How to get a business loan with no money

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Key takeaways

• It may be possible for businesses with no money to get approved for a business loan

• Nonprofit lenders like Kiva offer microloans with minimum requirements

• Other ways to finance a business with no money include business credit cards, business grants and venture capital

Without cash on hand, you may not be able to get just any business loan. Most lenders want to see a flow of revenue and profit to consider you for a loan. But some types of business loans and alternative financing can help borrowers get the funds they need without revenue or funds. 

How to get a small business loan with no money or revenue

To get a small business loan with no revenue, you’ll need to show that you have the ability to repay the loan. Here are some tips to help you get approved.

Research lender requirements

Every lender sets different lending requirements that it approves for business loans. Whether you’re a brand new business or don’t have any available capital, check to see if your business at least meets the minimum criteria.

These are common lender requirements:

Lenders that accept low or no revenue

Most lenders require borrowers to have consistent revenue being deposited in a business checking account. While banks and credit unions typically require high amounts, a few online and alternative lenders work with businesses with little-to-no money.

Pay attention to cash flow and assets

Most lenders need you to show a current flow of revenue or capital to get a loan. But some loans look beyond cash flow. Accounts receivable financing lets you use unpaid invoices to get funding.

Meanwhile, secured business loans help startup businesses and business owners with bad credit get a loan with no down payment because they’re guaranteed by business assets. Lenders are typically more willing to take on 100 percent financing because they can seize the collateral or assets to repay the loan if you fail to make payments.

Know how much loan you can afford

No matter how much a lender approves for you to borrow, make sure the loan payments fit into your monthly business budget. You can use a business loan calculator to estimate the monthly payments and total interest you’ll pay on startup business loans with no revenue.

You can also see if loan payments will be manageable by looking at your estimated debt payments compared to revenue. Lenders often use one or more of the following ratios to see if you’re eligible for funding:

• Debt-to-income ratio (DTI). Your DTI is calculated by dividing your monthly debt payments by monthly gross income. A DTI of 35 percent or lower is considered healthy, but some lenders may accept higher.

• Debt service coverage ratio (DSCR). The DSCR uses your net revenue or EBITDA divided by monthly debt payments. Most lenders want to see a DSCR of 1.25 or higher.

8 financing options when your business has no money

Financing a business with no money won’t be an easy task, but there are options. From business loans and credit cards to grants and venture capital, here are your best financing options.

Microloans

A microloan has a maximum loan amount much smaller than typical term loans. There’s no standard for how large these loans can be, but the SBA microloan goes up to $50,000.

Microloans are usually offered through nonprofit or community-based lenders or as specialized programs for underserved businesses. These loans typically have low eligibility requirements and may not require a minimum credit score or annual revenue. But they may require business owners to go through training or one-on-one mentoring to help the business succeed.

Examples of microlenders include:

• Accion Opportunity Fund: Offers loans up to $250,000 with APRs of 7.49 percent to 24.99 percent.

• Kiva: This peer-to-peer lending platform lets you get loans up to $15,000 and doesn’t charge interest.

Business grants

A business grant is an ideal option if you have no money because it doesn’t have to be repaid. But it can be tough to win a grant since they’re highly competitive. Some grants have an easy application process and few eligibility requirements. But others may have an extensive application or require anyone who wins to receive training and show up for workshops.

Bankrate insight

For more information on business grants, check out any of the following guides:

Business credit cards

Many business owners have one or more business credit cards in their wallets, especially first-time business owners needing quick cash. Unlike a business loan, you’re not required to have any money upfront for most cards.

The best business credit cards typically require good-to-excellent credit. But some, such as the Spark 1% Classic, are open to fair credit borrowers.

You can use a business credit card for short-term expenses, and you won’t have to pay off your credit card right away. When the bill becomes due, you can pay it in full or make the minimum payment.

If you pay in full each month, you can avoid interest charges. This makes business credit cards a potentially low-cost way to build business credit. Most cards also come with additional perks like free employee cards, discounts and the chance to earn cash back or travel rewards.

