don’t have extra cash but have a significant influx of debit and credit card sales. It’s kind of like invoice financing or factoring, except that you take out an advance based on your future sales and repay it as money comes in.
A merchant cash advance is another expensive form of financing, and you typically have to repay the advance in daily or weekly installments, which can be pretty aggressive. It’s also not suitable for many types of businesses, although if you’re in retail, it might work for you.
Business lines of credit
More like a business loan than a credit card, a business line of credit can give you access to cash needed for startup costs, expansion or other business expenses. However, you might need a little money up front because some lenders that offer lines of credit may charge origination or other fees. You may also need to meet minimum revenue requirements.
Business credit cards
With a good credit score, a business credit card might be one of the easier types of business funding to qualify for, and you won’t have to put any money down. It can help you meet short-term business expenses, and — if needed — you only have to make the minimum payment to get through a lean period.
Plus, you only have to pay interest on what you borrow, unlike most business loans. And many business credit cards come with additional perks, like rewards points or discounts. It’s also a good way to build your business credit, which can help you qualify for other business loans down the road.
How to get a startup business loan with no money
Offer collateral. It’s typically easier to qualify for a business loan secured with collateral — an asset of equal or greater value than the loan amount — because secured loans are less risky for the lender. However, these types of loans are riskier for you because the lender can seize your asset if you can’t make your payments.
Add a cosigner. If you have a friend or family member with excellent credit, significant assets or both, you may be able to add them as a cosigner to your loan application. A cosigner in good standing can practically guarantee loan approval, but this option shouldn’t be taken lightly. If you default on the loan, your cosigner becomes responsible for repaying it, which is a tough position to put someone in.
Find out lender requirements. Because you’re looking for a startup business loan without money, you’re already coming into the game at a weaker position. That’s why it’s important to carefully research multiple lenders’ requirements to determine where you might find the most success. For example, traditional banks and credit unions may require two years in business to qualify for a business loan, while some online lenders may accept businesses that are only six months old.
Offer a personal guarantee. If you’re applying for a startup business loan with no money or revenue, you may not have much more to offer than your personal guarantee that the loan will be repaid. In business lending, a personal guarantee is a legally binding agreement that says you accept personal responsibility if your business can’t repay the loan. More specifically, if your business can’t pay, the lender can go after your personal assets, including cars, houses, bank accounts and other valuables.
Pros and cons of startup business loans with no revenue
Pros
Access to funds. A business loan can provide much-needed capital to start or expand your business.
New opportunities. Some of the faster financing options can allow you to jump on important business opportunities you might otherwise miss out on.
Builds credit. Many types of business loans can help you build credit, making it easier to qualify for financing in the future.
Cons
Higher rates. Startup loans are generally considered riskier for the lender, meaning it will charge you a higher rate than a more established business.
More fees. Newer businesses may be charged fees that might be waived for repeat borrowers or more mature businesses.
Risk of default. If you can’t repay your loan, you’ll hurt your credit and might even lose your business.
May require collateral or personal guarantee. Business loans that require collateral or personal guarantees put more than just your business at risk.
Should you get a business loan with no money?
Getting outside funding can make all the difference in growing your business. But it’s important to consider your situation before deciding if it makes sense.
When a startup business loan with no money is a good idea
There are plenty of good reasons why a business with no money might want to get a loan.
You’re just getting started. Most people can’t fund a new business out of pocket. You might need money to rent a space, purchase inventory, pay employees or buy office equipment.
You’re trying to grow your business. You may have been in business for some time now, but a fast influx of capital could help to catapult you to the next level.
Unexpected expenses. Stuff happens. A major piece of equipment needing replacement or having to relocate could elicit a need for funding.
When not to get a startup business loan with no money
There are also times when getting a small business loan might not be the best idea.
You can’t afford it. If you don’t think the monthly payments fit into your budget, you may need to go without the loan for now.
You can wait. If you don’t have a pressing need for the money, you might be better off waiting until you can save up enough for at least a down payment on a loan.
Poor revenues. If you’re not bringing in enough revenue yet, you may want to see if you can take the time to boost revenues first.
Alternatives to startup business loans with no money
If business funding through banks, credit unions and online lenders aren’t in the cards, consider these alternatives.
Grants. Grants can be very competitive and hard to qualify for, but if there is an opportunity to get ahold of funding you don’t have to pay back, jump on it.
Crowdfunding. Crowdfunding involves raising money through a large amount of small donations. Depending on the platform you use, you may not even have to pay it back.
Equity financing. An alternative to loans is selling equity in your company to investors, although this will eat into your profits and may diminish your control over the business.
Loans from friends and family. Maybe your wealthy aunt or adventurous brother would like to invest in your business with a low-interest loan.
Bottom line
Getting a startup business loan with no money can be challenging, but several options might fit your business funding needs. Depending on your industry, business model or specific need, you might want to look into SBA microloans, invoice financing or factoring, merchant cash advances and business lines of credit or credit cards.
You could also consider alternative forms of business funding such as equity investors, crowdfunding or business grants. You can also explore some of the best business loans we’ve already done the research on.
Frequently asked questions
Do I have to provide a personal guarantee to get a business loan with no revenue?
In most cases, yes, you’ll need to provide a personal guarantee to secure a business loan, especially when you’re a newer business. A lender wants to ensure it gets repaid, and if your business isn’t profitable, it will turn to you.
Can I get a startup business loan with no money and bad credit?
A better credit score generally equals better rates and an easier time qualifying for a business loan. It will be even more difficult to qualify for a business loan with no money and bad credit. Some lenders offer business loans to borrowers with bad credit but expect to pay higher rates and have less favorable loan terms. You may also look into business loans that don’t require a credit check.
Why is cash flow so important to business loan lenders?
The main priority of all lenders is to get their money back — at a profit. Reliable cash flow is a good indicator that a business has the means to repay the loan.
Lacey Stark is a freelance personal finance writer for Finder, specializing
in banking, loans, investing, estate planning, and more. She has 20
years of experience writing and editing for magazines, newspapers, and
online publications. A word nerd from childhood, Lacey officially got her
start reporting on live sporting events and moved on to cover topics
such as construction, technology, and travel before finding her niche in
personal finance. Originally from New England, she received her
bachelor’s degree from the University of Denver and completed a
postgraduate journalism program at Metropolitan State University also
in Denver. She currently lives in Chicagoland with her dog Chunk and
likes to read and play golf.
See full bio
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