Running a business isn’t as easy as the TV shows make it look. In fact, it’s a whole lot harder than most people anticipate, and a lot of the stress comes down to funding. You might be used to making use of payday loans in the UK, but when running a business, this might not be an option. When looking for funding, you might find that a lot of lenders want you to have some form of collateral before agreeing to loan you the finance. However, what do you do if you don’t have it? So, if you want to acquire additional business funding without collateral, keep reading and discover the alternative methods.
Find No Collateral Loans
It may seem obvious but try taking a look for loans that don’t ask for collateral. These types of loans are out there for businesses, it’s just a case of finding them. They may have different requirements, so make sure you know exactly what you need to have before applying. Some lenders also won’t require collateral up to a certain amount, so sometimes it’s best to apply for less funding and not have to worry about be rejected due to your lack of collateral. Alternative and online lenders are also quite good at helping businesses who don’t have collateral, so be sure to do some online research and seek them out too. You might be able to do things like equipment financing or a merchant cash advance, both of which can help you out of a sticky situation and don’t generally require collateral.
Assess Your Other Qualifying Criteria
If you don’t have collateral, then lenders will be looking for other qualifying means that demonstrate your business is viable to lend to. Take a look at things like your credit score and cash flow, as these can work in your favour if they’re at decent levels. If you don’t have a high credit score and a negative cash flow, then it’s unlike you’d be approved for a business loan even if you had collateral. Some lenders will also require you to have been operating for a certain period of time too. This means if you’re still a start up and maybe have only been operating for a few months, they may not lend to you purely for this reason. So, make sure you check out what qualifying criteria the no-collateral loan lender requires of you, and make sure you do your best to meet it. This will give you the best chance of success when applying.
Sign A Personal Guarantee
If you don’t have business collateral, then some lenders might ask you to sign a personal guarantee instead. This is where you’ll personally take on the debt should your business be unable to pay it off. You’ll typically find these are applicable when it comes to no-collateral loans too, so you need to be fully committed to repaying before signing. It also means that the lender can sue you personally if the business doesn’t make the repayments and you then fall behind. So, before you decide to sign a personal guarantee, make sure you completely understand the terms and conditions, as well as knowing your own affordability should the worst happen.
Getting funding without collateral isn’t impossible, it just needs a different approach. You need to consider the terms and conditions carefully as they might be a slightly different to a standard collateral loan. Don’t agree to something unless you truly feel comfortable with it, and you believe that it will be best for your business. So, if you’re prepared to sign a personal guarantee and spend time searching for no-collateral loans, then you might just be able to acquire the funding your business needs. With the help of the funding, you’ll soon be pushing your business towards the success you’ve dreamed of.