Equipment loans

An equipment loan is a type of term loan that’s secured by the commercial equipment you’re buying with the loan funds. Because it’s secured, it’s easier to qualify for than other business loans. Lenders may have lower requirements, such as an annual revenue of $100,000 or less. It’s also possible to get 100 percent financing so you don’t have to put a down payment on the equipment.

Invoice financing

Invoice financing is a type of accounts receivable financing using your unpaid invoices to get approved. In order for your business to qualify, financing companies evaluate your clients’ payment histories and invoices. The company then typically advances up to 90 percent of the invoice amount for you to use any way you please.

Payment structures differ from company to company, but most require you to repay as your clients pay you. But fees can be high. Financing companies often charge a one-time fee as a percentage of total invoices, while others add an additional percentage for each week the invoice stays outstanding.

Merchant cash advances

A merchant cash advance helps you get funding based on past credit and debit card sales. You won’t need any money upfront. Payments are either a percentage of your sales or a fixed payment. But for most MCAs, you’ll have an aggressive daily or weekly repayment schedule.

Venture capital

Venture capital is a startup financing option offered by venture capital firms. Venture capitalists provide funding, usually in exchange for a high equity stake in the business.

You’ll be expected to have a strategy for high growth in place to satisfy the investors. But you also get mentoring and business resources to fuel your growth, giving you an edge over small businesses trying to make it on their own.

Crowdfunding

If you need a little capital to kickstart your business or expand, you could go the crowdfunding route. Crowdfunding raises money for your business from anyone willing to invest in it, including family, friends or investors.

You can use crowdfunding platforms like Kickstarter or Kiva to find interested parties. You usually reward your small business investors with perks like your product, swag or equity, depending on the level of investment.

When to get a business loan with no money

There are several reasons why a business might need to obtain a loan with no money.

• When starting a business, a loan may be necessary to cover initial expenses such as rent, equipment, inventory and employee wages.

• For businesses looking to expand, a small business loan can help finance costs associated with growth, such as new inventory, additional staff or a larger office space.

• Unexpected expenses can arise at any time, and a small business loan can provide the necessary funds without straining cash flow.

• If a business encounters a promising opportunity, a small business loan can enable them to take advantage of it.

• If you struggle to make payments on multiple loans, consolidating high-interest debt into a small business loan with a lower interest rate can help make monthly payments more manageable.

Bottom line

Whether it’s for starting a business, expansion or meeting unexpected expenses, loans can provide financial support if managed wisely. You may need to get creative with the types of funding at your disposal, but it’s possible to get a small business loan with no money. The key is to consider all available resources, make use of assets and have a solid business plan to show lenders you’re able to pay back the money you borrow.

Frequently asked questions

• Why is cash flow important to business lenders?

  Cash flow refers to the money flowing in and out of a business. Business lenders prioritize cash flow because it demonstrates whether a business can generate enough income to repay existing debts and handle a new loan.

• Can you get an SBA loan with no money down?

  Most SBA loan programs require a down payment typically ranging from 10 percent to 30 percent based on the type of loan. But some types of SBA loans, including CAPLines and disaster loans, don’t have a down payment requirement.

• Can you get a no credit check business loan with no revenue?

  While most lenders require a credit check to determine your eligibility, some may overlook this requirement or conduct a soft inquiry that does not impact your credit score. But if you wish to avoid a credit check altogether, alternative business financing options, such as crowdfunding platforms like Kiva, may be an option. Kiva is a microlender that offers a unique crowdfunding platform for loans up to $15,000 with repayment terms of up to 36 months.

• How do I get a startup business loan with no money?

  Lenders typically prefer businesses with solid cash flow, as they view these businesses as more reliable borrowers. If you’re looking for a business loan with no money, research lenders with relaxed eligibility requirements and be ready to provide collateral to secure the loan. You’ll also want to make sure you have a solid business plan to show lenders you have a method for generating revenue and repaying debts.