How to get a Business Loan with no collateral
Starting or growing a business often begins with a brilliant idea. But what if you have no money to invest and no assets to offer as a security?
You’re not alone. Many Australian entrepreneurs face this exact challenge.
The good news is, that getting a business loan with no upfront cash or collateral isn’t impossible.
With the right approach and a clear understanding of your options, financial support might be closer than you think.
In this guide, we’ll explore loan types, application strategies, and introduce a flexible alternative—Credit24 personal loans, which, while not business loans per se, can still help fund your business goals.
What are no-collateral Business Loans?
No-collateral or unsecured business loans are the ones that do not require physical assets like property or vehicles as security. Instead, eligibility typically hinges on your personal credit score, cash flow, and the viability of your business plan.
While these loans can be a great fit for asset-light businesses, they generally come with higher interest rates and shorter terms, reflecting the increased risk to lenders.
Suitability of businesses
Some business types are better positioned for unsecured finance, particularly if they have strong cash flow or growth potential. These include:
Freelance or service businesses
Online retailers
Home-based operations
Hospitality startups
Consulting firms
Creative agencies
If traditional business loans aren’t an option, Credit24 personal loans is an alternative way to fund inventory, tools, or marketing campaigns—just note they’re not classified as business loans and include consumer protections of the National Consumer Credit Protection Act.
6 types of business loans with no money down.
Unsecured Business Loans
Unsecured business loans, unlike secured loans, do not require collateral, however, evaluation of your application is based on your personal credit score, business cash flow, and trading history. These loans are suitable for businesses with a solid financial track record but no assets to pledge. While they offer faster access to funds, they often come with higher interest rates due to the greater risk assumed by lenders.
Invoice financing
Invoice financing allows you to access the money your customers owe you before they pay. Lenders advance a certain percentage of the invoice value upfront instead of waiting 30 or 60 days for clients to pay. This will relieve the burden of short-term cash flow delays and help businesses cover operational expenses while waiting for payments. It's a practical option for B2B businesses with reliable accounts receivable.
Merchant cash advances
A merchant cash advance (MCA) is a type of factoring which provides funds now, in return for a percentage of your future credit card receipts.It's commonly used by retail, hospitality, and service-based businesses for which customers pay by credit card.
Business line of credit
A business line of credit gives you the flexibility to borrow money up to a pre-approved limit. You only pay interest on the amount you draw, not the total credit limit. This is ideal for managing variable cash flow, seasonal expenses, or unexpected costs. Unlike a term loan, you can reuse the funds once you've repaid what you borrowed—making it a practical safety net for many small businesses.
Equipment finance
If you're looking to purchase machinery, tools, or technology for your business, equipment finance can help. You don't need to provide separate collateral, because the loan is secured by the equipment itself. Majority of lenders offer structured repayments aligned with the asset's useful life. This type of financing helps you preserve working capital while investing in productivity-enhancing assets.
Microloans
Microloans are small, short-term loans typically offered by community lenders, not-for-profit organisations, or specialised microfinance institutions. They often range from $2,000 to $10,000 and are designed for startups, sole traders, or businesses with limited credit history. While small in value, they can be a vital stepping stone to help fund marketing, inventory, or early-stage growth.
How one can improve the approval chances?
Improve personal credit score
Achieving a higher credit score by paying bills on time and reducing debt shows lenders you’re financially reliable, increasing your chances of approval.
Build business credit
Using a business bank account, paying suppliers promptly, and registering for a business credit card helps establish your business’s own financial track record.
Prepare a strong business plan
A strong business plan can demonstrate how your business will operate, grow, and repay the loan, giving lenders more confidence in your proposal.
Show future contracts or confirmed orders
Showing upcoming revenue from signed contracts or purchase orders can be used as a proof of your ability to generate income and repay the loan.
Get a guarantor
A guarantor agrees to pay back the loan if you can’t, which reduces risk for the lender and may improve your approval odds.
Demonstrate industry experience
Demonstrating relevant experience proves you understand your market, building trust in your ability to run the business successfully.
Present clear financial projections
Clear, realistic forecasts help lenders see how you’ll manage loan repayments, especially with limited current income.
Consider alternative lenders
FinTech's, online lenders, and credit providers like Credit24 may offer more flexible criteria than traditional banks, increasing your chances of getting approved.
