No Equity Business Loan – What Are Your Options?

no-equity-business-loanFor people who have money but are short on creativity, the problem is finding that one business idea that will make them a lot of money to add to the golden nest egg that they already have. But for most businessmen, the opposite is the problem, that is, they have a good idea but do not have the money to fund their business.

Hard to Get Business Loans

Business loans have always been hard to get. On the other hand, loans by the Small Business Administration are getting more and more competitive. They are easily accessible, more than bank loans, however in recent years the SBA loan credit facility was maxed out. And it is only through an act of Congress that the limit is expanded, but only God knows when the SBA’s loan program will get maxed out again. This is the reason why you need to find sources for a no equity business loan. What is a no equity business loan? This is a type of loan where you do not need to provide any collateral in order to get a loan. In the rest of this article, you will find a list of some of the best sources of business loans of the non-traditional kind.

Online lenders

Within the past few years, online lenders have become the favorite source of credit for many small businessmen. This is for a very good reason. Online loans are convenient. You can get a decision within an hour of your application, and the money is given to you within a few days. However, this convenience is something that you pay for with higher interest rates.

Invoice loans

With invoice loans, a lender will advance you the money that you are owed in invoices. Most banks offer invoice loans, although there are financing companies out there that specialize in this type of loan product. If you have a bundle of invoices that need to be collected, have a lender do the collecting for you. How much you will get in invoice loans is typically equivalent to 80% to 90% of the total collectible amount.

Angel investor loan

There are many people out there who are looking to finance the next great big business idea. CostCo and Google started out with angel investors. Angel investor loans are for business in the gestation stage. IF you are a startup that’s already seeing profits come in, you should consider the next type of loan. Angel investors typically invest to make 25% profit.

Venture capitalist loan

Money from venture capitalists typically are equivalent to millions of dollars, and this is money that you can use to expand your business. Like angel investors, venture capitalists are very tough in determining which businesses to invest in. Venture capitalists are typically paid with stock options on a company, which increases in value as the company grows.

As you can see, you have many choices when it comes to non-equity business loans. If you don’t feel comfortable having any form of debt, you have other sources of funding options like crowdsourcing, bootstrapping, or using your current income to finance your business.