How To Get a Business Loan With No Money: Step-by-Step Guide

Step 1: Strengthen your personal and business credit.

When applying for a startup business loan with no money, lenders will closely evaluate your credit history to assess risk. If your business lacks revenue or assets, a strong personal credit score can improve your chances of approval.

Start by checking your credit reports for errors and paying down existing debt to boost your score. Additionally, consider opening a business credit card or a small credit line to establish business credit. The stronger your credit profile, the more financing options you’ll have.

Step 2: Create a solid business plan.

A well-crafted business plan is essential when applying for a startup business loan, as it shows lenders you have a clear path to profitability. Your plan should outline your business model, target market, revenue projections, and how you intend to use the loan.

Lenders want to see that you have a strategy to generate revenue and repay the loan, even if you don’t have upfront capital. A strong plan can make up for a lack of financial history and increase your chances of securing funding.

Step 3: Choose the right financing option.

Since traditional business loans can be difficult to secure without upfront capital, exploring alternative financing options can be a smarter approach. The best option depends on your business type, revenue model, and financial situation. I discuss each in detail later, but here’s an overview.

• Microloan is ideal for startups needing 1) small amounts of capital to get their businesses off the ground; and 2) access to mentorship and business training.
• Equipment financing works well for operations with machinery, tools, or technology, as the equipment itself serves as collateral.
• Business line of credit offers flexible, revolving credit, making them useful for covering ongoing expenses or managing cash flow as needed.
• Invoice factoring or A/R financing helps businesses with outstanding invoices access immediate cash without waiting for customers to pay. Invoice factoring involves selling your invoice to a factoring company to obtain immediate cash, while A/R financing allows you to use the invoices as collateral by borrowing against them.
• MCA can be a fast funding solution for businesses with strong daily credit card sales, though it often comes with high fees.
• Business credit card provides an easy way to cover short-term expenses while helping to build business credit.

Step 4: Apply for the option that fits your needs.

Once you’ve identified the best for your business, the next step is to prepare and apply. Each type has different eligibility requirements, so it’s important to gather the necessary documentation. For example:

• Microloan may require a business plan and proof of industry experience.
• Equipment financing typically requires a quote for the equipment and an assessment of your creditworthiness.
• Business credit line and credit card are often based on your personal and business credit scores.
• A/R financing or invoice factoring requires unpaid invoices from reliable customers.
• MCA is based on your daily credit card sales history.

Before applying, check the lender’s requirements and improve your credit profile if needed. Having the right paperwork ready can speed up the approval process and increase your chances of securing funding.

Step 5: Use the funds strategically to grow your business.

Once you’ve secured financing, use the funds wisely to maximize your business’s growth and ability to repay the loan. Prioritize spending on essential expenses that will generate revenue — such as equipment, inventory, marketing, and operational costs.

If your financing option involves revolving credit, such as a business credit line or credit card, use it responsibly to maintain a healthy credit profile. For loans with fixed payments, ensure you have a clear repayment plan to avoid missed payments or high fees.

By making smart financial decisions, you’ll build your business’s financial strength and improve your chances of qualifying for more funding in the future.

Best business loan types for businesses with no money

Securing financing can seem daunting for entrepreneurs with promising ideas but no established revenue stream. However, several funding options exist specifically for pre-revenue startups and new businesses. Even with zero dollars coming in, these alternative methods can help transform your business concept into a revenue-generating reality by focusing on your potential rather than your current bank balance.

Microloan

This is a great option if you require a small amount of capital to get your business off the ground. Offered by nonprofits, community lenders, and the SBA, a microloan typically ranges from $500 to $50,000 and comes with lower interest rates and flexible repayment terms.

Unlike traditional loans, a microloan is often easier to qualify for, making it ideal for startups, businesses with no revenue, or those with limited credit history. Many lenders also provide mentorship and business training, helping you build a strong foundation for long-term success. If you need a manageable, low-cost funding solution, this financing type could be the perfect stepping stone for growing your business.

Equipment financing

Equipment financing is a smart solution if you need essential tools, machinery, or technology but lack the funds to pay upfront. The equipment serves as collateral, making qualifying easier even if you have limited cash flow or credit history.

This allows you to preserve working capital while acquiring the resources needed to operate and grow. Whether you seek office computers, restaurant appliances, or construction machinery, equipment financing can help you get started without a large initial investment.

Business line of credit

This is one of the most flexible financing options available, giving you access to funds you can draw from as needed. Unlike traditional loans, you only pay interest on the amount you use, making it great for managing cash flow, covering unexpected expenses, or seizing new opportunities.

Many lenders offer both secured and unsecured lines of credit, allowing businesses with limited revenue or credit history to qualify based on other strengths. If you’re looking for a financial safety net that provides ongoing access to capital, a business line of credit can be a valuable tool for growth.

Invoice factoring

Invoice factoring is a great option if your business has outstanding invoices but needs cash quickly. Instead of waiting for customers to pay, you can sell your invoices to a factoring company in exchange for an immediate advance — typically 70% to 90% of the invoice value. Once your customer pays, the factoring company releases the remaining balance, minus a small fee.

