Findings are very important for any business, but it becomes even more important when the business is new or recently started. In such a situation, opting for a business loan is the most common solution to any business owner. But, getting a business loan requires some detailed documentation that one may not have. At the same time, you need to be eligible for it and have the capacity to repay the borrowed amount. Then down payment is also a concern here for the business owners, as many of the lenders ask for it before approving any business loan. But, only a few people are aware that business loans can also be availed without any down payment. Let us discuss those business loans with no money pay in detail.
Why Do Lenders ask for Down Payments?
Down payment helps lenders to offset the risks involved. Lending to small or new businesses is always considered risky as they don’t have much financial history to trust upon in terms of repayment. Hence, lenders ask for a down payment with the borrowers.
Most of the lenders want to know that the borrowers should invest in the loan. Doing this minimizes the risks. On the same hand providing down payment enhances your potential to get approved for the business loan. Making a down payment makes borrowers reliable and providing collateral again adds a plus point to your business loan application.
This is the reason why only a few lenders are ready to approve your business loan application without any down payment.
Business Funding without Down payment
Here are some ways by which you can fund your business without any down payment or collateral.
- Merchant Cash Advance
- Business Line Of Credit
- SME Loans
- Term Loan
- Working Capital Loan
Business Line of Credit – A business line of credit is one of the ways by which you can fulfill your business requirements without providing any collateral or down payment. The card comes with great flexibility which provides customers ease to withdraw money as per their requirement. The business line of credit has an upper limit of withdrawal and interest is payable only on the borrowed amount. The repayment is simple through monthly EMIs.
SME Loans- These loans are business loans provided by banks or NBFCs to small and medium enterprises that have the potential to grow. Lenders generally don’t ask for a down payment while lending for this as the loan amount is also low as compared to conventional business loans.
Merchant Cash Advance – Merchant cash advance is again a way to get funding for your business without depending on any collateral or down payment. Here the vendor provides a lump sum amount of money to the supplier. This helps merchants of small and medium businesses as they experience more short-term cash crunches as compared to the bigger industries.
Hence, they are mostly unable to qualify for a business loan due to a lack of collateral and cash flow. Merchant Cash Advance help them in such a situation by helping them to continue with their demand and supply ratio.
Term Loans- These days’ bank loans for new businesses are not the only option for the business owners. Term loans are the new introduction in the loan industry which can fulfil their business requirements easily. The loan is available for a short period of time ranging from one to five years. The repayment is done over a regular period as per the loan agreement. The owners have full freedom to use the amount as per their requirements.
Working Capital Loans for SMEs
Working capital is essential for any business to operate and gain growth. However, there are times when companies suffer from the absence of working capital which leads to their failure. Under such condition, working capital loans by banks/ NBFCs or from investors can become them to survive and continue their functioning. These loans are easy to get, collateral and down payment free.
The above-mentioned points are the options for you when looking for a collateral & down payment free business loan. However, you need to be sure of your business plans and requirements before you apply with any of these business funding options.