Is it possible to get a business loan with no money down?
The short answer is yes. If your business is tight on cash flow, it’s likely you’re searching for loan options that don’t require a down payment.
There are several loan programs designed to help business owners grow their business without having to put money down. Options include securing the business loan with collateral, securing the loan using future sales, short term loans, and others. What may vary between products and lenders is the amount available to borrow, the interest rate charged, loan fees, amount of time to repay the loan, and eligibility requirements for the business and business owner.
Let’s take a look at some products that are available and the differences with each.
Term Loans
Term loans are the most common form of lending for businesses. They don’t require a down payment but they do generally require collateral and also have certain eligibility requirements for the business. The requirements of the loan will depend on the lender you choose and your business’s financial profile. Loan collateral could include equipment, real estate, or other form of collateral. They may also require a personalized guarantee, especially for new businesses.
Equipment Loan
If your business is in need of equipment to support current operations or growth, an equipment loan may be the best option. Just like with any collateralized loan, you are basically financing the equipment with a plan to pay it off in a certain amount of time. Not all equipment loans will fund equipment 100 percent. Some lenders require some money down or up to 20 percent down. Equipment loans can be used to purchase or lease equipment depending on your lender and your business needs.
Business Line of Credit
A business line of credit is like a credit card. The money is available when you need it and you can pay back the principal in payments that fit your budget. The amount of your line of credit will depend upon how many years you have been in business, your current financial profile and other parameters. One of the benefits of a line of credit is the money is available when you need it. For example, you can apply and get approved today and so the money is there when you need it in the future. As your business grows, your level of credit may be increased.
Business Credit Card
A business credit card is an optimal choice for small everyday purchases. Use them to earn rewards or cashback. Depending on your operational budget, the cashback offer could be quite substantial. A lender will consider your business’s financial situation and possibly the owner’s financial situation when determining the level of credit to offer. A benefit of a credit card is that many are available with no annual fee and if you pay off your monthly balance each month, you may be able to avoid interest fees. This, in turn, is like receiving a loan at no cost.
SBA Microloan
The Small Business Administration (SBA) offers a Microloan Program. SBA loans are partially guaranteed by the government, so lenders look favorably toward them. Loans up to $50,000 are available to businesses with no money down. As with any loan, the business or business owner must meet certain financial criteria.
What are your business plans? Do you need a loan to help move things forward? Apply today in just a few minutes and get approval in as little as the same day to 24 hours with Affinity Beyond Capital.