This financing method is especially useful if you have slow-paying clients, helping improve cash flow without taking on debt. If your company has substantial receivables but struggles with working capital, invoice factoring can provide the funds you need to keep operations running smoothly.

MCA

An MCA provides quick access to capital by advancing you a lump sum of cash in exchange for a percentage of your future sales. Unlike traditional loans, it doesn’t require fixed monthly payments; instead, repayment is automatically deducted from your daily credit card or debit card transactions. This makes it ideal for businesses with fluctuating revenue, such as retail stores and restaurants.

While it offers fast approval and funding, it often comes with higher costs and fees, so weighing the benefits against the expense is important. If you need immediate cash and have consistent sales, a MCA can be a convenient, short-term financing solution.

A/R financing

This flexible funding option allows you to borrow money using unpaid invoices as collateral. Unlike traditional loans, it provides quick access to working capital without requiring a long approval process or perfect credit.

Lenders typically advance a percentage of the receivables — often 70% to 90% — and release the remaining balance once customers pay, minus a small fee. This method helps you cover expenses and invest in growth without waiting for slow-paying clients.

Business credit card

A business credit card can be a powerful tool if you’re looking to secure funding without upfront capital. It provides immediate access to revolving credit, allowing you to cover expenses, build your business credit profile, and demonstrate financial responsibility.

A strong credit history can increase your chances of qualifying for larger business loans in the future, even if you start with no money. Additionally, many business credit cards offer rewards, such as cashback, and 0% introductory APR periods, making them a cost-effective way to finance short-term needs. If used wisely, a business credit card can serve as a crucial bridge to more substantial financing options.

Pros and cons of acquiring a business loan with no revenue

Alternative ways to fund a business without a loan

1. Crowdfunding

Crowdfunding allows you to raise funds from a large group of individuals, often through platforms like Kickstarter, Indiegogo, or GoFundMe. Instead of relying on a traditional loan, you can secure capital by offering rewards, equity, or early product access to backers. This method is especially useful for startups with innovative ideas or strong community support but no upfront capital. A successful crowdfunding campaign also helps validate your business idea and build an initial customer base.

2. Business banking accounts

If traditional loans and alternative financing options aren’t viable, self-funding through personal savings may be the best path to launching your business. While this approach requires patience and discipline, it allows you to maintain full ownership and avoid debt.

Choosing the right business bank is crucial when self-funding your business. The providers below offer valuable perks and the best free business checking accounts that help business owners maximize their savings and manage finances efficiently.

• U.S. Bank: The Silver Business Checking Package is great if you’re looking for a free checking account with in-person banking capabilities. It also offers limited free transactions and cash deposits, reducing your daily banking costs.
• Novo: It can be a huge money-saver. Not only is Novo Business Checking a free account, but you also get access to free tools to help you maximize your incoming cash, such as
  • The fund allocation tool, Novo Reserves
  • A payroll service
  • Software discount perks
  • Free budgeting tools
  • Software integrations

Additional ways to build your startup fund include cutting personal expenses, setting aside a fixed percentage of your income, taking on a side hustle, and selling unused assets. Additionally, starting small — such as launching a minimal viable product (MVP) or freelancing in your industry — can generate initial revenue to reinvest in your business.

Common mistakes to avoid when applying for a business loan

One of the most costly mistakes business owners make when applying for financing is failing to prepare adequate documentation before approaching lenders. Many applicants rush the process without organizing their financial statements, business plans, or cash flow projections, giving the impression of disorganization or financial instability.

Equally problematic is applying with multiple lenders simultaneously without a strategy, which can result in numerous hard credit inquiries that damage personal and business credit scores. Taking the time to research lender requirements, organize paperwork meticulously, and strategically sequence applications can dramatically improve approval odds.

Things to keep in mind

Businesses often choose financing options based solely on ease of qualification rather than appropriate structure. For instance, using short-term financing like MCAs for long-term investments can create unsustainable cash flow pressure, whereas equipment financing makes little sense for working capital needs.

Additionally, many neglect to separate personal and business finances before applying, making it impossible for lenders to evaluate business performance independently. Successful applicants carefully align loan types with specific business requirements, maintain clean financial boundaries between personal and business accounts, and avoid taking on more debt than their current or projected revenue can reasonably support.

Frequently asked questions (FAQs)

Do banks give loans to startups with no money?

Yes. Startups can pursue microloans, equipment financing, business credit cards, invoice factoring, or MCAs — all of which have more flexible requirements and are specifically designed for businesses with limited capital.

Is crowdfunding a good alternative to business loans?

Yes, crowdfunding can be an excellent alternative to business loans for startups with no money. Unlike traditional financing, crowdfunding requires no collateral, credit history, or revenue proof and instead leverages your concept’s appeal to attract many small investments from supporters.

What are the risks of getting a business loan with no money?

The risks of getting a business loan with no money include taking on debt obligations before establishing reliable revenue streams, which can create immediate financial pressure. Additionally, failing to meet repayment obligations can severely damage both personal and business credit, limiting future financing options.