How to Get a Small Business Loan Without Collateral
A small business loan transfers money, or principal, from a lender to a business owner. Typically, a business owner will repay the principal to a lender over time at a cost, known as interest. Most small-business lenders require some type of collateral, or something a bank can sell in the event a borrower cannot repay a debt. However, a business owner may not have the ability to provide enough collateral to secure a loan. Fortunately, the Small Business Administration (SBA) can help these borrowers obtain a loan without collateral.
- Business plan
- Financial statements
- Tax returns
Write a business plan that details how you expect to run your business successfully. Include a statement of purpose for the loan request, a description of the business, a marketing plan, a financial analysis and a management summary (see the link in the References section for a detailed step-by-step guide on preparing a business plan). A business plan provides detail for a banker to understand the business, but should not span any more than 50 pages long.
Call a Small Business Development Center (SBDC) in your area. Set up an appointment to meet with an SBA loan specialist. SBDCs provide assistance to business owners who need an SBA loans by providing guidance in business plan preparation, financial analysis and financial projections. Each state has at least one SBDC.
Complete the following SBA forms before applying for an SBA loan: an application for business loan; a schedule of collateral; a personal financial statement; a statement of personal history; certification regarding debarment, suspension, ineligibility and voluntary exclusion; and a statement regarding lobbying.
Present the loan request to a banker
Call a local bank and ask for an SBA loan specialist. Meet with the banker and present her with the business plan, SBA forms, financial statements and tax returns.
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