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Startup Business LoansIf you are looking for startup business loans ideas with no collateral requirements, this post is just for you.

Do you need financing for your new startup but don’t know where to begin? asking yourself, how can you get funding for your startup?

We have put together a list of the nine easiest, simplest, and cheapest business loans ideas for your business to grow, expand, and succeed.

9 Startup Business Loans No Collateral Ideas


When funding a startup, you may run into some barriers through traditional methods of financing, like bank loans.

This is because banks are wary to give new businesses money without a proven and demonstrated track record of growth or success.

 1. Get An Online Peer-to-Peer Loan

Cost: 1-6% initial fee + 5-26% interest rate (based on credit score and length of loan)

A Peer-to-Peer (P2P) loan gets you money from strangers through online platforms like Lending Club.

These loans can be used for any size business in any stage of financing. Lending Club offers loans up to $40,000 with a variety of interest rates and lending options.

You need good credit to qualify for a P2P loan, though. Check your score here to see if you are above the minimum 650 in order to apply.

Although there are benefits to online P2P lending, there are some things to keep in mind:

  • Your personal credit rating will be affected if you don’t pay back the loan.
  • The interest rate of a P2P loan is usually the same as a credit card, in the range of 12-25% per year.
  • You receive the cash in a lump sump, which means you will be paying interest on the full amount from the start.

Although Lending Club is a great way to find a P2P loan, it may not be for everyone. Other lenders like LoanMe offer loans to those with lower credit scores, but for higher interest rates.

Check your credit score—and if you are below the minimum credit score for conventional P2P loans, you can get prequalified for LoanMe onine!

2. Use Crowdfunding

 Cost: 5-10% total money raised + investor incentives.

Crowdfunding is a campaign that raises small amounts of money from a lot of people through online platforms, such as Kickstarter or Gofundme.

“Investors” give a portion of money to the business in exchange for a promise reward, such as a product, incentive, or even a share in the business.

A lot of startups are finding success with crowdfunding campaigns because it helps obtain the necessary financing and market the business before it has even launched.

Your investors want to show off their investments—which gives you an expansive reach and word of mouth right from the get-go.

The only downside to crowdfunding is that most platforms are all or nothing—if you don’t finance your entire project, you don’t get the money. So make sure you really get your business out there and market your campaign!

3. Get an SBA Startup Loan

 Cost: 7-9% annual interest rate

Although SBA loans typically lend to established businesses, are two SBA loan programs that target new startups:

  • The Community Advantage – up to $250,000
  • Microloan Program – up to $50,000

For both programs, the lender is an SBA-approved intermediary, like a non-profit institution or CDC.

These programs are generally available to owners with experience in the industry and businesses that are partially self-financed (at least 30% of your own money in business).

SBA loans usually offer a lower interest rate than other financing options for new startups, which can help your business have more money available in the first few years.

To qualify for these SBA programs, you typically need a credit score above 680 and a detailed business plan with financials.

4. Get a Microloan From Nonprofit Lender

 Cost: 18-35% annual interest rate

Similar to an SBA microloan, you can get a loan from a nonprofit lender if you don’t have great credit or other options.

However, you will need to show sufficient cash flow of the business and provide a list of personal assets (like a second job or spousal income) to prove you can make your loan payments.

If your credit score is under 640, consider working with a company like Accion, a nationwide nonprofit that microloans to startups. You can borrow up to $10,000 for a home-based or incubator-based startup.

5. Raise Money From Angel Investors or Venture Capitalists

Cost: stock/shares in business

A venture capitalist is an investor with a company or firm who is looking for a high rate of return, generally 10-15 times their initial investment within five years. This sort of ROI is hard to prove for startups.

Which is why VC is not a typical road for most entrepreneurs. Angel investors are individuals who choose to invest their money at an early stage of a startup and tend to be more flexible than VCs with a lower necessary rate of return on investment.

While this helps raise money debt-free, both VCs and Angels tend to maintain some control over business decisions in order to protect their investments and get a high return.

It is important to come prepared to an investment meeting with a business plan, financial projections, and investing contract.

Venture Capitalist Tips:

Here are two resources that will help you figure out if you are the right candidate for a VC:

  • How To Raise Money From Angel Investors and Venture Capitalists by Marshall Brain
  • Raising Venture Capital by Mark Suster

Angel Investor Tips:

  • Network.

Angel investors are often those in your personal network who believe in you and your idea. You need to network with people in your industry to find the right investing options. You can also advertise on angel investing sites for more opportunities, such as Angel List and New York Angel.

Structure investment as a convertible note

A convertible note is a loan with interest that converts into stock under certain conditions. They are simpler and require less legal fees than traditional investments.

And they eliminate the need to determine the valuation of the company until the next rounds of investments—this is crucial to obtain high funding for a business without a history of revenue.

