How To Get A Startup Business Loan With No Money: Let’s Explore
For many aspiring entrepreneurs, starting their own business is more like a dream. You start from scratch, create value, and steer your destiny to uncertainty is thrilling. Everyone wants to take this one risk, at least once in their lives.
Do you know about Linktree? Almost every single day, we see at least one content creator using Linktree. But what do they do with that? Well, they organize all their creator pages in one place.
So, when you and I look for the pages, we can find them easily.
Originating in Australia, the company started its journey as a startup, and now it is a successful business, even being featured in Forbes, Entrepreneur, and Digital Trends.
Beneath all this business planning, there is one challenge that every entrepreneur faces—the capital needed to start the business. Capital is a company’s lifeline. Most entrepreneurs do not have the money to fund their business plans.
How do you get a startup business loan with no money? Is that even possible?
In this article, I will help you understand some of the tactics and sources of financing for your business.
Getting A Business Loan With No Money: The Funding Options
If you have just started your business and need proper cash flow, you might need help qualifying for a traditional business loan or face challenges getting an SBA loan.
But there is nothing to worry about. There are a lot of other financing options for startup businesses that you can explore.
However, regardless of whether your revenue is growing or experiencing a loss, you will still need to repay your loan amount.
1. Equipment Financing
Suppose you have just started your small business and need to buy expensive equipment. Equipment financing could be a good option. You only need to have a small revenue to opt for equipment financing.
These loans will finance the value of your equipment, not your business earnings. Since your equipment acts as collateral, lenders show interest in lending to startup businesses.
2. Small Business Credit Cards
Business credit cards are just like your personal credit cards. It allows you to borrow money up to a predetermined credit limit.
These small business credit cards offer you different perks that you can enjoy. For example, you may get cashback if you purchase office supplies with business credit cards.
Business credit cards often come with interest charges. We hate paying extra charges for credit cards, so keep paying your balance in full every month to avoid such charges.
Also, the eligibility criteria for the cards are reasonable. You need to have a good credit score and future revenue.
3. Business Grants
Several kinds of grants are available for you. However, it depends on the type of business you are about to start.
However, one feature of grants that can be advantageous is that, unlike business loans, you don’t have to pay back the amount you receive.
Both government and private first offer grants to small businesses based on your business type. They also provide grants for female business owners.
Other than these, you can find some research grants. You need to check if your business suits the criteria for research grants.
It is hard to get a grant, but you can still try. I believe it is a wonderful way to fund startups, as they won’t have to pay back the grant money.
You can invest your energy and valuable time in exploring various options and determining which suits you.
4. Microloans
Let’s say you need to handle your small funding needs; then microloans can be a good option. Microloans allow you to spend up to $50,000 for your startup.
These types of loans are specifically designed for startups, so you don’t need to show a good revenue amount to qualify for them.
You can find microloans from the SBA. In addition, a few non-profit agencies, government institutes, and peer-to-peer agencies offer Microloans.
5. Crowdfunding
Crowdfunding is another way to get a loan for your startup. It allows you to raise money from different people every day. So, you don’t have to depend on one particular lender to get funding for your startup.
There are four different kinds of crowdfunding that you can find for your startup:
| Name | Type |
| Donation | You can ask people to donate money to your cause. But one thing to remember: when it comes to donations, there should be an expectation that you will repay the amount or even offer them something in return.
|
| Debt | Here, you collect money from the contributors and promise to return it to them in the future.
In this specific crowdfunding process, there is an outline for the repayment timeline. It also offers interest, so the contributors can get a return on the amount they are investing in your startup. |
| Reward | Regarding rewards, the contributors provide funds for your business and expect something in return. It can be a simple sticker or an award for the funds.
Kickstarter is a good type of crowdfunding. This type of crowdfunding allows you to sell products even before you produce them. Once you raise the fund, you can use it to make the product and deliver it. |
| Equity | There are several startup businesses that sell a portion of their ownership to get funds for their startup.
So, if you sell a portion of your ownership in exchange for a loan, you are giving them the authority to make business decisions.
|
6. Alternative Money Lenders
Usually, there are many businesses that rely on banks and credit unions for loans. But trust me when I tell you, you can find alternative lenders who are ready to invest in your startup.
These alternative money lenders are mostly web-based businesses and private lenders. You can also find peer-to-peer lending sites.
Online lenders offer you easy applications and quick funding. They can be a great source for you to get loans. They also provide an easy qualification. So, startup business owners like you can easily get loans.
However, there is one thing that I should remind you of—the bad credit business loan. Suppose you have started a startup but have a bad credit history; online lenders might charge you expensive rates.
How To Get A Startup Business Loan With No Money
Don’t worry if your revenue is limited or if you are unable to provide proper collateral; you will still have the chance to show your creditworthiness in other ways.
In the following, I will provide you with a few steps for applying for a loan even when you have no money.
💶 A Clear Understanding Of Lender Requirements
Small business loan requirements depend heavily on lender type and loan type. So, try to be attentive and understand their requirements.
Usually, they consider the following points while reviewing a business loan application:
- Your personal credit score
- The credit history of your business
- How much collateral is available
- Your capacity to repay the amount from your revenue or savings.
- The overall length time of your business (don’t forget to mention your long-term goals)
Other than that, you will have to ensure whether they work with startups that have no money or collateral.
💶 Get Knowledge About Your Cash Flow And Assets.
The lenders always prefer to know how you will repay the loan. In that case, you can create a budget and explain your future cash flows and assets.
You can present your business plan to help them understand how you are planning to spend your funds.
💶 Be Ready For A Personal Guarantee.
There can be instances when the lender may ask you to sign a personal guarantee. Always remember that there are some risks associated with personal guarantees. For example, you can lose your house or your car.
So, try to read the terms and conditions before signing for the personal guarantee.
💶 Decide Your Affordability For Repaying.
Usually, loan payments comprise the loan amount, interest rate, frequency of payment, and repayment timeline. So, try to make an estimation of the total amount in advance.
This way, you can ensure that you have covered your startup cost while staying within your budget.
Now, if the loan exceeds your affordability range, you can look for lender offerings that fit your repayment terms and needs.
Bottomline
Well, in today’s dynamic business landscape, it is not impossible. You do not need to have a bank account full of cash or a series C pitch deck like Linktree; you can still get a business loan without any money.
Don’t worry. The journey may seem daunting, as you must secure a startup business with no money, but if you are determined, then nothing can stop you!
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