Can you get a small business loan without collateral?
Most creditors require a form of collateral in case a business defaults on their loan. There are a few types of collateral that typical business owners may use to secure the borrowed capital:
- Business equipment
- Business inventory
- Real estate the business owns
- Cash held in a business checking or savings account
- Personal assets such as your home
The reason creditors want collateral is in case a borrower defaults on their loan and leaves an amount due to the lender. In that scenario, the lender would then sell off the collateral to pay off the remaining balance on the loan.
Working capital loans don’t require any physical collateral and can be secured only by the business owner’s personal credit.
Rapid Funders understands many business owners may already have leverage on existing collateral and may require alternative financing options. Click here to learn more about business loans that are available to you and your business.