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It is possible to get a startup business loan with no revenue or no money. But if you need to find financing that doesn’t depend on cash flow, your best choice may actually be to wait — if you can afford to.
You’ll likely qualify for better rates and terms once your business’s finances are stronger. Waiting won’t always make sense, though. If you need a small-business loan now, here are options that may be available without money or revenue.
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Business loans for startups with no revenue
If you’re a startup — or any business — with limited funds, it’s unlikely you’ll be able to secure a traditional term- or SBA loan. You may, however, be able to access these other financing solutions without money in the bank or revenue.
Microloans
Microloans are smaller loans (typically of up to $50,000 or less), and the lenders who issue them are usually nonprofits and mission-based organizations. These loans tend to be low cost and are often designed for businesses in traditionally underserved communities.
Compared to other types of business loans, microloans tend to have more flexible qualification requirements. Lenders may be willing to work with startups and/or businesses with no revenue.
Equipment financing
The underwriting process for an equipment loan is a little different than that of a traditional term loan. The lender fronts you the cash to fund up to 100% of the purchase of a piece of equipment, and the equipment itself serves as collateral for the loan.
For that reason, lenders are just as concerned with the value of the equipment as they are with your business's financial performance. The terms of an equipment loan are based on credit (both business and personal), time in business and how well the equipment fits into your business plan. Revenue may not be as big of a factor.
Invoice financing
Invoice financing uses a business’s unpaid invoices as collateral. In exchange, invoice financing companies will front you a percentage of your unpaid invoices.
Invoice financing companies are just as concerned with the value of your invoices as they are with your business’s finances. As a result, startups with limited cash flow may have an easier time qualifying for this type of funding.
Business credit cards
A business credit card can boost your credit score and help your startup qualify for more business loans in the future if you use it responsibly (which, in large part, means paying your credit card bills in full and on time every month).
Cash flow can be important to credit card issuers, but many tend to care more about your personal creditworthiness. You’ll likely need good personal credit (a score of 690 or above) to qualify for most cards.
» MORE: Best low-revenue business loans
Max loan amount $250,000 | Max loan amount $250,000 | Max loan amount $500,000 |
Min. credit score 625 | Min. credit score 625 | Min. credit score 660 |
How to get a startup business loan with no money or revenue
If you don’t have sufficient revenue, you’ll need to show a potential lender your ability to repay a loan in other ways. Here’s what you can do to get financing for your business:
Evaluate your assets
Every time a lender makes a loan, it takes a risk. They need to know that a borrower can repay that debt in full. Lenders often determine this in part by whether you’re generating revenue. If you aren’t, consider what other positive attributes you can offer a lender. For example, business assets that can be used as collateral or your personal credit history can make you look like a safer bet.
Know a lender’s requirements
Some lenders require borrowers to have a certain amount of money in their business bank accounts before they'll even consider extending a loan. But other lenders are a little more forgiving of cash flow if borrowers have a strong personal credit history or meet other business loan requirements. Make sure you know what a lender is looking for before you apply.
Determine whether you’ll be able to repay
If you get a business loan, you’ll need to be able to cover your loan payments — in addition to your day-to-day expenses. Loan payments will vary based on your funding amount, interest rate and repayment term.
Some lenders may offer monthly payments, but startup business loans are more likely to require weekly or daily payments. If you can’t afford your potential loan payments, you might try searching for a more competitive option — or look for an alternative way to fund your business.
Understand your own risks
Loan terms reflect risk. If a loan is risky, the interest rate and payment frequency may be higher and the repayment period may be shorter. If you’re not confident you’ll be able to repay a loan without money in the bank, you may end up having to borrow more to pay off your existing debt. Breaking out of that debt cycle can be difficult.
Should you get a business loan with no money?
It may make sense to get a business loan with little to no revenue in the following instances.
You’re making your business official
If you’ve been working a side hustle or solopreneur venture — and have decided to make the leap to a full time business — you’ll need capital to get started. At first, you may be able to get by using personal savings or investments from friends and family.
After a while, however, you’ll likely find that startup costs are expensive — and that startup business loans with no revenue may be the right option to help you get your venture off the ground.
You’re waiting to get paid
Many businesses (almost all B2B companies — including construction, trucking, consulting, etc.) work on a contract basis and sometimes need to wait weeks or months after services are rendered to receive payment.
However, these businesses don’t have the luxury of waiting to start the next job, contract or project, which incurs expenses. That's when cash flow problems begin and an option like invoice factoring or financing can make sense.
You need resources to grow
Startup-sized resources can’t keep up with a growing business. Bigger businesses need bigger amounts of capital, which is why small-business loans are so important. They can help replenish inventory, hire more employees or open additional locations.
If you’re a startup with no revenue — but with a strong financial forecast — you may want to look at options like microloans and business credit cards for new businesses to inject some money into your business.
Alternatives to getting a business loan with no money
The best alternative to getting a business loan with no money is waiting, but that won’t be practical for everyone. Here are some other options to consider:
Equity financing
Equity financing can be used to raise funds through the sale of shares or a stake in your business — this may be an option if you’re unable to find startup business loans with no revenue. While you won’t incur loan debt with this type of financing, investors who have purchased stock do have a share in the ownership of your business.
Crowdfunding
If you’ve just launched your business, you might consider crowdfunding, another zero-debt financing option that lets others invest in your idea. Not only can it help you raise funding for your business, but it may also be a way to raise awareness of your products and services.
» MORE: How to get startup funding
Business grants
More established businesses with no revenue might try to qualify for small-business grants. Not every business will meet eligibility requirements — and competition can be fierce for this free money — but funding is available.
Find the right business loan
The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Frequently Asked Questions
Yes, some lenders offer business loans for bad credit to startups with limited revenue. You’ll likely need at least six months in business and a credit score of 600 to qualify.
These options, however, may have higher interest rates and shorter repayment terms.
Yes. In general, most lenders require that their borrowers sign a personal guarantee. If you have no revenue, you pose a greater risk to the lender, which means they’re even more likely to ask you to sign a personal guarantee.
It’s very unlikely to get a no credit check business loan with no revenue. Most lenders will require a credit check at some point in the application process, even if it’s only a soft pull that doesn’t impact your credit score.
Although there are some loans available that don’t require a credit check, these are typically offered by payment processors who evaluate eligibility based on sales you make through their platform.
A version of this article originally appeared on Fundera, a subsidiary of NerdWallet.
Forest Sisk contributed to this article.