6. Use Credit Card Financing

Cost: 16% average annual interest + annual fee

According to the National Small Business Association, 37% of small business owners use credit cards to finance their operations. This is because business credit cards are relatively cost effective and easy to manage when starting out.

The Pros

  • Cost effective with average rates of 16%
  • Cashback and rewards programs that can benefit your business
  • Helps build business credit which can lead to additional business financing at lower rates in the future
  • Useful tool for debt consolidation by transferring balances during 0% interest credit card promotions

The Cons

  • Limited spend based on credit limit
  • Higher interest rates than other sources of potential capital
  • If using a personal credit card, can ruin personal credit score (using a business credit line will protect this but has less legal protection)

Tips and Tricks

  1. Improve your personal credit score. Generally, it is easier to get a line of business credit if your personal credit is above 660. Nav can help you build your business credit score.
  2. Expand your credit limit. Every six months, you can apply for a new card or ask your current card company for an increased limit. When you get additional credit, use at least a portion of it—what you don’t use may be taken away. The more credit you have, the more you can spend.
  3. Apply for a business credit card as opposed to a personal card. This will give the business its own credit score, which helps to secure financing later on. This will also protect your personal credit score.

7. Use Your Retirement Savings

Cost: $5,000 initial cost and $1,500 annual fees

You can invest your retirement account in your company through companies like Guidant Financial. This lets you use your own resources without worrying about interest rates or shared investors in the first round of financing.

Another great reason? You can use your retirement savings without paying income taxes or early withdrawal penalties.

Otherwise known as Rollover As Business Start Ups (ROBS), this financing option essentially uses your retirement account as a purchase of stock in your business.

This means that when you start paying out shareholders, your 401(k) investment also receives a percentage of ownership payouts—which puts more money back in your own pocket from your business!

See if you pre-qualify online through Guidant and learn more about how you can use your IRA or 401(k) as an investment in your startup.

8. Use Your Home Equity 

Cost: 2-5% closing costs + 3-6% annual interest rate

Some entrepreneurs are able to get a business loan based on the value of their home. If you have more than 15% equity on your home— (home value – mortgage value) / (home value).

Then a bank may allow you to borrow in aggregate between 70-85% of the value of your home (including mortgages).

There are two types of bank loans based on your home:

  • The home equity loan (HEL) is similar to a second mortgage
  • The home equity line of credit (HELOC) is similar to a line of credit, using your home as collateral

Both tend to have significantly lower interest rates than traditional credit cards or financing methods, but you risk the loss of your home if you cannot pay them back.

9. The Friends and Family Loan

Cost: Generally, min. interest rate of .38% on loans > 3 years; 1.85% on loans 3-9 years

You may have friends and family that are interested in investing in your business because they like the mission of the company and want to support you.

This can be a great way to get financing for your startup without dealing through a third party. However, it can be equally messy if not properly dealt with and put in writing.

You can sell friends and family a share of the business or take their money as a loan, depending on their history with investing.

It is generally a good idea to go the loan route to avoid family and friend investors giving you business advice and having a say in operations.

Two important rules to the friends and family loan:

  • Get everything in writing.
  • Provide a fair interest rate.

Although this interest would be lower than a bank rate, you should still treat a family/friend loan as you would any other financing with reasonable rates for using their money.

Best Pick: Guidant Financial

A lot of entrepreneurs use their retirement savings to fund their new business.

If you have more than $50,000 in a retirement account, you can use it to finance your startup without paying income taxes or withdrawal penalties. In the long term, this can be a profitable investment of your retirement fund!

Consult with Guidant Financial to learn more about how you can use your retirement assets as an investment in your company.

Below you’ll find extended descriptions of the above financing methods. The first five options are nontraditional loans, and the latter four are ways to rework your own money into startup capital.

What You Need To Obtain Financing

There are three major things you will always need to provide when looking to obtain financing for a new startup:

  • Knowledge of your personal credit score (check and raise your credit with Nav)
  • A well-formulated business plan (try LivePlan for simple business plan software)
  • A checking account for your business (compare checking accounts to find the right one for your startup)

In Conclusion

Although there are several financing methods, oftentimes you will have to put up some of your own money and assets to launch your business.

You should discuss with your family, accountant, and an advisor how much you are willing to risk investing in your startup.

Don’t forget that if you have more than $50,000 in a retirement account, using these savings as an investment in your company is fast, potentially profitable, and will save you on withdrawal fees and taxes. Check out Guidant Financial for a consultation.

Once you set a limit on your personal savings invested, you can start looking into other funding methods to help grow your business right from the get-go.

Determine what kind of financing is right for your company based on interest rates, your credit score, potential annual fees, and whether the option is a loan or a shareholder investment.

With these nine options, you are sure to find the right startup financing to grow your idea and business.