Alternative funding options
If you think it would be difficult to qualify for a traditional business loan, there are still some practical alternatives to consider.
Credit24 Personal Loans
While Credit24 does not offer traditional business loans, our Personal Loans can be used to support business-related expenses for sole traders. This might include setting up your workspace, buying supplies, or managing cash flow. It is a straightforward way to access funds without needing to provide security or navigate complex approval processes tied to business lending.
Government grants
Government grants are available for almost all industries, for example, innovation and sustainability. Grants do not need to be repaid, but they usually involve a detailed application process and specific eligibility criteria.
Crowdfunding
This involves gathering support from a wide audience, often through online platforms. If your business idea resonates with people, especially those who value what you are trying to build, crowdfunding can be a powerful way to raise capital without borrowing.
Angel investors
These are experienced individuals who invest in early-stage businesses they believe have strong potential. In addition to funding, they often provide valuable advice and business connections. In return, they typically receive a share of ownership in your company.
Venture capital
Venture capital is similar to angel investing but usually comes from firms rather than individuals. This type of funding suits businesses aiming for rapid growth. Like angel investors, venture capitalists expect equity and a say in your company’s direction.
Peer-to-Peer lending
This is a convenient alternative that lets you borrow money directly from investors via online lending platforms. It often provides quicker decisions and more flexible terms compared to traditional bank loans.
Partner financing
Taking on a business partner who contributes funding is another option. This approach spreads the financial responsibility and can also bring in new skills or experience to strengthen the business.
Best lenders to get a Business Loan
Online lenders
If you are after a quicker, more streamlined loan process, online lenders often make it easier to apply and get a response.
Fintech companies
These tech-savvy lenders focus on flexibility, using smarter tools to match you with a loan that suits your business goals.
Government programs
Some state or federal programs offer funding support for small businesses—especially if you meet specific industry or location criteria.
Nonprofit organisations
Some nonprofits offer funding to promote local business growth and financial inclusion.
Microfinance institutions
Ideal for small loan amounts, especially for startups or individuals with limited credit history.
Traditional banks
While they offer competitive rates, their approval processes are more stringent and slower.
Common mistakes to avoid
Getting a business loan without money upfront is possible, but there are some common mistakes to watch out for. One of the biggest is sending in forms with missing or wrong details. Even minor errors can stop your application. Not having the proper documentation, like a business plan or proof of income, can also slow things down. Asking for more money than you can afford to repay, can cause financial trouble later on. It is also essential to be careful when lenders make unrealistic promises. They might charge extra fees or include rules that are hard to understand and follow. If something feels rushed or confusing, step back and ask more questions. Being well-prepared and double-checking everything gives you a better chance of getting the right loan for your needs.
How to apply for a business loan with no collateral: Process explained
Required documents
You'll need ID, a business plan, bank statements, and proof of income or upcoming work.
Timeline expectations
Some lenders respond within a day; others may take several business days, depending on your application.
Application tips
Double-check your details, keep documents organised, and ask questions if anything is unclear.
Common reasons for rejection
Low credit scores, missing paperwork, or unclear business plans are typical reasons applications are declined.
Next steps after approval
Review the offer carefully. Once you agree and sign, the funds are released, and the repayment period begins.
Warning signs to watch for when taking a loan:
Not every loan offer is as good as it sounds. Be cautious with lenders who promise fast approvals without checks—this can be a sign of predatory lending. Always check for hidden fees, which can increase your costs over time. Be wary of unrealistic promises like guaranteed approval or instant money. If a lender uses high-pressure tactics to make you decide quickly, take a step back. Finally, avoid offers with unclear terms, you should always understand exactly what you are agreeing to before signing anything.
Should I apply for a business loan with no collateral?
Applying for a business loan without upfront capital can be valuable if used wisely and you’re approved for a loan. Here are a few pros and cons to help you decide whether it is the right move for you:
Pros
Even a small loan can help you start, support, or grow your business when other funding is unavailable.
Unlike equity financing, a loan lets you keep full ownership and control of your business.
It may help you build your business credit, opening up better financing options in the future if you successfully repay a loan.
Cons
These loans are considered riskier, often with higher interest rates and fees.
You may still be asked for a personal guarantee, even if no deposit or collateral is required.
Every business is different. If you have a clear plan and are confident in your ability to repay, a loan—even without upfront funds—could be the support your business needs to move forward.
