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Compare five types of small business loans that don’t require collateral as security

How to borrow money for your business without putting up your property as security.

Small business loans help entrepreneurs meet financial obligations. However, lenders often require that you put down property as security for repayments. Not every business owner is in a position to do so.

Fortunately, business owners can apply for loans without putting up their assets as security. Lenders evaluate the strength of your business and may approve an amount based on that assessment. Besides sound business structure, you also need to show bank statements and a reasonably good personal credit history.

Which lenders offer small business loans with no collateral required?

Some online lenders offer loans that don’t require property as security. Rates, fees and loan terms differ depending on the institution, so it’s a good idea to shop around for the best combination of these factors. Online lenders are generally more relaxed than banks with their lending criteria.

Compare business loans available in Canada

Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
SharpShooter Funding Business Loan
Prime pricing from 9.00%
$500 - $250,000
6 - 120 months
$10,000 /month
100 days
Unsecured Term, Merchant Cash Advance, Invoice Factoring
To be eligible, you must have been in business for at least 100 days with a minimum of $10,000 in monthly deposits.

SharpShooter provides capital to small businesses that are underserved by banks and credit unions. It measures overall business health and potential rather than focusing strictly on traditional metrics. Fill out a simple application and get pre-approved in minutes. Receive your funds within 24 hours.
OnDeck Business Loan
8.00% – 29.00%
$5,000 - $300,000
6 - 18 months
$10,000 /month
6 months
Secured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months with a minimum monthly revenue of $10,000.

OnDeck offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.
Loans Canada Business Loan
Prime Pricing from 9.00%
$2,000 - $350,000
3 - 60 months
$4,166 /month
100 days
Unsecured Term
To be eligible, you must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $350,000. Complete one simple online application and get matched with your loan options.
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What loan types are available with no collateral required?

Lenders offer a few different types of business financing that doesn’t require security. Consider the following types to see which one might work best for your business:

  • Unsecured business loan

With an unsecured business loan, the lender will consider the financial health of your business and whether or not you’re in a position to make repayments. The minimum and maximum amounts vary depending on the lender, but the loan amount you get depends on the lender’s assessment of your business.

Repayment periods can range from 1-7 years. The quicker you repay this loan, the more you save on interest and the better your credit profile. Lenders will more readily grant another loan to a responsible borrower.

  • Invoice financing

Invoice financing lets you borrow against outstanding invoices and repay the loan once your clients honor those invoices. This is a quick, easy way to fix a business’s cash flow problems without putting up property as collateral.

Depending on the lender, you may be able to have the money in your account within one business day of the application. This kind of funding can be an option for when you’re unable to fill an order because of a cash shortage.

business-invoice-wide

  • Purchase order financing

If you’re having trouble filling an order because of cash flow problems, you can apply for a loan where the lender pays your suppliers on your behalf. The supplier ships the order to your customer who pays the lender, and any profit from the transaction is deposited into your account.

Instead of demanding property as security, purchase order financing is granted based on your business profile, the risk of the orders, your clients’ and suppliers’ reputations and experience in the industry.

Besides providing financial breathing room, purchase order financing helps you take on bigger orders, increase turnover and streamline the supply chain. This boosts your business’s profile, thereby extending your customer base and eventually enhancing profits.

  • Trade finance

Similar to purchase order financing, a trade finance loan pays your supplier on your behalf so that you can deliver an order to your customer. You then repay the lender within the agreed-upon period.

Lenders work with foreign exchange partners to find the best interest rates, usually more competitive than those offered by traditional banks. Maximum loan amounts differ, with some lenders offering over $1 million depending on the order.

Sometimes available as a revolving line of credit, trade finance helps small businesses fulfill their orders without putting up their own assets as collateral. This type of loan can be ideal for businesses with suppliers and overseas customers. The lender acts as a third-party financier to facilitate the business deal while you get on with fulfilling the order.

  • Equipment finance

If you’re struggling with old or damaged equipment, you can apply for a loan to purchase business equipment. Instead of demanding assets as collateral, lenders may take into account the strength of your business and anticipated cash flow when considering your application.

Depending on the lender, you can get different loan types to finance a rental lease, financial lease or actual purchase. You then enter into a tailored contract to repay the loan over the agreed-upon period. Some lenders may provide the option to purchase additional equipment during the loan and then adjust the repayment terms accordingly.

Bottom line

Acquiring a business loan doesn’t have to mean risking your property. Several online lenders grant funding based on the financial health of the business and projected income to get you the financing you need.

Want to learn more about financing your business? Check out our guide to business loans.

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